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334 A meeting of the Executive Committee of the Federal Reserve Board Was held in 'jashington on Wednesday, May 24, 1933, at 12:00 o'clock noon. PRESENT: Mr. Mr. Mr. Mr. Black, Governor Hamlin Miller O'Connor Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. McClelland, Assistant to the Governor. The Committee consider ed and acted upon the following matters: Letter dated nay 18, 1933, from the Secretary of the Federal Reserve 1., astk of New York, and telegrams dated May 18, 1933, from the Chairman Of the Federal Reserve Bank of San Francisco, aria May 23, 1933, from the Q4airm„ --- of the Federal Reserve Bank of Kansas City, all advising that, at raeetinas Of , -'their boards of directors on the dates stated, no changes were Macle the banks' existing schedules of rates of discount and purchase. Without objection, noted with approval. lieril°ralidnm dated May 15, 1933, from 1.1r. Paulger, Chief of the °71 Of Examinations, recommending the appointm ent of Mr. T. B. Crosby 44c1 hie des igaation as an assistant Federal reserve examiner with salary 4t the basic rate of .,4,500 per annum. The recommendation having been approved by five members of the Board on May 22, 1933, Mi. Qr°81)Y was appointed an examiner for all purposes Of the Federal Reserve Act, as amended, and all Other acts of Congress pertaining to examinations made by, for, or under the direction of the Federal Reserve Board; and was designated as an assistant Federal reserve examiner, with salary at the basic rate of '4,500 per annum, less a reduction Pursuant to the Act of March 20, 1933, now 15, all effective as of Llay 25, 1933, on which date he will assune his duties. 335 5/a4/33 -2- Lemorandum dated May 17, 1933, from Er. Goldenweiser, Director of tilaDivision or Researah and Statistics, transmitting the resignation of h11'4* RUth Jones, a temporary employee in that division, and recomnendin8 the accePtance of the resignation as of that date. Accepted. Reply on May 19, 1933, approved by five members of the Board, to 4 letter dated May lb from Mr. Stevens, Chairman of the Federal Reserve Balak or Chicago, advising that the executive committee of the bank has z."°14:2181.1deci to the board of directors the appointment of Kr. Ueil B. Dawes --4. " ' 8 er of the Investment Department of the bank, with salary at the ZAte or N)6,650 per annum, and stating that it is proposed to employ Mr. 1)"" lUatiediately, and at the meeting of the board of directors on May 26, to 11)1D(:)irlt him as Manager of the Investment Department. The reply stated the Board assu5 the matter has been taken up individually with a 1114i°11tY 0f the directors of the bank and that they are agreeable to the 8,Ppo1litent, and that, accordingly, the Board approves the salary fixed t°1' beraz. Ei•vies, effective as of the date on which he assumes his duties at Approved. RePlY on 1,Lay 22, 1933, approved by five members of the Board, to 4letter dated Lay 15 from hr. Stevens, Federal Reserve Agent at Chicago, 14E1(111"tille approval of the designation as assistant examiners at the bank ot ' T E. Meloy and Hugh I. Helmer with salaries at rates within l'4111ge Of 'AIE300 to'42,400 per annum and .:?2,000 to .A,400 per annum, l'el3"tivelY, The reply stated that the Board approves the designations ) 5/24433 -3- €114 requested that the agent advise the Board of the salaries fixed for 11888rS• Lieloy and Helmer within the above salary ranges. Approved. Telegraphic reply on Lay 22, 1933, approved by three members of the Bc"as to telegrams of that date from 11r. Newton, Federal Reserve Agent Ett Atlan + ---a, requesting approval of the extension, for a period of thirty 41'8 fr°M lune 3, 1933, of the appointments of flessrs. Bowron, Saussy and /31T1e as acting assistant Federal reserve agents at the Birmingham, 8011vI11e and Nashville branches, respectively, and of the appointment Or J. R. licCravey, Jr., Acting Assistant Federal Reserve Agent at the head office of the bank for the period ending December 31, 1933. The relay stated that the Board approves the extension of the appointments of 11"8re• Bowron, Saussy and Davis as requested, and the appointment of Fr. IleartIveY, it being understood that there will be no Change in Hr. McCravey's sal€117 and that he will remain on the payroll of the Federal tee ervA ' agent and be responsible solely to him. The reply also stated thEvt 14r, lacCravey should execute the usual form of oath of office and 8t1rety r'r bond in the amount of .„50,000 which should be examined by coun8e1 the bank to determine whether its execution complies fully with the Printed on the reverse side of form of bond 162. Governor Black et4ted that the continuation of the appointments of the acting assistant Nierttl reserve agents at the three branches of the Atlanta bank and the 4DointOent of La.. 111'. UcCravey are made necessary by the unexpected death of Albertson, Assistant Federal Reserve Agent at the head office. Approved. 