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428 A meeting of the Federal Reserve Board was held on Thursday, May 26, 1932, at 11:30 a. m. PRESENT: Governor Meyer Mr. Hamlin Er. Miller Ur. Magee Mr. Pole Jr. Morrill, Secretary Er. McClelland, Assistant Secretary Mr. Harrison, Assistant to the Governor. The following matters of business were considered and acted upon by the Board: Report of the Committee on Salaries and Expenditures on a letter dated May 18, 1932, from Deputy Governor Attebery of the Federal Reserve Bank of St. Louis recommending approval by the Board of a change in the personnel classification plan of the Little Rock branch to provide for the creation of the new position of "Clerk" in the Collection, Collateral and Securities, Discount and Government Department of the branch; the Board's committee recommending approval. Approved. Telegraphic reply, approved by five members of the Board on May 23, 1932, to a telegram of that date from Deputy Governor Rounds of the Federal Reserve Bank of New York requesting authority to purchase from the Danbury National Bank, Danbury, Connecticut, 425,000 of tax notes of the Town of Danbury; the reply stating that the Board authorizes the purchase with the understanding that the notes net all requirements of Regulation E except that the amount offered, together with notes in the amount of $100,000 now held by the New York bank, exceeds 25% of the total outstanding warrants of the municipality. Reply approved. 429 5/26/32 -2Telegraphic reply, approved by four members of the Board on May 25, 1932, to a telegram of that date from Deputy Governor Rounds of the Federal Reserve Bank of New York requesting authority to purchase from the Palisades Park National Bank and Trust Company, Palisades Park, New Tersey, 65,000 of tax warrants of the Borough of Palisades Park, the reply stating that the Board authorizes the purchase with the understanding that the warrants meet all requirements of Regulation E except that the population Of the issuing municipality is less than 10,000 and that the amount offered exceeds 25% of the total outstanding warrants of the municipality. Reply approved. Telegraphic reply, approved by five members of the Board on May 241 1932, to a telegram of that date from Deputy Governor Rounds of the Federal Reserve Bank of New York requesting authority for an advance by the New York bank, in accordance with the provisions of section 10(b) of the Federal Reserve Act, as anended, to the Farmers National Bank, Theresa, New York, in the amount of .15,000, for a period of ninety days, at a rate of 5 1/2% Per annum, and on the security of miscellaneous bonds with a market value of 4PProx1mately 22,000; the reply stating that the Federal Reserve Board auth- orizes the advance subject to the terms and conditions recommended. Reply unanimously approved. Telegram to Deputy Governor Rounds of the Federal Reserve Bank of New York replying to his telegram of May 25, 1932, requesting authority for 84 advance by the Federal Reserve Bank of New York, in accordance with the Provisions of section 10(b) of the Federal Reserve Act, as amended, to the Pirst National Bank in Mamaroneck, New York, in the amount of150 000 for 4 Period of ninety days, at a rate of 5 1/2(10 per annum, and on the security 4R0 5/26/32 -3- of miscellaneous collateral loans and other loans amounting, to approximate].y ,1300,000; the reply stating that the Board authorizes the advance subject to the terms and conditions recommended. Reply unanimously approved. Telegraphic reply, approved by five members of the Board on May 25, to a telegram dated May 24, 1932, from the Governor and the Federal Reserve Agent at the Federal Reserve Bank of San Francisco rocorrnd1rig approval of the application of the Reno National Bank, Reno, Nevada, far permission to rediscount eligible paper acquired from the Henderson Banking Company, Elko, Nevada, a nonmerber; the reply stating that the Board authorizes the Federal reserve bank, in its discretion, for a period of six months from May 25, 1932, to rediscount for the national bank good and eligible paper acquired from or bearing the signature or indorsement of the Henderson Banking Company. The reply also stated that the Board believes no such Paper should be rediscounted until the Reno National Bank has first utilized all other paper in its portfolio which is eligible and acceptable to the Federal reserve bank for rediscount. Reply approved. Reply to a letter dated May 23, 1932, fram the Federal Reserve Agent at Philadelphia stating that the Central National Bank, Mount Union, Pennsylvania, which was placed in the hands of a receiver on January 21, 1932, and whose Federal reserve bank stock was canceled on February 13, 1932, expects to reopen for business in the near future, that a remittance to cover payment for an appropriate amount of Federal reserve bank stock has been received, and that the agent recomends that the requisite amount of stock be issued to the bank when it is aathorized to reopen; the reply 431 5/26/32 stating that, in view of the circumstances involved and the agent's recommendation, the Philadelphia bank is authorized to issue 45 shares of Federal reserve bank stock to the Central National Bank, if and when the Comptroller of the Currency authorizes the national bank to reopen for business with a paid-up capital and surplus of 130,000 and $15,000 respectively. Reply approved. Letter to the Federal Reserve Agent at Dallas, approved by five rembers of the Board on May 25, referring to his letter of May 10, 1932, With which he forwarded the information submitted by the junction State Bank, Junction, Texas, as a result of the proceedings instituted by the Board to determine whether the membership of that bank should be terminated, and in which he stated that the board of directors of the Dallas bank, in view of corrections in its condition effected by the member bank, had voted unanimously to recommend that the Board defer taking final action in the ratter. The reply stated that, in view of the circumstances outlined, the Federal Reserve Board has decided to defer action, and inclosed a letter to the member bank, also approved by five members of the Board on May 25, stating that the Board has deferred making a decision in order that the bank MaY have an opportunity to demonstrate its ability to comply with the provisions of the Federal Reserve Act and the Board's regulations. The letter to the Federal reserve agent also requested that upon receipt of the report or the next examination of the member bank the matter be considered further • by the board of directors of the Dallas bank and the Federal Reserve Board furnished with a recommendation of the board of directors as to the action Which should be taken. 