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A meeting of the Executive Committee of the Federal Reserve Board Wes held in the office of the Federal Reserve Board on Friday, November 13, 1931, at 11:35 a. PRESENT: Governor Lleyer lir. Miller Mr. Liagee Morrill, Secretary McClelland, Assistant Secretary Mr. Harrison, Assistant to the Governor. The Governor stated that at the meting of the Board of Directors of the Federal Reserve Bank of New York which he attended yesterday, there was di8cussion of the question whether the Federal Reserve banks should follow the recent reductions in dealers* rates on bills by corresponding reductions ill the effective buying rates of the Federal Reserve banks and there was also CliS CUSSiOri PlIrchas in regard to the extent to which the Federal Reserve banks should Federal intermediate credit bank debentures. The Governor stated that he understood that the directors reached the conclusion that in the k'esent circumstances it would be undesirable for reductions in Federal Re- 11 ' 11's banks' effective buying rates to follow closely the reductions in 48z1lerst rates, as such a procedure might result in the necessity for trarae ,L.Late increases in case the market changed and dealers' prices moved upThe Governor also stated that he understood that it was the consensus °t the directors of the Federal Reserve Bank of New York that it would be desi, "le for the Federal Reserve banks to cooperate with the Federal inter'"e credit banks as far as possible, through the purchase of their clebehin, —res, with the understanding, of course, that every reasonable effort 444 be made by the banks and their fiscal agent to dispose of their ' clebeb+,. -"'Ll'es elsewhere in the market at reasonable interest rates. The following matters of business were presented and acted upon by th 'ulaMittee: 11/13/31 -2- Letter dated November 12 from the Secretary of the Federal Reserve leadc of New York and telegram dated November 12 from the Chairman of the Federal Reserve Bank of Richmond, both advising that their boards of directors, Ilt eetings on that date, made no changes in the banks' existing schedules of rates of discount and purchase. Without objection, noted with approval. Lists submitted by the Federal Reserve Banks of Cleveland, Richmond Kansas City of employees for whom the directors authorized leaves of ctheence with pay on account of illness during the month of October, where the t"81 of such absences since Ianuary 1, 1931 has exceeded thirty days. Upon motion, the salary Payments involved in the action of the directors were approved. Memorandum from Assistant Secretary Noell recommending that the Board 4131arove an extension, from October 31 to November 10, of the sick leave el'anted to Essex Banks, a messenger assigned to the Otis Building, who ' leetuned his duties on the latter date. Recommendation approved. Letter dated November 6 from the Chairman of the Federal Reserve Bank or'•.allas requesting approval by the Board of the appointment of Mr. Thomas 3.el'rers0n Holmsley to the appraised position of special representative in the loan department of the bank at a salary of $1,800 per annum. Upon motion, the salary recommended was approved. Reports of Committee on Salaries and Expenditures and Committee on 1)18tl'ict rib. 8 on letter dated November 4 from the Chairman of the Federal ltee "e ' Bank of St. Louis, requesting approval, effective November 16, 1931, °r "aaries of 38,000 and $7,000 per annum, respectively, for Yr. John T. tiAttliN I . 4; 11/13/31 -3- who has been appointed Managing Director of the Louisville Branch to elleceed Mi. 77. P. Kincheloe, resigned, and Mr. Charles A. Schacht, who has been appointed Cashier of that branch to succeed Mr. Moore; the Board's Cormitteeerecommending approval of the salaries in question. Approved. Draft of letter to all Federal Reserve Agents, advising that the l'ederal Reserve Board will send the Federal Reserve Bulletin without charge dul'ing 1932 to all State bank examiners who desire to receive it. Upon motion, the proposed letter was approved. Draft of reply to a letter dated November 5 from the Vice-President °t the First Farmers and Merchants National Bank, Troy, Alabama, containing 84 assurance of the trust committee of the bank that the affairs of the tl'Ilst department will be properly managed and free from criticism in the rtIture l and requesting that the Board give further consideration to the ballk's confirmatory application for trust powers; the proposed reply stating that while the Board is pleased to receive the statements contained in the letter, it still feels that it should not take favorable action on the al3P11cation until after it has been demonstrated throuc4 another examination that the trust department is being properly conducted and that there are no c'llditions remaining therein which are subject to criticism, and that, theref°re, as stated in the Board's letter of November 3, further considerati°11 °f the application will be withheld until after receipt of the report t the next examination of the bank. Upon motion, the proposed letter was approved. Draft of reply to a letter dated November 5 from the Federal Reserve -.4 at Dallas reporting that the First National Bank, Hale Center, Texas, 11/13/31 has been continuously deficient in its reserves since March 15, 1931, but Ilecommending, because of the fact that the deficiency has been due to conentirely beyond the bank's control, that no action be taken regardthe matter at this time; the proposed reply stating that the Board c°11cura in the Federal Reserve Agent's recommendation and is sending a copy °this letter to the Comptroller of the Currency for the information of his orrice. Upon motion was approved. the proposed letter Letter dated November 5 from the Federal Reserve Agent at Dallas rePorting that the First rational Bank, Durant, Oklahoma, has been deficient in its required reserves for the period April 16 to October 