5/24/33 -4Letters dated May 18, 1933, approved by four members of the Board, 41141141Y 22) 1933, approved by five members of the Board, to Mr. Walsh, Mlair1116111 Of the Federal Reserve Bank of Dallas, stating that, in accorda4.ee with the recommendations contained in his letters of May 3 and 11, 1933, the Board approves Changes in the bank's personnel classification Plan to Provide for a change in the title of the position of "bank examiner" tO '.41ef examiner" and for the new positions of "examiner" and "assistant examinnr” -- in the examination and statistical department of the head office, the f°• 1* the new position of "Reconstruction Finance Corporation clerk" in Reconatruction Finance Corporation Department of the Houston branch. Ille8 • " ra's letter of May 18 also stated that, as recommended by the agent, the 81• 34ra approves a salary at the rate of :".,;840 per annum for Mr. Roger Loyd, 111141 I. i8 in excess of the salary range provided in the personnel Qletaairication plan for the position of "page", which position Mr. Loyd °Q N)isa. Approved. Te — 18(Era, dated May 18, 1933, to the respective Federal reserve '4 ents I approved by four members of the Board, stating that the Board 4PP/T).7 s e- the applications of the following State banking institutions for rae l'441P in the Federal Reserve System and for Federal reserve bank stock, 11-113iect to the conditions prescribed in the individual telegrams: Number of Shares 1J1110/1 aild New Haven Trust Company, naven, Connecticut. 1,475 414k or Ycaic, York, Alabama. 24 Approved. Federal Reserve Bank Boston Atlanta. 338 5/24/33 -5Telegram dated Lay 19, 1933, to Ur. Case, Federal Reserve Agent at 17"Yol'k) aPproved by five members of the Board, stating that the Board 3 the aPplication of The State Bank of Sea Cliff, New York, for mraber8hiP in the Federal Reserve System and for 90 shares of stock of the l'eclel'al Reserve Bank of New York, subject to the conditions prescribed in tlie telegram. Approved. Tele gram dated May 22, 1933, to Ur. Curtiss, Federal Reserve Agent Ett Beaton, approved by three members of the Board, referring to the application of the Worcester Bank and Trust Comnany of Worcester, Massachusetts, 1)ell iseion to withdraw immediately from membership in the Federal asae..ma System, and stating that the board waives the usual requirement of ebz 11/°11the notice of intention to withdraw and that, accordingly, upon 814'1'exiller of the Federal reserve bank stock issued to the Worcester Bank l'1-1/8t ComPany, the Federal Reserve Bank of Boston is authorized to ee.Leel such at and make a refund thereon. Approved. TelaSraphic reply on Lay 23, 1933, approved by three members of the 8041,a, to a tele gram dated r.:ay 15 from Er. Newton, Federal Reserve Agent Atla "a) requesting an expression of the Board's views with regard to ti 8 °r their for membership by certain banks which have a large percentage deP°eits frozen, apparently under agreements entered into prior to the l'ecent banking holiday. The reply stated that the Board is not in 14)eit• , 1°- u0 express an opinion in any such case without having complete 4ati°4 a8 to the te under which such deposits were frozen, the 339 5/24/33 -6reason for such action, the bank's ability to meet the demands of its de positors as the frozen deposits become due and payable, the condition Or the institution and the character of its management, and that, if, in the °Pinion of counsel for the Federal reserve bank, the method followed ta r elation to the free ing of deposits was legal under the State law }(37erning such procedure, and if the condition of the bank and its manageent e-nd its future prospects are such that the agent and the membership committee of the Federal reserve bank would be willing to recommend ELPPI'Oval of its application, the Board upon receipt of full and complete 14tQl1Qati°n, will be glad to give consideration to the application and 4rt(31'ci an- oPPortunity for its withdrawal if it should appear that favorable acti -on cannot be taken thereon. Approved. Reply on. ray 22, 1933, approved by five members of the Board, to a 1 -etter dated April 18 from Mr.„ Gettemy, Assistant Federal Reserve Agent "13°et°11, l'eqUosting a ruling by the Board on the question whether the C'3"ker National Bank of Turner Fall, Massachusetts, should be required t° reclu e its holdings of Federal reserve bank stock on account of the l'eQent net reduction of0,000 in its capital stock. The reply stated tIlet) since the bank is required, on the basis of its present capital anU mArau,s1, to hold 78 shares of stock compared with the 120 shares now held) it sh , , oulk4 in. accordance with the provisions of Section II, pars(a) Regulation I, file an application, either for the cancellation "3° sh.ares of Federal reserve bank stock, conforming to the reduction r /iRrr "'"")0010 in its paid-in capital, or, if it desires for the cancellation •7, 5/21/33 z -701' its total excess holdings of 42 shares. Approved. Telegraphic reply to a letter dated May 18, 1933, from 11r. McClure, Pederal Reserve Agent at Kansas City, inclosing an application for 33 Ilal'es of stock of the Federal Reserve Bank of Kansas City to be issued In the naOf the National Bank in North Kansas City, Missouri, and etatill that the organizers of the national bark have decided to withdraw t11811' aPPlication for trust powers and to organize the bank under the lipcivs title. The reply stated that the Board withdraws its approval of the. -PPlication of the National Bank and Trust Company in North Kansas Otty r, Federal reserve bank stock and approves the new application of the N • aulonal Bank in North Karsas City for 33 shares of such stock, effective if , alio. when the bank is authorized to commence business. Approved. Ett Letter dated Kay 23, 1933, to Mr. Peyton, Federal Reserve Agent idiruasapolis, approved by five members of the Board, referring to 4seistEult i?ederal Reserve Agent Bailey's letter of April 26, with regard to the reorganization of the Peoples State Bank of Plainview, Minnesota, eJaci to the request of that institution for a further extension to April 13) 1934, of the ? 