432 5/26/32 -5Letters to the Federal reserve agent and the Junction State Bank approved. Memorandum dated 1,-.Ew 5, 1932, from Mr. Wingfield, Assistant Counsel, referring to the fact that it frequently happens under present procedure that a consolidated national bank which has succeeded to the trust powers granted to one or more of its constituent banks, and which applies to the Federal Reserve Board for a permit in its awn nare, is in such an unsatisfactory condition that the Board is not warranted in approving its application and that in these circumstances, the Board is placed in the undesirable position of granting affirmative authority to the national bank to exercise trust powers when it is in an unsatisfactory condition or of refusing to grant such powers when, under the plovisions of the Board's Regulation 74 the bank already has legal authority to exercise them; the nemorandam suggesting that in order to avoid this result in the future the Federal Reserve Board, upon receipt of advice from the office of the Comptroller of the Currency of a consolidation of national banks, one or more of which has been granted authority to exercise trust powers, issue to the consolidated bank a certificate in the form submitted with the memorandum, setting forth (1) the grant of the trust powers to the appropriate constituent institution Or institutions, (2) the consolidation of the constituent institutions, and (3) the fact that the consolidated bank has the right to exercise the fiduciary powers previously granted to the constituent bank or banks. The memorandum also suggested that when Regulation F is next amended there be eliminated therefrom the suggestion that a consolidated national 1341ak which has succeeded to trust powers should make a new application for a Permit in its own name, and that there be incorporated in the regulation the procedure outlined above. 433 -6- 5/26/32 Suggestions and forn of certificate approved. Reply, approved by five members of the Board on nay 25, to a letter datedUay 16, 1932, from the attorneys for the First Federal Foreign Banking Corporation, New York City, New York, referring to recent correspondence between the Board and the corporation with regard to the number of directors elected at the last annual meeting of the stockholders of the corporation, and suggesting that it would be desirable to permit this matter to remain in its present status until the next annival meeting of the stockholders; the reply stating that the Board offers no objection to the suggestion with the understanding that at the next annual meeting of the stockholders appropriate action will be taken to bring the number of directors provided for in the articles of association into conformity with the number actually elected. Reply approved. Reply to a letter dated May 16, 1932, from the Chairman of the Committee on Banking and Currency of the Senate requesting a report from the Board with respect to S. 4647, "a bill to prevent the use of the mails and of telegraph and telephone facilities in furtherance of fraudulent and harmful transactions on stock exchanges"; the reply stating that, as the subject matter of the bill is one which does not fall within the provinces of the Federal Reserve Board, it is without adequate irformation upon which to base a study of the questions involved and does not feel prepared to srPress an opinion. Reply approved. The Governor then reported briefly on the meeting held at the ired"ol Reserve Bank of Chicago yesterday, at which he and the Secretary 434 5/26/32 -7- Of the Treasury were in attendance, and at which a committee of business Illen and bankers, similar to the committee appointed by the Governor of the Federal Reserve Bank of New York last week, was appointed for the purpose Of developing ways and means of making effective use, through the banks in that district, of the funds which are being made available by the open Market program of the Federal Reserve System. Reference was then made to preliminary negotiations which have been conducted with the agents for the owners of the Shoreham Building, located at 15th and H Streets, N. W., for space in that building for the Board's Divisions of Research and Statistics and Bank Operations, now housed in the Otis Building, and for the Gold Settlenent Section and Currency Clerk, now included in the office of the Secretary of the Board. La% Harrison reported that the agents had asked a price of '.;2.00 per square foot and that recently they had indicated a willingness to accept 1.75 per square foot. However, he expressed the feeling that the space available in the Shoreham Building, Which is more desirable and is nearer the Board's offices than the Otis Building, may now be obtained at less than :1..75 per square foot. In this connection, Yr. Pole stated that a price of :2.00 per square foot is being Paid for offices which his Organization is occupying in the Washington Building at 15th Street and New York Avenue. After discussion, Lai. Harrison was requested to continue negotiations for space in the Shoreham Building on the basis either of a three year lease with an option in the Board to renew for two years, or of a five year lease with a right in the Board to terminate the lease upon reasonable notice after three years in the event the Division of Research and Statistics and the Division of Bank Operations are moved into a Government owned building or into a building owned by the Federal Reserve Board. 435 5/26/32 -8Reports of Standing Committee dated May 25, 1932, recommending aPproval of the following change in stock at a Federal reserve bank: A2plication for SURRENDER of Stock: District No. 5. Tlrat National Bank, Princeton, W. Va. Shares Approved. Thereupon the meeting adjourned. Approved: 90 90
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