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1528 A meeting of the 7ederal Reserve Board was held in Washington Prida7, May 25, 1934, at 3:30 n. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Black, Governor Hamlin Miller James Thomas Szymczak Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. ALSO PRESENT: Morrill, Secretary Carpenter, Assistant Secretary Bethea, Assistant Secretary Martin, Assistant to the Governor Paulger, Chief, Division of Examinations Wyatt, General Counsel Leonard, Federal Reserve Examiner Wingfield, Assistant Counsel Mr. Thomas R. Geoghegan, Vice-President, City Bank Farmers Trust Company, New York City Mr. C. Alexander Capron,)of Counsel for the City Mr. W. W. Lancaster, )Bank Farmers Trust Company Governor Black stated that Messrs. Geoghegan, Capron and Lancaster haddiscussed with him some time ago the ouestion of membership in the Federa" Reserve System of the City Bank Farmers Trust Company, and that at that time had raised a question as to whether standard condition of member,Almbered 12, prescribed by the Board for all banks admitted to member2hip ti the Federal Reserve System, and standard conditions numbered 17 and 18 1)rescribed for all banks admitted to membership which are exercising trlatt powers, should be prescribed in the event the trust company makes aPPlication for admission to membership. Governor Black said that he had reqUested the representatives of the trust company to submit a memorandum otltlj - questions which they desired to have the Board consider, which Mr. eal°r°4 dia under date of April 26, 1934; that the memorandum was referred to 41_ ulle Board's counsel for consideration; that a memorandum with regard 5/25/al thereto 1529 -2had been submitted by Mr. Wingfield, Assistant Counsel, under date °f/14Y 8, 1934, to Governor Black and circulated by him among the members °f the Board today; that the representatives of the trust company had disseed the matter further with the Board's counsel this morning; and that this . ' eetlng had been called to afford them an opportunity to present any Matti °nal information which they cared to have the Board consider. Uessrs. Capron and Geoghegan amplified the statements contained in tilmemorandum submitted with Mr. Capron's letter of April 26, 1934, to G.017 elnlor Black, as to why the conditions referred to should not be prescribed i]th e event the trust company applies for membership in the Federal Reserve 4lite 111. There was a full discussion of the practices of the trust company Of inv Rti e---nC trust funds in mortgage participation certificates, and in ne trust funds for the purpose of investment in other types of securities _ There was also a discussion, in connection with condition of member18, of the effect of the New York State statute which grants a prefel'enoe t0 obli gations due from a trustee in his fiduciary capacity. During the discussion, Mr. Capron submitted to the Board for con-0-ion statements containing the substance of conditions of membership whic4 mi be imposed by dati„„ 61t Of the Board as substitutes for the standard con- 4 membership numbered 12 and 17, and a statement of the reasons 171 COild' • ltlon nuMbered 18 should not be imposed in the event the trust coral3a4,1„ s admitted to membership. In c °Ilnection with the consideration of the practice of the trust c()T4-PeaW Of Gi:jv r minelinc trust funds being administered under uniform trusts, Black requested that a copy of the uniform trust agreement and 1_530 5/25/34 _3_ the acc,. u7 'llanZring declaration of trust be forwarded to the Board promptly for coasi deration, and Mr. Capron stated that this request would be cornwith. In connection with condition numbered 18 which requires that trust f/414.8 deposited in the banking department be secured by the deposit of E3-Irities in the trust department, Mr. Capron said the trust company would halreflo objection to that condition if it were made effective as to all e°mPeting member trust companies in New York so that the City Bank Farmers corm, -2.-a-nY would not be placed at a competitive disadvantage. Mr. Hamlin inquired as to what benefits the trust company expects to 01„ "ain from membership, whether it received commercial deposits and What ki,A -*"8 of loans it made with the funds derived from such deposits. Mr. 4131'04 replied that the bank does chiefly a trust business, having deposits of ItPlxituately ,000,000, most of which are maintained by persons for whom the b _ d'ilk acts as trustee, and only approximately $20,000,000 worth of loans alla disc aunts, practically all of which are collateral loans. He stated that the depots other than those of persons having fiduciary relations with the 114113t amount to about $7,000,000. He also stated that the principal reason wky the trust company is considerin6 membership at this time is that it is an "liate of the National City Bank of New York, its stock being trusteed for the benefit of the shareholders of the national bank, and that unless the trust e°11111all ' Ir iS adraitted to membership on or before June 16, 1934 this arrangement 1741 have to be d iscontinued in conformity with the requirements of