20,000 tire in which to increase its capital stock from ::' to as required under a condition prescribed by the Board and 4ePted by the bank at the time of its admission to membership in the ?eaerea. Reserve system. The letter stated that it is noted that, although 6/13141relatly the bank has bee n placed in a satisfactory condition as far as 1;t. Iseete are concerned, such correction has been effected principally v24/33 tho M the waiver by depositors of 45 per cent of their funds, the stockholder 8" 47ing contributed only 4,000 in the reorganization; that it seems, tlaref"e, that the stockholders of the institution may still be in a 13°81tion to purchase the 3'5,000 of additional stock necessary to comply With the condition of membership previously referred to, without delaying the platter another year; and that the Board feels that this aspect of the raatter should be canvassed carefully before action is taken upon the al31)11cati°31 for an extension of time. The letter also stated that it will be 4PPreciated if the agent will discuss this matter with the Peoples State 44k alld advise the Board what action is taken by the institution, together "Ilia re commendation in the premises, and requested that the agent for711'11 to the Board a statement of condition of the bank, after giving effect to the adjUstments and eliminations involved in its reorganization, together "advice as to any changes in the management of the institution. Approved. Letter dated 1,:ay 19, 1933, to the Hibernia National Bank in New 44E4183 Louisiana, approved by five members of the Board, advising that 7 ective ir and when the Comptroller of the Currency issues a charter to b and authorizes it to commence business, the Federal Reserve Board ellkices "application filed in behalf of the bank for permission to act, 111154 Act 14 contravention of State or local Law, as trustee, executor, lqt1I/Iistrator, registrar of stocks and bonds, guardian of estates, e4411nee, re ceiver, committee of estates of lunatics, or in any other rtall ti 11117 capacity in which State banks, trust companies or other corpora- '4)4'1 1741ell come into competition with national banks are permitted to act C-4 t-Pt- 5444/33 1114er the laws of the State of Louisiana, the exercise of all such beilag 814 )JeCt to the provisions of the Federal Reserve Act and the regula- tions of the Federal Reserve Board. The letter also stated that, after the beilk has been authorized by the Comptroller of the Currency to commence buainsA -8 it is requested that the board of directors adopt a resolution zetirYing the action taken in behalf of the bank in making application for Iletti11881on to exercise trust powers, and forward to the Board a certified °°131r Of the resolution so adopted. The letter further stated that the 131'3.41 has been advised by the Comptroller of the Currency that he feels that the Rib ernia National Bank should not take over any trusts from the Rihelllia Bank and Trust Company, the execution of which might react unte'll°11IblY upon the national bank, and that it is the feeling of the Board, tllezer°118 'that, if the national bank is tendered any of the trusts now bY the Hibernia, Bank and Trust Company, it should carefully scrutinize the "Ixlition Whicia of these trusts and should not accept any of such trusts, tilr°11E41, their assumption, may be detrimental to the interests of the 114ti°11411 bank, and particularly that the national bank should not -eAt -'s trusteeship for issues of the Hibernia I,:ortgage Company, which It i IlderatOOd is not Proposed. Approved. Tel dated hay 20, 1933, to Mr. Newton, Federal Reserve Agent et AtlEttt e ' approved by four members of the Board, requesting that he adLouisiana, that, effecan —"hal Bank of Cominerce in New Orleans, it a,nd when the Comptroller of the Currency issues a charter to the bank 414 ti .Are 44th()Ilz83 it to co ence business, the Federal Reserve Board approves 5/24/33 -10- t118 aPPlication filed in its behalf for permission to act, when not in °°11travention o-P State or local law, as trustee, executor, administrator, reietrar of stocks and bonds, guardian of estates, assignee, receiver, Qoltlittee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into °°1144atition with national banks. are permitted to act under the laws of the State of Louisiana, the exercise of all such rights being subject to the Provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. The telegram