15, 1931, 11/c348ive, and recommending, because of the failure of the bank to regard letters written to it by the Federal Reserve Agent and the Chief rations, 8alkk Examiner concerning the matter, that the Comptroller of the Currency be requested to address the bank directly with regard to the importance "it8 naintaining its reserve position; draft of letter to the Comptroller r3t the Currency, advising that the Board concurs in the Federal Reserve jle"'s recommendation and suggesting that, if he feels such action is deellte.ble under the circumstances, he address a letter to the First National 8atk • in accordance therewith; and draft of letter to the Federal Reserve 4eett enclosing a copy of the letter to the Comptroller of the Currency. Upon motion, the proposed letters were approved. Ilemorandum from Counsel dated November 7, calling attention to a letter addressed by the Assistant Attorney. General to all United States 4tt0 rneys on the subject of delays in disposing of criminal cases under 11/13/31 -5- Federal banking laws; Counsel recommending that additional copies of the letter be secured and transmitted to all Federal Reserve Agents for their information. Counsel also submitted drafts of letters to the Attorney G"eral and to all Federal Reserve Agents in accordance with this recommendation. Upon motion, the proposed letters were approved. Letter dated November 7 from the Federal Reserve Agent at San Franenclosing copy of a letter received by him from Mr. Harold L. Reed of Cc/II:IC-1 University inquiring whether the bank has adopted the policy during the Past year of not issuing gold certificates; the Federal Reserve Agent stating that the inquiry is referred to the Board as it involves a System rnstter. In this connection, it was reported to the Committee that upon ' lsceipt of Mr. Newton's letter inquiries were made of all other Federal Resal"ve banks and it was ascertained that they had received similar inquiries and had made direct replies. After discussion, upon motion, it was voted to advise the Federal Reserve Agent at San Francisco that other Federal Reserve banks have not regarded the inquiry as a System matter, that their direct replies have been brief and general in character, stating that gold certificates are always paid out on demand and in most cases in about the same volume as they are returned to the bank from circulation, and to suggest, with the assumption that the same situation has prevailed at the Federal Reserve Bank of San Francisco, that the Federal Reserve Agent reply to Ijr. Reed along the same lines. In connection with the discussion of the foregoing matter, attention " 11 directed to the Board's letter of Lay 5, 1925, addressed to all the ' ' 1411 Reserve banks in which the request was made that inquiries received hYthem involving matters of System interest be referred to the Federal l*ve Board for consideration of the character of reply which should be 373 11/13/31 -6- 1Q4de from the point of view of the System as a whole. It was noted that the Federal Reserve banks other than San Francisco appeared to have overlooked this request, and consequently the Board authorized the Secretary in acknowled:ing the receipt from the various banks of conies of their ' l ePlies to Er. Reed's inquiries, to call their attention to the circular .Y 5, 1925, and to request that, in the future, inquiries of this or la 44Y other character involving policy or procedure of all the banks or the System as a whole be submitted to the Board for consideration before l'etAies are made thereto. It was also decided to bring the subject of the Board's letter of 5) 1925, to the attention of the next conference of Chairmen and Q-overnors. Reports of Standing Committee dated November 11 and 12 recornaending Ill'Proval of the following changes in stock at Federal Reserve banks: ' -44-19.1.2.tions for ADDITIONAL Stock: , I) ,istrict No. 7. 4'irst National Bank, Converse, Ind. )11,strict No. 12. ' lilted States National Bank, Eugene, Oregon. 1 ons r SURRENDER of Stock: ik strict No. 2. 1,elvidere National Bank, Belvidere, N.J. (Insolvent) irat National Bank of Great Neck at Great Neck Station, N. Y. (V.L.Abs. by Great Yeck Trust 1T, ,Company, Great Neck, N. Y.) ' 41onal Mohawk Valley Bank, Mohawk, N. Y. 1, (Insolvent) e°Ples National Bank, Blairstown, N.J. (Insolvent) ket • t National Bank, Orbisonia, Pa. (Insolvent) Shares 1 9 Total 1 9 10 120 120 90 45 375 84 84 11/13/31 7- for SURREanTIR of Stock: (Cont'd) ictN -nrst National Bank, Toledo, Ohio. (Decrease in surplus) Pirst National Bank, Lynchburg, Ohio. (Insolvent) 4chanse National Bank, Pittsburgh, Pa. (Insolvent) District No. 6. Citizens Banking Conpany, Eastman, G . (Insolvent) ILtptN(4 7. Pint National Bank, Belvidere, Ill. (V.L.Abs. by Second National Bank of Belvidere) °gden National Bank, Chicago, Ill. (Insolvent) West Side-Atlas-National Bank, Chicago, Ill. (Insolvent) 117°'n County National Bank, Rock Rapids, Iowa. (Insolvent) National Bank of Sidney, Iowa. (Insolvent) Pirst National Bank, Reed City, Mich. (Insolvent) C°11111e1eial National Bank & Trust Co., St. Toseph, rich. P. (Insolvent) zIrst National Bank, Fennimore, Wis. (Insolvent) Shares 300 39 990 1,329 72 72 66 150 150 60 60 81 240 40 847 -uxrst National Bank, Lake Village, Ark. (Insolvent) 11,,Irst National Bank, Carterville, Ill. (Tnsolvent) .,;i•tY National Bank, Herrin Ill. (Insolvent) t National Bank, Brunswick, Mb. (Insolvent) 'ulrat National Bank in Versailles, Mo. (Insolvent) 45 48 60 36 22 211 'ecurity National Bank, Mbbridge, S. Dak. (Insolvent) 35 35 r8t National Bank, Coats, Kans.(V.L.Abs. by Coats , State Bank, Coats, Kansas.) 'Iret National Bank, Auburn, Nebraska. (Insolvent) 21 51 72 %atiejoii ''I•rst National Bank, Clint, Texas. (V.L. Terminal) 18 18 30 Total 30 3,073 r31313t • 4:1rat National Bank, Baldwin Park, Calif. (Insolvent) Approved. The meeting adjourned at 12:45 p. 41111roved:
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