section 5139 Of the Revised Statutes as amended by the Banking Act of 1933, which pro1/iaea that after that date the ownership, sale, or transfer of any certificate 1531 5/25/34 -4- rePresenting the stock of a national bank shall not be conditioned in any raenlier whatsoever upon the ownership, sale, or transfer of a certificate rePliesenting the stock of any other corporation, except a member bank. During the discussion of condition numbered 12, Mr. Szymczak left the meeting, and toward the conclusion of the discussion Governor Black Ifaa called from the meeting, which continued as a meeting of the Executive Cortaittee of the Federal Reserve Board. Before Governor Black left the room and again at the conclusion of the discussion, Mr. Capron stated that, if the Board is not inclined t° e°11sider favorably the request of the trust company that the three Iltandara- conditions of membership referred to be not prescribed in the event it makes application for membership, Mr. James H. Perkins, President the ef trust company, would apureciate very much an opportunity of disallssing the matter with the Board. The representatives of the trust c°r4D6 ' 111Y were advised that the Board will consider the matter further toTI°1‘11(317 and if it feels it is desirable to grant Mr. Perkins a hearing bet°1be a final decision is reached, the Board will communicate with him by te1 e1311°11e so that he can arrange to meet with the Board on Monday, May 28. Thereupon Messrs. Capron, Geoghegan and Lancaster left the meeting, f°14winP whi .--oh the Committee considered and acted upon the following Matters: ?easral Letter dated May 24, 1934, from Mr. Sproul, Secretary of the 11e8erve Bof New York, and telegrams dated May 24, 1934, from uco, Chairman of the Federal Reserve Bank of Kansas City, and 1532 5/25/34 -5- 25, 1 934, from Mr. Stevens, Chairman of the Federal Reserve Bank of CilicagO, all advising that, at meetings of the boards of directors on the dateS stated, no changes were made in the banks' existing schedules of rates of discount and purchase. Without objection, noted with approval. Memorandum dated May 22, 1934, from Mr. Goldenweiser, Director of The D ivision of Research ond Statistics, recommending the appointment of IfisR Alice M. Demerjian as a stenographer in the division, with salary at The rate of $2,000 per annum, effective June 18, 1934, subject to her passing asatisfactory physical examination. Ap:proved. Telegram dated May 24, 1934, approved by six members of the Board, t° 14r. Walsh, Federal Reserve Agent at the Federal Reserve Bank of Dallas, reading as follows: fry Your letter May 19th I. F. Betts. His temporary assignment per June 1st to November 1st 1934 to Division of Examinations ' mo eral Reserve Board Washington at compensation $450.00 per Pilla cost of transportation and necessary traveling ex1110.e - es from Dallas to Washington will be satisfactory. Board he will be continued on your rolls and will be under leaerstands of absence rhile serving in Washington and all compensation wilt be -paid direct by Federal Reserve Bank of Dallas and Board reimburse Federal Reserve Bank each month for the amount paid of statement of amount. Other matters relating to receiPt er date,ii employment can be discussed with you and Betts at a later 4% Approved. Letter 4. 40 Mr. Williams, Federal Reserve Agent at the Federal Reserve Of el " 'eland, reading as follows: 1533 5/25/34 -6"The Federal Reserve Board has received Mr. Fletcher's letter of May 19, 1934, and, in accordance with the recommendation contained therein, apnroves the appointment of Robert D. Rowland as assistant examiner in the Federal Reserve Agent's .(lepartment of your bahk at salary rate of $1,200 per annum. Please advise effective date." Approved. Memorandum dated May 22, 1934, from the Committee on Salaries and 4I3eilditures, transmitting a letter dated May 17 from Mr. Walsh, Chairman f the Federal Reserve Bank of Dallas, which requested approval of changes the Personnel classification plan of the bank to provide for the new positions 01 -^ "clerk" and "typist" in the fiscal agency department and the new position of "senior R. F. C. clerk" in the Reconstruction Finance C°rporation d epartment. the The memorandum stated that the committee has re- proposed changes, and recommends that they be approved. Approved. Letter to the board of directors of "The Union Trust Company of /30stolio, Boston, Massachusetts, stating that, subject to the conditions Prescribed in the letter and to the issuance by the Board of a voting Dermit to the "Consolidated Investment Trust", Boston, Massachusetts, the Board approves the trust company's application for membership in the ?sclera Nero. Reserve System and for the appropriate amount of stock in the Reserve Bank of Boston. 