also asked that the agent request the bank to ilave itS board of directors adapt a resolution, after it has been authorizea by the Comptroller of the Currency to commence business, ratifying the "tion taken in its behalf in making application for permission to exerOise trust Powers and to forward a certified copy of such resolution to the Board. The telegram further requested that the agent inform the bank that the C oraptroller of the Currency has called attention to the comment examiner that the Canal Bank and Trust Company has acquired a 11444 ot trust accounts which are not desirable, that a review is being 16410 ot these accounts, and that it is proposed not to accept a large 41111133er 'or them 113 11/ 'tlue if tendered, and stated that the Board feels that if the tendered any trusts or other trust department accounts now held Canal Bank and Trust Company it should carefully scrutinize the %4dition of these trusts or accounts and should not accept any such tItate or accounts which, through their assumption, may be detrimental to lta ilqterest, and that the Board feels particularly that it should not "ept without careful consideration any trusteeships for corporate trust 5/24/33 -11botd issues in default as to principal or interest which trusteeships wee "Mmented upon by the examiner in his report of examination of the trust dePartment of the Canal Bank and Trust Company as of 'larch 24, 1933. Approved. Reply on nay 22, 1933, approved by four members of the Board, to e'rilern°rEirldum dated hay 11 from 1.1r. Await, Acting Comptroller of the recolmending approval of the application of the Wolfeboro liati°11e1 Bank, Wolfeboro, New Hampshire, for permission to reduce its ae.Pital stock from 100,000 to J50,000 throug a change in the par value or 8110:h stock from ,,:,100 to .,50 per share, no money to be returned to the 4111"°1der82 but the released capital to be credited to undivided profits Ettra 117131ediatelY thereafter to increase the common stock from .:;50,000 to '40,0nn bY the sale of 1,000 shares of new common stock of a par value of , ' a45,000, following which the Reconstruction Finance Corporation tMtlae cli"elY Purchase up to l23,0:41 of preferred stock at par to be by tile bank. The reply stated that the Board approves the proposed 4ketio, —. subject rtetio to certain conditions set forth in the reply, which also ion to the feeling of the Board that, in view of the low or ComMon capital stock to deposits existing in this institution, 44°Nat 4.14°17ision should be made whereby, in the event of retirement of Et4Y Dart or the Proposed issue of preferred stock, the common stock would be i e -413itea bY an amount sufficient to maintain a satisfactory ratio of to deposits at all times. Approved. 345 5/24/33 -12Reply on May 20, 1933, approved by five members of the Board, to a letter dated May 9 from Lir. Case, Federal Reserve Agent at New York, inel°8i11C ooPY of a letter addressed to him under date of May 1 by 1,Ir. 3.. 8. RiPPelt Chairman of the board of directors of the Merchants and NeWark Trust Company, Newark, New Jersey, with regard to the syndicate °Peratiens of the J. S. Rippel (7,1 Company, Inc., and the heavy borrowings Or • RiPPel and his affiliations from the trust company. The reply 8tatecl that it is assumed that, as requested in the Board's letter of Ilarch 2, 1933, the agent will arrange for a representative of his examining "eXt t° Participate in the next examination of the Merchants and Newark 1111118t °°1111)811Y, with the view to developing information as to each of the 83q1dicate arrangements of nr. Rippel or his affiliations in recent years, alld the profit or loss of the trust company through participation in each 811°11 tr ansaction, to ether with full information as to the indebtedness clrlar• Rippel and his affiliates. The reply also requested that the agent keeP the Boetrd advised of any improvements which may be effected in the other cr iticisms of the Merchants and Newark Trust Company as reflected 41 the report of examination as of May 11, 1932. Approved. ReplY on May 22, 1933, approved by five members of the Board, to lettel . - dated March 28 from Mr. Austin, Federal Reserve Agent at PhiladelDttia with Particular reference to the sale by the Citizens Bank and 0114184y, Middletown, Pennsylvania, of guaranteed mortgage participalert b wait wowsificates. The reply noted that, in Mr. Austin's opinion, the cl agree promptly not to incur further liabilities of this type 5/24/33 414 to reduce the present amount of such liabilities as rapidly as P°881ble if it were acquainted with the Board's attitude in the matter, 411(1 :a.LIGgested that the agent discuss the matter with the management of the 11414k) acIvisinG it that the Board considers the activity referred to a elle19. 'g° in the functions of the institution contrary to the spirit and purPc) "or the General condition under which it was admitted to membership In tha Federal Reserve System, and endeavor to obtain a resolution by the batIk , t '°ard of directors to the effect that the practice of issuing and liellialgruortgage participation certificates will be discontinued and that 811Qh outstanding obligations will be retired as rapidly as possible. The /'s113-Y also noted the improvement in the condition of the Citizens Bank and Nat company as reflected by the inclosures in the agent's letter of 1410011 28 and stated that the Board assumes that the agent will advise it °I% 44Y further improvement which may be effected from time to time. Approved. p y Re l on, May 23, 1933, approved by four members of the Board, to e letter City dated Lay 15 from Lir. McClure, Federal Reserve Agent at Kansas 8. „4Ing that ,although the Board's letter of April 29, 1933 (177425) With, re gard to indebtedness of officers and employees of Federal reserve bezute aetion we8 Presented at the meeting of the board of directors on May 10, °b. the matter referred to in the letter was deferred until the next ""ecause of the absence of three members of the board of directors, IlEtt the -°Etrd will be advised following that meeting as to the action which Nrbe bY the directors with reference to indebtedness of officers and Tees e'r the bank, and that information covering indebtedness of the 3417 5/24/33 -14reserve agent and his assistants, including members of his staff eligaged ta audits and examinations,will be forwarded to the Board as requested. The reply stated that it is assumed that the agent will include EtIlltsmbers of his staff in the report, in accordance with the request e(3tclinsd in the Board's letter, nmr1 noted that information as to any out" business connections of officers and employees of the bank will be le°rilArded to the Board in due course. Approved. Reply on May 18, 1933, approved by four members of the Board, to letter dated May 5 from n% Walsh, Federal Reserve Agent at Dallas, reto the Board's letter of April 29, 1933 (M-7425), with regard to ilbtedness incurred by members of the staff of the Federal reserve agent, eIi reTlesting advice of the Board's views with regard to the occasional use ccetleMber bank credit, in reasonable amounts and for legitimate purposes, " r ers of the staff who are not engaged in audits or examinations. The rePly stated that it is the feeling of the Board that the extent to which 1)()rroiving on the part of individual northers of the staff of a Federal l'e8erveeut might be justified as being in reasonable amounts and for leUtiMate the purposes could not be prescribed in advance, which was one of reasons why reports of such cases were requested so that the Federal Ile3erve agent might consider them on their respective merits and so that 140 iksard, on the agent's recommendation, night determine whether any 1\111her action Should be taken. The reply also stated that, in the cir- it seems to the Board that the question is one for the exercise °r the agent's beat judgment in each case as it arises and if in any 348 5/24/33 -1515a-111°111E1r instance a special problem presents itself, the Board will be el84 to consider the facts when submitted with the agent's recommendation Eta to the course which he believes should be pursued. Approved. Reply on May 22, 1933, approved by five members of the Board, to a letter dated Eay 2 fram Governor Calkins of the Federal Reserve Bank of San L4e0 in response to the Board's letter of April 12, 1933 (X-7407), with l'elt•td. to s ubscriptions to Government securities by directors, officers and ein1)1°Yees of Federal reserve banks. The reply stated that the Board is glad to le 4r4 that allotments to directors officers and employees of the Federal aeserir 6 )141411k of San Francisco upon subscriptions to Government securities 1141re bear, made in strict accordance with the requirements of the Treasury 1)ePartm,„ 4 1 and that,such being the case, it would seam that these members °r the 0, 1 of the ' 1f' bank would not have any objection to either of the two -°11s contained in the second paragraph of the Board's letter of April m The raTily added that,where the directors, officers and employees are "11113111m, 1 -8-LY observant of the requirements, it is difficult for the Board to bei4 ' 4 eve that they will feel inclined, merely because precautions of this ktala be taken by the directors, to enter their subscriptions to gove,1116telit s ecurities t1nrous4 other Channels, that there can be no doubt 46 to the , r.kght of the board of directors of a Federal reserve bank, in its otrieial tIletel4k "'Pacify, to have detailed information as to all transactions of ' l egardless of whether the directors have any reason to believe tlItq the el el'e irregularities; and that as the Federal reserve banks, in tt eaPEieitY as fiscal agents of the United States Government, are engaged 349 5/24/33 -16- PUblic service, it seems to the Board that the exercise of this right ill connection with transactions in Government securities handled by the betks Should not be regarded as an "inquisition", regardless of whether there has --'" any vestige of impropriety in the actions of anyone connected with ths batik, The reply further stated that clearly, as stated in the last 1)aragraph Of Governor Calkins' letter, the auditors of the bank should report to v4u board of directors improper transactions, and, since in order to 13111 -00-ie duty the auditors must be in position to inform themselves as to all t