4 _ Approved, together with a letter to Mr. Curtiss, Federal Reserve Agent at the Federal Reserve Bank of Boston, reading as follows: The Board has considered the application of 'Consolidated nvest aent secti Trust', Boston, Massachusetts, for a permit under °n 5144 of the Revised Statutes as amended, entitling it 15311 5/25/34 -7- s to vote the stock which it owns or controls of The Union Trust Compa of Boston, Boston, Massachusetts, and has authorized the issuance of such a -permit to the applicant, if and when The ynion Trust Company of Boston is admitted to membership in the Federal Reserve System, upon the following conditions: (1) Prior to the issuance of the permit and not later than July 1, 1934, Consolidated Investment Trust shall deliver to you in duplicate an agreement in the form inclosed herewith marked 'Exhibit A', duly executed bY it, and two certified copies of a resolution of its irstec,:f trustees specifically authorizing the execution agreement. (2) The agreement and resolution referred to in (1) above shall be in form satisfactory to Counsel to the Peer Reserve Board. 'Upon receipt of one executed counterpart of the agreement one certified copy of the resolution of authorization, each "form satisfactory to its Counsel, the Board will forward to Y ar a permit to be delivered to the applicant at the time of the mis:i o n to membership of The Union Trust Co-apany of Boston. this P0r YOUr Me )/sli ee d. iir in notifying the applicant, a copy of er j 13e.nk Letter to Mr. Newton, Federal Reserve Agent at the Federal Reserve Of sat Francisco, reading as follows: 197,"Receipt is acknowledged of Mr. Sargent's letter of May 14, ' Di s reporting that the Security Trust & Savings Bank of San er,e,P has withdrawn its application for membership in the Fedci;. 4 Resve System, and requesting advice as to whether, in the er Withumstances, the cost of the examination made in connection -arlcis application should be assessed against the bank. that411 the letter of July 26, 1930, X-6665, the Board stated ra„ aminations of State banks incident to their admission to i;uwersai_ P in the System may be made without charge. The Board ple.atlso of the opinion that, in cases where a bank does not cornmembership, the costs of the examination made in conn,ecpe,In 7rith the application may be waived if, in the opinion of the uch action is warranted in view of the trvIt e i stt:::11ei;: Approved. hrik of Letter to Mr. Stevens, Federal Reserve Agent at the Federal Reserve Chi cago reading as follows: 1_535 5/25/34 -8"Reference is made to Mr. Young's letter of May 14, 1934, o utlining the proposed readjustment of the capital structure of the State Bank and Trust Company, Evanston, Illinois, based ()lithe report of examination as of November 21, 1933, in which Your examiners cooperated with the State Auditor. "Mr. Young states that it is the opinion of your office that You will be reasonably safe in recommending the State Bank 41141 Trust Company as a Class 'Al stockholder in the Federal Deposit Insurance Corporation following the corrections outlined ,'11 his letter of May 14. Mr. Young states also that it is believed that no useful purpose would be served by making a new examination of the bank for the purpose of certification, and quests advice as to whether it would be agreeable to the ard If the certification is based upon the report of joint " ion as of November 21, 1933. "In view of Mr. Young's recommendation, the Board is willing to a ccept the report of examination as of November 21, 1933 as the basis for the required certification to be made prior to 1, 1934. In this connection it will be appreciated if you 11 ' I orward a copy of the report. According to Mr. Prugh's letter of February 21, 1934, to Mr. G Manager of the Cnicago Agency of the Reconstrucation, the directors of the bank, the State d. r office concur in the opinion that the report a condition which justifies a change in management and it ects haswpa'be appreciated if yuu will afivise the Board what progress been made in this connection. "It has been observed, also, that the bank has been engaged 14 the b _ usiness of selling real estate securities to its customers -snthat there are now outstanding approximately $11,000,000 of _!214 securities. Inasmuch as the Board's files do not contain ;Zsinformation indicating that the bank was engaged in such busithe time it was admitted to membership, its present activities at in this connection would appear to be a change in its '1°11s contrary to the spirit and purpose of the general conact en under which it was admitted to membership, if not an is violation thereof. As you know, the Board feels that it e4p.„TitrarY to sound banking practice for a commercial bank to /„Ii i;5e in the business of issuing or selling, either with or ° recourse, Other notes, bonds, mortgages, certificates, or or j_ evidences of indebtedness representing real estate loans he Bo therein. If you. have not already done so, itt jard would be pleased to have you acquaint the bank with aiti 'ews in this respect, calling specific attention to constat°1110IT)ered 12 of the revised regular conditions under which are now admitted to membership in the System. The as' t would also be glad to receive an expression of your views • tue anY action which should a/roropriately be taken at this either '‘ the Board or by your office in connection with r fr2or 1536 5/25/34 -9"this particular activity of the institution." Approved. 