ransactions, the submission of a renort which would include the Pr(4)81* a's well as the improper transactions, if any, would not seem to j48til'Y criticism to any greater extent than the submission of reports of the details of other official business of the bank which do not necessarily irregularities. The reply also requested advice as to the action tke bY the San Francisco bank upon the suggestions contained in the 130Etrd's letter of April 12, 1933. Approved. Reply on lItiv 22, 1933, approved by five members of the Board, to a letter dated Iiay from la% Newton, Federal Reserve Agent at Atlanta, 171 a signed copy of an agreement between the Federal Reserve Agent th 6 -6 ' 4era1 Reserve Bank of Atlanta, covering the custody of unissued F'ecierea reserve notes, gold coin and gold certificates at the New Orleans and advising that the action of the executive committee of the bank, Ilthar 21 boat d. overnor Black to execute the agreement, was ratified by the Ofe directors of the bank at its meeting on T.:ay 12, 1933 and that 1111111411t 0 t the said agreement there has been placed in the vaults at the 3, 5/24/33 -17- Neworleans branch45,000,000 in Federal reserve notes, °°t4 and ) : 2,000,000 in gold certificates. 2,000,000 in gold The reply stated that the Board 484° objection to the establishment of this arrangement for the custody cjt 11111881xed Federal reserve notes, gold coin and gold certificates at the New orieeina branch, with the understanding that it may require the arrange1316" t° be modified or discontinued whenever it may deem it advisable to do 80. Approved. Reply on Lay 24, 1933, approved by four members of the Board, to a lattet ) 10 by addressed to the President of the United States under date of April -•Ce P. Holzderber, Dontclair, New Tersey, and referred to the Fed- Reesrve Board for reply, making certain charges of irregular practices 153r the 11 . 1, 41331ore Trust Company of Baltimore, Maryland, in connection with the ri ' lancing of certain public utilities in the State of Florida, and stating that 4. 4116 'flatter had been taken up with Mr. Hoxton, chairman of the Federal ileagr`le Bank of Richmond, asking for investigation which was refused. The l'el)11t stated that the Board has communicated with Mr. Hoxton in respect to 1101zderher,s complaint, and has been advised that an investigation was taacie511.troversy 411c1 rroM the o iu nf tormation obtained it appeared that the matter involved Without the scope of the Chairman's jurisdiction and one which 4" 4° Pmer to decide, and that the Board, after reviewing all the nor t: :of the ileither it lice that the subject is one over which of the Richmond bank has jurisdiction or 41aritY 1111der the law, and, therefore, is one upon which neither the Fed1e Board nor the Chairman of the bank can properly undertake to 331 5/24/33 -18611Tess an opinion. In regard to la%. Holzderber's statement that Er,. Howard Bruce is a member of the board of directors of the Federal Reserve Bank of Ric141°741 the reply stated that Mr. Bruce was not at the time of Er. Rolzderber,_ a complaint and is not now a director of that bank, and that, hilla he was at that time a menber of the Federal Advisory Council, it is the erstanding of the Board that neither the Federal Advisory Council nor ''4ce took any part in the consideration of the matter. Approved. Reply on May 19, 1933, to a letter dated April 13 from Mr. Walsh, eciere2- Reserve Agent at Dallas, inclosing a memorandum submitted by a ():Mmittee Qclatained the or the bank's officers relating to the comments and suggestions in the report of examination made by the Board's examiners as at close of business on February 21, 1933. ' lePort or e xamination Of the mime-es of the 10, The reply stated that the and the officers' memorandum, together with a copy meeting of the board of directors of the bank on April 1933, at which the report of examination and the officers' memorandum 11(*a "Ilsidered, have been reviewed and the Board is pleased to note that the in4tters commented on and the suggestions made by its examiners have had Itteliti°11 or have been referred to the proper officers for appropriate "ti°11) aad that it is assumed that the Board will be advised later with Neet to the adjustment of those matters on which definite action has not etileell taken. The reply also requested that the agent forward a report tO the 13°4ra covering the cash shortage referred to in the report of exam'if he has not already done so, that he report the matter to t'r 1008.1 United States attorney. The reply also referred to Mr. Walsh's 352 5/4/33 -19- letter of __ ladY 11, 1933, with regard to the consideration given at the illeetillg of the board of directors on Lay 8 to the question raised by the }3°e ' llte examiner as to the necessity for the continuance of the employment "Is• C. C. Huff as General Counsel of the bank, in view of the fact that leglalMatters affecting the bank are now referred to the firm of Locke, Locke, Stroud and Randolph, and stated that the Board is agreeable to the suggestion b4cle bY the directors that, in the circumstances, Mr. Huff be permitted to l'el114111 as General Counsel throughout the remainder of the current year with tile distinct understandinz that at the regular annual election in January liect he will not be reelected. Approved. The following memorandum adopted at the meeting of the Federal 8 Y Cowie on NAy 16, 1933, and transmitted to the Board by the Secretary of the the record: Council in his letter of May 20, 1933, was presented for po "The Federal Advisory Council recommends that the proGo8ed co-ordination of the four agencies of the Federal thverament, viz., the Treasury, the Federal Reserve Board, 006 Conaptroller of the Currency and the Reconstruction Finance 5)j srl 'ation, be brought about as expeditiously as possible. four agencies have the primary responsibility for the the-"ene,nce of the major portion of the banking structure of bei4"untry and the Council, from its collective experience, by Aaves that the procedure for mAking loans and the rules ti , which assets of banks are valued by the respective authoriell- should be harmonized and that the recuperative value of coe4 4esets rather than the distressed market price should es4stitUte the basis of such valuation, to the end that the op%raace given the public that the member banks permitted to or after .1;:sich 13 were sound and would be kept open, 01 or --On laked;:‘°13ed only under conditions stated herein later, may be shcr-o eertain. Here again time is of great importance. If it iti'LL(1 be determined that under the law the powers and authorraak:8,°11 this group of Federal agencies is not adequate to `4efinite and certain the responsibility for keeping open 353 5/24/33 -20"such banks as have been permitted to open then it may well be that the need will arise to ask for legislation which will give these agencies adequate power to accomplish the purpose stated"Such legislation should cover the following thought: "A bank in a given district applying to the Federal Reserve or that district may, on the recommendation of such Federal 4:,,teserve Bank, if approved by the Federal Reserve Board, obtain Irom the Reconstruction Finance Corporation, on such available aeellritY as the bank have, sufficient funds to Pay its net ( ;:bligations to depositors. In the case of a national bank if, arlY reason, the Federal Reserve Board deems such action adit may, on recommendation of the Federal Reserve Bank, to-Tirs the Comptroller of the Currency to close such a bank, in such event the Reconstruction Finance Corporation shall, ;ktigainst the securities of such bank, advance such sums as are ecesaarY to pay the net deposit liabilities of such bank. "In the case of State banks, advances shall be made on the same • uonditions as to national banks, but no advances shall be .c„1? to banks recommended to be closed except upon the condition the State authorities agree to close such banks. This 19333J;ation should not remain in force longer than February 28, T Lorrill stated that under date of April 29, 1933, there was receive tL'O11 1334cle by he to, the Chairmen of the Federal Reserve Bank of Chicago a report auditing department of the bank of an analysis of subscriptions allotment of, United States securities during the years 1931 and 1932, c14dina, J.0408,: ln.i'ornEtion which led up to the resignation of Mr. D. A. (24rmer Assistant Deputy Governor in charge of fiscal agency operations; 1114t villiaothe8°ard's Division of Exaninations has examined the report; and that, it Co sore additional information, it has been found to be in t/Ilbst aGreement with the report submitted by Mr. Cagle. He also stated et tile letter to the Attorney General transmitting a copy of Lix. Cagle's reN)rt a 114- °tiler related documents, which was prepared in accordance with tile 80,aroe ins tructions, has not yet been approved by the Chairman of the 354 5/24/33 —21— Board, and that, if there is no objection on the part of the members of the Board, the report of the auditing departnent of the Federal Reserve Bank of Chicago, above referred to, will be held until the Chairman of the Board ad71See whether or not he approves the proposed letter to the Attorney General. Ali of the meiabers present expressed agreement with this procedure. governor Black stated that he attended the meeting of the executive e°111Mittee the Open Tarket Policy Conference which was held in Washington heterc * at which the Governors of the Federal Reserve Banks of Boston, NeW Yo rj&I Philadelphia and Cleveland, awl. Deputy Governor McKay of the FedRe serve Bank of Chicago, were in attendance. He stated that all of the ei*tilber °f the comndttee reported that the boards of directors of their l'"Pecti e 7- -anks were in favor of increasing the System's holdings of Governfleit sen„4 ---4ties in accordance with the authority granted in the Board's telegz 'era c3f riaY 12, 3.933, and that, after carefully considering the present bUirj 8 eklad financial situation, the committee decided upon the purchase g the s tatement week which ends today of '25,000,000 of Government securi- The Governor also reported that the executive committee unanimously IIQFtelq that the authority given to it at the last meeting of the Open Market conrbrence, which limits the right to purchase Government securities either in the Market or direct from the Treasury "to meet Treasury requireshou, Id be amended so as to remove that restriction, in order that Nre.ileaes or s ecurities may be made promptly if in the judgment of the (11'114-ittae such Purchases are considered desirable whether or not to meet '4E)41Y recIllirements, lie stated that the proposed amendment would conform 355 5/24/33 the -22- powers of the executive committee to the broader action of the Federal ileeerve Board in authorizing the committee to proceed with proposed purchases °Is securities up to an aggregate of ri'reasurY requirements. 