4tter to Mr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with Acting Comptroller of the Currency Awaltts r ecommendation, the Federal Reserve Board approves ar eduction in the common capital stock of 'The First National Bank of Wellston, Ohio, from $100,000 to $50,000, PursuantWellston', to a increased plan which provides that the bank's capital shall by $50,000 of preferred stock to be sold to the Reconstructionc Finance Corporation and/or others, and that the released capital shall be used to eliminate a corresponding amount of substandard assets, all as set forth in Mr. Awalt's mem°ranclwil of May 17, 1934. t. "In considering the plan under which the proposed reduc,1! in capital is to be effected, it has been noted that the 'Illoers and directors of the bank were subject to severe crit*icism • by your examiner, and that Assistant Federal Reserve 4,4.,nt Pletcher's recommendation for approval of the capital 1,,01-ct10n includes a proviso that the management be strengthened. It 1 understood that this feature of the case is receiving the attention of your office." Approved. t°11ows: Letter to Mr. O'Connor, Comptroller of the Currency, reading as "In da • accordance with Acting Comptroller Awalt's recommentlons the Federal Reserve Board apnroves a reduction in the common capital Ba stock of !The First National Bank of Batesville', tesville s Indiana from $60,000 to $30,000, pursuant to a 1,, , 1- a12 , which that the bank's capital shall be increased i; 900,000 provides of preferred stock to be sold to the Reconstruction ance Co rporation, and that the released capital shall be used to eliminate approximately $23,600 of unsatisfactory assets, and to increase the bank's ' surplus in the amount of apProximately $6,400, all as set forth in Mr. Awalt's memoranclItl of May le, 1934." i Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as 1_537 5/25/34 -10"In accordance with Acting Comptroller of the Currency Awalt's recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The First National Bank of Alger County at Munising', Munising, Michigan, from 0-00,000 to $50,000, pursuant to a plan which provides that the b ank! s capital shall be increased by $50,000 of preferred stock to be sold to the Reconstruction Finance Corporation, and that the released ca-Atal shall be used to eliminate a cor responding amount of unsatisfactory assets, all as set fort). in Mr. Awalt's memorandum of May 17, 1934." Approved. follows; Letter to Mr. O'Connor, Comptroller of the Currency, reading as "In accordance with the recommendation of Acting Comptroller Await, the Federal Reserve Board approves a reduci°n in the common capital stock of 'The National Bank of rrilnrce of Tulsa', Tulsa, Oklahoma, from $200,000 to pursuant to a plan which provides that the bank's apital shall be increased by $250,000 of preferred stock :ad that the released capital, together with $75,000 of the atirplus account, shall be used to eliminate unsatisfactory fZitisin the amount of approximately $175,000, all as set in Acting Comptroller Awalt's memorandum of May 16, 1934. I: tion In considering the plan under which the proposed reducin capital is to be effected, it has been noted that ::f e wer the proposed eliminations are consummated there will al;111 in the bank approximately $80,300 of estimated losses wow24ePreciation in securities which, if considered as a loss, Th (1. imPair the bank's moital to the extent of $03,300. fairlea:11stsdoaT:J4 an excessive amount of slow and doubtinvestment in bank premises. It is 4ist.;71;ritver, that you have these conditions in mind and it is feasible to do so you will require such ter co rrections as may be practicable." ! Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as f0110172, 1114 Arm14. accordance with the recommendation of Acting Comptroller -4-u, the Federal Reserve Board approves a reduction in the 1538 ' 134 -11- II common capital stock of 'The Strawn National Bank', Strawn, Texas, from $50,000 to $25,000, Pursuant to a plan which provides that the bank's capital shall be increased by $5,000 of preferred stock to be sold to the Reconstruction Pinance Corporation, and that the released capital shall be used to eliminate a corresponding amount of undesirable assets, all as set forth in Acting Comptroller Awnit's letter of May 17, 1934." Anproved. Letter to Mr. O'Connor, Comptroller of the Currency, ren4ing as r°11 s "In accordance with Acting Comptroller Awalt's recommendati the Federal Reserve Board an7roves a reduction in the (3m'Ion capital stock of 'The Whittier Uational Trust and -a7ings Bank', Whittier, California, from $300,000 to $150,000, rrsuant to a plan which provides that the bank's capital shall ,e increased by $150,000 of preferred stock to be sold to the econstruction Finance Corporation, and that the released capi1 shall be used to eliminate or reduce undesirable assets, all as set forth in Mr. Awalt's letter of May 17, 1934." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: is made to your letter of April 4, 1934, in Trr,c!"Reference to the proposed reduction in common capital stock of f le uolu mbia.National Ban?. of Dayton!, Dayton, Washington, jr°m $100,000 to $75,000, which was approved by the Board on alluary 22, 1934. "You advise that the Reconstruction Finance Corporation ;; ,'s re considered the bank's application for the purchase of $4fZed stock and has increased its commitment from of te $50,000, and that a reduction in common capital now desired instead of $25,000 as previously -.v.y4oved. Prev. acco .In an rdce lts with your recommendation, the Board amends mon ous approval to provide for a reduction in the camalla capital stock of the subject bank from $100,000 to $00,000 str f° jthe'eal e of $50,000 of preferred stock to the Reconenj .c --°n Pinance Corporation, with the understanding that the inglre amount of the- releged capital is to be used in eliminator reaucing undesirable assets which are to remain the 1_539 5/25/34 -12- "property of the bank." Approved. Memorandum dated May 24, 1934, from Mr. Smead, Chief of the Division of Bank Operations, stating that Mr. Curtiss, Federal Reserve Agent at the Federal Reserve Bank of Boston, had called him on the tele1311°11e and advised that some of the member banks in the First Federal Reserve District were making very careful appraisals of their assets for the PlIrPose of preparing the special report on form 231 recently asked by the Board and feel that it will take them until June 10, 1934, to satisfactorily complete their reports; that where the directors of State member banks are attempting to make careful appraisals of their assets, an good faith ask for a reasonable additional period in Ilhich to submit their renorts, it is felt their reauests should be cornWith; and that therefore it is recommended that the Board authorize /411* Smead to advise Mr. Curtiss that the Board authorizes him to grant the State member banks in question ten days additional time within W/lich to submit their reports. The memorandum also recommended that, ill ease other requests are received for an extension of time in which submit to these .reports, Mr. Smead be authorized to grant such requests, lis°11icled that without the specific approval of the Federal Reserve 13" cl 40 bank shall be granted more than fifteen days additional time, ol'beY°11c1 June 15, 1934, within which to submit its report. Approved. serve Letter to Mr. Curtiss, Federal Reserve Agent at the Federal Re-. Bank of Boston, reading as follows: 1540 5/25/34 -13- "Reference is made to Mr. Gettemy's letters of May 2 alld 11, 1934. "The alpPlication dated March 7, 1934, of The First National Bank of Bar Harbor, Maine, for 120 additional shares of stock of the Federal Reserve Bank of Boston, based Upon an increase in capital from $100,000 to $300,000 through !he sale of preferred stock to the Reconstruction Finance ?orporation, was held in abeyance at the Board's offices pendlug a reduction in the bank's common stock in accordance with the plan approved by the Board on November 27, 1933, of which you were advised on that date. This was done in order that ,the necessary change in the bank's holdings of Federal Reserve 4°.axik stock could be made on the basis of the completed adjustment of its capital, and, as the reduction has now been effected, the application referred to above is being filed without action, IT'., 1d it is suggested that a new application be submitted on the basis of the bank's present capital and surplus. It is also suggested that, when you are aware than an 17pPlication for an adjustment in Federal Reserve bank stock _°1aing9 is contemplated incident to the consummation of only Pt of a plan which provides both for an increase and a de.e r c e:!ze in the capital t, structure, it would be proper to suggest uhe member bank that the anplication be withheld until such time as the entire recapitalization plan has been completed, 141111ess there is an unusuaa delay in the completion of the plan, tn which event the annlication should be executed and forwarded 11151 .:6Bmdwith ie your recommendation and a statement of the es in the bank's capital structure." ;: Approved. Telegram to Mr. Case, Federal Reserve Agent at the Federal Re"live Bar ' k of New York, reading as follows: fo "There is no objection to your furnishing Mr. Broderick, :s own information only, copies of the Board's letters 5457, September 13, 1933, and X-7786, February 9, 1934." 4a1 Approved. Letter to Mr. Wood, Federal Reserve Agent at the Federal Reserve B ark of St. Louis, reading as follows: "In chedking over the affiliates' reports submitted by Y Bank & Trust Company, Louisville, Kentucky, in i:sPonse to the Board's call of March 5, 1934, we note that - eel-1111ln 5 of Schedule 0 the member bank reports loans and the 1541 5/25/34 -14"advances to one of its affiliates, the Liberty Fire Insurance Comnany, in the amount of $2,385.30. On the copy Of Form 220 as submitted for this affiliate however it is reported that the affiliate has no money borrowed from the member bank. An explanation of this difference will be appreciated. "In examining the affiliates' reports submitted by the Rentucicy Title Trust Company, Louisville, Kentucky, we note that in all of the reports as published the holding company affiliate involved is referred to but is not mentioned by name. This is evidently an oversight and the Board will not equire