000 000,000, without reference to The action of the committee, he stated, was sub- raitted to the other members of the Conference but replies had not been received from all of them up to the time of his latest information. Governor Black informed the other members that, while he questioned vhether there additional purchases of Government securities should be made until i8 more evidence of a need therefor, when he was inclined to feel that Possibly $100,000,000 or 4 . 200,000,000 of securities should be purchased, he agreed to the purchase proposed by the executive committee of the Open Narket " )licy Conference with the understanding that, if need for more vigorous action develops, such action will be taken promptly. Governor 84telc elso added that, after the executive committee had taken its action, the me.v er -u was taken up with the Chairman of the Board, the Comptroller of the c 1/rrencY and Mr. HRmlin (Mr. James being out of the city, and Mr. Miller being out of the office at the time), that, upon inquiry, the Chairman and the co II1Ptroller of the Currency stated that they were in accord with the ectiorl Proposed by the committee; and that Mr. Hamlin stated that he was in scon,s, but Would have gone further. Reference was also made by Governor 1141ek to the newspaper publicity which was given to the action of the ° Mittee and he stated that, although the newspapers had misunderstood the tetiaolas _ ror the action of the executive committee of the Open Market Policy Conference, there would appear to be nothing that could be done effectively t0 e°rract the reports which have gone out. 5124/33 -23The action taken by the executive committee of the Open Market pollcY Conference was then discussed, particularly in the light of the B°ard'e teleram of May 12, 1933, to Governor Harrison, authorizing the 1111114se of additional securities, and Er. Miller stated that he was in r4v(3r Of a very energetic and considerable program of open narket purchases and t• hat, in his opinion, substantial purchases made immediately would be rac)15 effective than small purchases in the same aggregate amount spread °7ar 10nger period. la.. Hamlin stated that he agreed with that position and f• eels that the minimum amount of securities to be purchased at the ks"e "tune should be placed at , -A50,000,000. Mr. O'Connor stated that he ee il• lelined to the opinion that if any action is to be taken it should be viec)rolls action. At the conclusion of the discussion Governor Black stated that he mould communicate the opinions expressed by the other members of the Board to the Chairman of the Open Market Policy Conference. Reports of Standing Committee dated May 16, 20 and 24, 1933, recomaPProval of the following changes in stock at Federal reserve banks: kat_ one for ADDITIMAL Stock. ' 4164,44et NO. 5. (V21.1rg National Bank, Middleburg, Virginia. 441rease in capital) , 1) Zettat 1\40 7. (Illati onalBank, Hinsdale, Illinois. Icrease in capital) 4atrie, 11.tat 1T6 110. 11. O1 Bank, Paris, Texas. (n -Lcl'ease in capital) Shares 13 13 90 90 30 Total 30 133 5/24/33 -24-- lications for SURAILNDLR of Stock: -1211,111;ZIt No 2 o Stlariii\Ta.---E-37-_,(-D-ittl Bank cc. Trust Co., Baldvrin, N. Y. (L aselvent) Shares No , 4tional — 17, .4) 71 c 5 ile Bank, Chester, S. C. (Insolvent) 4 j* ClelitY Trust Company, Baltimore, Earyland. (D ecrease in surplus) 90 90 105 450 555 District No. 7National Bank & Trust Co., Battle Creek, i'lehigan.. (Decrease in surplus) Diet ict No. 10. N ational Bank, Wellington, Colorado. (Insolvent) 90 90 30 30 -11'8,t,S-737:teThank, Roaring Springs, Texas. (Abs. by i t State Bank, Eatador, Texas, member) 15 15 t i ' l ict No. 12. — °r Camas Prairie, Gran3eville, Idaho. (Insolvent) GO Total Approved. RePorts of Standing Committee dated Nay 24, 1933, reconrending 41)Proir ' 81 of the following Clayton Act applications: ea (1.11.1r. Jacob Embry, for permission to serve at the sere time shr,„'rector and officer of the Commercial National Bank in Rert, Shreveport, Louisiana, and as director of the -wort loational Bank of Longview, Texas. E• C. Willis, for permission to serve at the same time P. of the Commercial National Bank in Shreveport, Be4,report, Louisiana, and as director of the Rembert National 1 Longview, Texas. as Off rr aaP. A. Strack, for permission to serve at the sane time or 5 ctor and officer of the Peoples Bank and Trust Company Belo,eattle, Washington, and as director of the First National of lienton, Renton, Washington. Approved. 60 840 -25- Thereupon the nieetiric adjourned. APProved.: Governor.
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