republication of the reports in corrected form, but rthe matter should be brought to the attention of the member Dank in order that reports published in response to future calls 1114Y give all the information recraired for the purpose of the report." Approved. Letter to Mr. Peyton, Federal Reserve Agent at the Federal Reserve 2ank of Minneapolis, reading as follows: " regarA4Receipt is acknowledged of your letter of May 16, 1934, --411g charges for examinations of State member banks. " Since July 26, 1930, the date of the Board's letter on the subject, the situation with regard to examina;; .ons of State member banks has changed to some extent. In ew of the circumstances and yuur recommendation, therefore, the Pederal Reserve Board will interpose no objection, pendIllrelg the submission of the report of the Committee of Federal „?erve Agents recently appointed to consider the matter of orm Charges, to the waiving of the costs of such examinain cases where you consider it advisable to do so." V Approved. Letter to the Federal reserve agents at all Federal reserve banks, l'eadillg as follows: baro.. "The Board recently considered anplications of a member lander section 32 of the Banking Act of 1933 for permisS sl ecri tO aCt as correspondent bank for certain dealers in urities, in order that the member bank might participate tw e ich was being formed to bid for an issue of bonL7di a7t: I A04. consideration of the questions of policy invol ved, the Board decided to issue permits authorizing the 1542 5/25/31 -1511 me1flber bank to act as correspondent bank for the dealers in question, in connection with dealing in and/or underwriting the following types of securities: obligations of the United States, general obligations of any State or of any political subdivision thereof, obligations issued under the authority of the Federal Farm Loan Act, obligations issued by the Federal liome Loan Banks, and/or obligations issued by the Home Owners Loan Corporation. These are the securities specifically excepted in section 5136 of the Revised Statutes from the restrictions upon dealing in or underwriting securities." Approved. Letter to Mr. Louis M. Atfterton, Boston, Massachusetts, reading as follows: "The Federal Reserve Board has given consideration to Y,°ur a piAication under Section 32 of the Banking Act of 1933 e l r a permit to serve at the same time as a director of The otl. National Bank of Lynn, Lynn, Massachusetts, and as and Partner Schirmer, Atherton & Company, of Boston1:: It appears from the information contained in your appliiopation that Schirmer, Atherton & Company conducts a brokerage illiness involving the purchase and sale of securities on beOf others in the open market. The Board has concluded Z I t i. the nrovisions of Section 32 are inapplicable to such a se84ness: and for that reason no permit is required under 3 a12 3pnelittlyour service to the two institutions named tio "However, your attention is called to the fact that Secoff1, 1 8A °f the Clayton Act makes it unlawful for any director, truster, or employee of any bank, banking association, or undcompaAY: organized or operating under the laws of the or e- States to serve at the same time as a director, officer: bar1 7 1°Yee of a4y corporation (other than a mutual savings see or as a member of a partnership which makes loans bY stock or bond collateral, other than to its own pintiaries. The Board has decided that the carrying of mars involves the making of such loans within the meaning icZtt section. appears that the carrying of margin accounts constitut ,1 oes it a su bstantial nortion of the business of Schirmer, Atherton in_TaPa4Y, and consequently that your service to the above named b utions is forbidden by Section 8A. the 0,The Federal Reserve Board is authorized by Section 8 of 1.11 Zon Act to grant permits in certain circumstances coverionshins to r'lier the provisions of that Act are applicable. 1543 5/25/34 -16"It appears, however, that, in enacting Section 8A, the Congress intended to terminate interlocking relationshins be- men national banks and organizations which carry margin " accounts. "Accordingly, the Board believes that it should not grant permits under the Clayton Act covering relationshins such as that described in the first paragraph of this letter." Approved. Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve 3341)k of New York, referring to the application of Mr. James C. Colgate 1111der section 32 of the Banking Act of 1933 for a permit to serve at the seas time as a trustee of The New York Trust Company and as a member of 48. B. Colgate & Co., both of New York, New York, and stating that, in " 7 of the Principles stated in the Board's letter of April 13, 1934 (3C*36()), it would seem that the firm of Jas. B. Colgate & Co. should 11 be regarded " as engaged primarily in the business of purchasing, or negotiating securities within the meaning of section 32; V.lat, t herefore, a permit covering the relationship described in the 61Plaioation is not necessary; ana that, accordingly, unless there are ()tiler facts which the agent believes should be called to the attention Of the Board, it is suggested that he so advise the applicant. Approved. Letter to Mr. William Travers Jerome, Jr., New York, New York, read. Itg as follows: yolir a4lleyederal Reserve Board has given consideration to 1933 ?placation unier Section 32 of the Banking Act of Of tlis°r a Permit to serve at the same time as a director Dunbar National Bank of New York and as a partner of jar,* B. Colgate & Co., both of New York, New York. i The information submitted in connection with your an1)1 comeation indicates that the firm of Jas. B. Colgate & vriDall,Y is a brokerage firm and that it is not 'engaged marilY in tie business of nurchasing, selling, or 1544. 5/25/34 -17negotiating securities' within the scope of that section. "However, it appears from your application, that the firm customarily carries margin accounts for its customers. In this connection, your attention is called to the fact that Section 8A of the Clayton Act (Sec. 33 of the Banking Act of 1933) makes it unlawful for a director of a national bank to serve at the same time as a member of a partnership which makes loans secured by stock or bond collateral. "The Board believes that the usual type of margin account involves the making of loans 'secured by stock or bond collateral' within the meaning of that section. Since the carrying of margin accounts appears to constitute a subPortion of the business of Jas. B. Colgate & Co., Your services to that firm and to the Dunbar National Bank of New York constitute relationships which are prohibited by that section. 0 Although the Board is authorized. by Section 8 of the Clayton Act to issue -permits under certain circumstances covering services to not more than three banking institutions Of the kinds referred to in Sections 8 and 8A, it has no a uthority to issue permits covering relationships between s nationalb --ailks and organizations which are not banking in0 t=ons of those kinds. Since it appears that Jas. B. & Co. is not such a banking institution and that the elationships are prohibited by the provisions of the Clayton 0._ , it would serve no useful Purpose for the Board to act n Yt, apolication under Section 32. Trbe.e Board wishes it understood that its action is not to „_ be" .garded as reflecting in any degree upon your de:trability as a director of the bank except in the respect . 1" .t the r elationships come within the statutory prohibitions rred to above. Also, the Board is not unmindful of the e factthat the Dunbar National Bank of New York values your is s rvices as a director. However, it believes that Section 8A whipoperly susceptible of no other construction than that • nas been given it and that the Board has no power to Per-a. the relationships to continue. othsr Of colIrse, in th.3 event that you desire to submit -acts or arguments which you believe will snow that the ,4Yton Act does not apply to you, the Board is prepared to e them careful consideration." Approved. Letters to the following applicants for permits under section tha, anki ng Act of 1933; each letter stating that it appears that the r 32 0 elationship covered by the application is within the class 1545 5/25/34 -18-. which section 32 was designed to terminate, and that, accordingly, the 8°arcl Is unable to find that it would not be 'incompatible with the public interest as declared by the Congress to grant the application, although in the event the applicant desires to submit further facts or arguments 811PDort of the application the Board is prepared to give them careful consi deration: Mr. Bartlett Harwood, for Permission to serve at the same time as a director of the Newton Trust Company, Newton, Massachusetts, a,41 as a director of Lee Higginson Corporation, Boston, Massaenueetts. Charles Carroll Morgan, for permission to serve at the same me as a director of The Washington Loan and Trust Company, washi ngtca D. C., and as co-manager of the Washington office Of G• M.-P.--ty & Company, New York, New York. Mr. IT. 10/1 R. Tucker, for permission to serve at the same time a director of the American Trust Company and as vice-president , and director of Elworthy & Company, both of San Francisco, .1 ifornia. Approved. Letters to applicants for Permits under the Clayton Act, advising Of. -1313r°vel of their applications as follows: Mr. Will4 tim "am P. Chapin, Jr., for permission to serve at the same e as a ;1:11 Trust director and officer of The National Bank of Commerce Company of Providence, Providence, Rhode Island, and vid: l oi er ,TIZe°f: alleiZorris Plan Company of Rhode Island, ProMr. Rbo, C. DeWolf, for permission to serve at the same time uirector of The Providence National Bank, Providence, 11 ,;e Island, and as a director of The Morris Plan Company of Rhode 110' Island, Providence, Rhode Islana. Mr. Oh., time ases C. Marshall, for permission to serve at the same 1/110A,a director of The Providence National Bank, Providence, Of -v Island, and as a director of The Morris Plan Company RhOde Island Providence, Rhode Island. L 1546 5/25/34 -19Mr. Herbert W. Rice, for permission to serve at the same time as a director of the Rhode Island Hospital National Bank of Providence, Providence, Rhode Island, and as a director and officer of The Morris Plan Company of Rhode Island, Providence, Rhode Island 11r. Henry L. Wilcox, for permission to serve at the same time as a director and officer of The National Bank of Commerce and Trust Company of Providence, Providence, Rhode Island, and as director of The Morris Pion Compa _ f Rhode Island, Providence, Rhode Island. Russell H. Britton, for permission to serve at the same tlme as a director and officer of the Rochester Trust Company, !:t.ochester, New Hampshire, and as a director and officer of The Nevt Public National Bank of Rochester, Rochester, New Hampshire. 1.r. Geo, A. Brockway, for Permission to serve at the same time cs a director and officer of the Second National Bank and Trust TaDallY of Cortland, Cortland, New York, and as a director and 4ficer of The Homer National Bank, Homer, New York. ! r. William J. Couse, for permission to ; 8 a director and officer of the Asbury rust Company, Asbury Park, New Jersey, the Manascuan National Bank, Manasquan, serve at the same time Park National Bank and and as a director of New Jersey. Charles H. Knight, for permission to serve at the same time ' s a .e , director of Th First National Bank of Washington, WashingNew Jersey, and as a director and officer of The First atic)nal Bank of Belvidere, Belvidere, New Jersey. Mr. G. R. Griffin, for permission to serve at t.le same time as an off. r, leer of The Exchance National Bank of Tampa, Tampa, . a director of the Hernando State Bank, Brooks: 1..1:(1:s "lle ! r Mr. J. A. ;acriirectorGriffin, for permission to serve at the same time as and officer of The Exchange National Bank of Tampa, °far' Florida, as a director and officer of the Columbia Bank the , ior City, Tampa, Florida, and as a director and officer of 'xellazge National Bank of Winter Haven, Winter Haven, Qlori3a. Mr. John O. Perry, for permission to serve at the same time as f;areetor and officer of The Exchange National Bank of Tampa, Florida, as a director ane officer of the Exchange a di°11a14. Bank of Winter Haven, Winter Haven, Florida, and as reck,or and officer of the Hernando State Bank, Brooksville, Florida 1547 5/25/34 -20Mr. C. T. Young, for permission to serve at the same time as a director and officer of the Hillsboro State Bank, Plant City, Florida, and as a director of The Exchange National Bank of Tampa, Tampa, Florida. John Stagnaier, for permission to serve at the same time az a director and officer of The Hamilton National Bank of Chattanooga, Chattanooga, Tennessee, and as a director and (3fficer of the Morris Plan Bank, Chattanooga, Tennessee. Mr. John H. Riddell, for permission to serve at the same time as a director and officer of The Riddell National Bank of Brazil, 1TationalBrazil, Indiana, and as a director of The First Bank of Center Point, Center Point, Indiana. 1a/1,r. Wm. S. McGee, for permission to serve at the same time _! a director and officer of The Northwestern National Bank ?f Litchfield, Litchfield, Minnesota, and as a director of the Union State Bank, Sauk Rapids, Minnesota. Mr. p , .-- E. Carroll, for permission to serve at the same time a director and officer of The Leavenworth National Bank, 07.17,e11/"rth, Kansas, as a director of The Army National Bank Port Fort Leavenworth, Kansas, and as a director Leavenworth, of the Leavenworth Savings & Trust Company, Leavenworth, Kansas. i7 Mr. Ear veY B. Goodjohn, for permission to serve at the same director of The Leavenworth National Bank, Leaven77th, Kansas, and as a director of The Army National Bank °r Pert L eavenworth, Fort Leavenworth, Kansas. Mr. r. "Hewitt, for permission to serve at the same time r a director of The Leavenworth National Bank, Leavenworth, L:lal.v sas, and as a director of The Arv National Bank of Fort enworth, Port Leavenworth, Kansas. Mr.E., a di LYzle, for permission to serve at the same time as Ica_ rector of The Leavenworth National Bank, Leavenworth, : l tac:t: Sal a% nlna lor and officer of the Leavenworth Leavenworth, Kansas. Mr. s. c for permission to serve at the same time zaatsa of The Leavenworth National Bank, Leavenworth, direZker' sas' and as a director and officer of The Army National Bexa, of Port Leavenworth, Fort Leavenworth, Kansas. as a d 11- Willson, for permission to serve at the sane time &rector and officer of The Leavenworth National Bank, 15418 5/25/34 -21Leavenworth, Kansas, as a director and officer of The Army National Bank of Fort Leavenworth, Fort Leavenworth, Kansas, and. as a director and officer of the Leavenworth Savings & Trust CompanY, Leavenworth, Kansas. Mr. Samuel H. Wilson, for permission to serve at the same time as a director of The Leavenworth National Bank, Leavenworth, Xansas, as a director of The Army National Bank of Fort Leavenworth, Fort Leavenworth, Kansas, and as a director of the Leavenworth Savings & Trust Company, Leavenworth, Kansas. Mr. T. R. Tinkler, for permission to serve at the same time as a director and officer of The Gypsum Valley National Bank Gypsum, Kansas, and as a director and officer of xne Roxbury State Bank, Roxbury, Kansas. Approved. Thereupon the meeting adjourned. ed:
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