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4[20 A meeting of the 2edern1 Reserve Board was held in Washington on 'riclEtY, November 18, 1932, at 11:45 a. m. PREMIT: Governor i;eyer Mr. Hamlin Mr. Miler Mr. .Tames Mr. Magee Morrill, Secretary Lir. McClelland, Assistant Secretary Er. Harrison, Assistant to the Governor. The Board considered and acted upon the following matters: Letter dated November 17, 1932, from the Secretary of the Federal lie80 Bank Of New York, and telegram dated November 17, 1932, from the eret a-q he b of the Federal Reserve Bank of San Francisco, both advising that aards of directors, at meetings on that date, made no changes in the bataza, e:41-2tilkl' schedules of rates of discount and purchase. Without objection, noted with approval. Tel „ e.,."-aDhic reply to a telegram dated November 17, 1932, from Deputy 40Verilorilounds of the Federal Reserve Ban of Few York, requesting authority the renewal for a period of ninety days from November 20, 1932, with ItItex'est at the rate of 5 1/2% per aanurIP of the advance in the amount of '15'13°C) bY the Federal Reserve Bank of New York in accordance with the 111'°'‘ria lo/ls of section 10(b) of the Federal Reserve Act, as amended, to the 41111. al Bam, tile b Theresa, New York; Deputy Governor Rounds stating that P°sition has not improved sufficiently to enable it to liquidate at this tir;19. The reply stated that the Board authorizes the renewal c)rt1Lc1:7 cllrance subject to the terms and conditions recornended. te Approved. Rel11-Y to a letter dated November 12, 1932, from the Chairman of the 4t1N, e"rve Bank of Atlanta advising of an arrangement with the Recon1'1114'11-lee Corporation, made with the approval of the board of 426 11/18/32 -2_ directors of the bank, for the apportionment of the services of Mr. T. Y. ICIrlowlton, Assistant Cashier of the Birmingham Branch, between the supervision or the custody division of the corporation at the branch and the operations of the bralach. The reply stated that the Federal Reserve Board approves the pro'7181°11 01 the arrangement for the reimbursement to the branch by the Recon81*11cti°n Einance Corporation of two-thirds of L".r. Knoulton's salary. Approved. Letter to the Federal Reserve Agent at Dallas referring to Assistant ?eciel ' 41 Reserve Agent Evans' letter of November 1,1, 1932, with which he incioaea e' s tatement of the expenses incurred by him during his trip to llexico °JAY to exanine, for the Federal Reserve Board, the branch of The Chase Banl: 10eatediiithat city. The Board's letter inclosed the statement submitted by lir. 4%42 and suggested that it be paid in the regular course by the Federal 11"°11ve Bof Dallas, following which a request should be made to the FedReserve Board for reimbursement, such request to include an item cover. '" for the period of his absence from Dallas in connection Elrans vlith the exesrAnatiol" 14Z Approved. lIePlY to a letter dated November 10, 1932, from the Federal Reserve 4$ellit at Ph' l4delphia reporting that the Beech Creek National Bank of Beech C1(1) Ylvania, was continuously deficient in its recluired reserves 1111113€ the Previous six months. The reply stated that, in accordance with 4(%11t's recenenendation, the Board will take no action in the matter other t1144 t° l'orward a copy of his letter and attachment to the Acting Comptroller 011zrency for the information of his office. th4t tI The reply also requested eagelit advise the Board, within a reasonable time, as to whether the 427 11/16/32 -3- bank has restored and is maintaining its required reserves. Approved. Letter to the Federal Reserve Agent at Chicago, replying to Assistant Peae , ie,,erve Agent Young's letter of October 31, 1932, with regard to the OAtin reserve deficiencies of the First Henry National Bank Henry, 110.1.171ni the First National Bank and Trust Company, Cambridge City, Indiana, tie " 11 National Bank, Lewisville, Indiana, and the Elk Rapids State Bank, 41c Rapids, Michigan; nr. Young stating that the First National Bank of 4111svi11e has suspended, and that the reserve records of the three other bknits continue to be unsatisfactory, although it is believed that the First 11:tiona1 Ba z and Trust Company of Cambridge City is doing everything in its 11°'ael' to restore its reserves. The Board's letter stated that a copy of rx. 1".°1111e's letter is being forwarded to the Acting Comptroller of the Currency l'°1* the itrormation of his office, so far as it relates to national banks; alleated bilitY or that, if the agent has not already done so, he consider the advisa- addressinC a letter to each of the directors of the First Henry 14°11. 1 Bank and the Elk Rapids State Bank pursuant to section IT(b) of 114t1 : 11 °13. 0; and requested that he advise the Board what decision is made rnatter, and that he keep the Board currently advised of any developthe 1P.ellta eserve records of the banks. Approved. 4Qt104 Letter to the Acting Comptroller of the Currency referring to the the Board in deferring consideration of the fiduciary application °r Nei Gloucester National Bank of Goucester, l'assachusetts, until after the El A 15t ,011.17 (11' the first report of examination' of that institution, and inclosing Or a letter dated November 4, 1932, from the Federal Reserve Agent at 11/18/32 Boston -4- reconLaendinr>, on the basis of information disclosed in the re:oort of eZetnination or the bank as of September 29, 1932, that action on the application be held in abeyance until a later date. The Board's letter requested the 4°4113 amptroller to advise whether in his opinion there is any reason why 4e1;10n on the application should not be deferred until after the report of "ller examination of the institution has been received; also, that if he is eenant with this suggested procedure he arranc;e at the time of the next ellihation to have the examiner again investigate and report on the proposed 41111ervision of the trust department of the national bank, and after the report or Ini tion has been received, he advise whether on the basis of the con- The bank as disclosed thereby he would recommend approval of the 41111lictItion. Approved. Letter to the Federal Reserve Agent at St. Louis referring, to the )11-Ettion of the Farmers National Bank, Glasgow, Yentucky, for permission or't°eZereise certain additional fiduciary --xwers, and to the Board's letter 411e,Ilet 11, 1932, advising that action on the application had been deferred 1/4ti1 after .leceipt of the next report of examination of the institution. Zhs -etter also inclosed a copy of a letter dated October 31, 1932, from the C'ora Dtroller of the uurroncy advising of the submission of a plan for (*ge.laizati on of a new bank to take over the Farmers National Bank, and Utli information is being brought to the attention of the Fed- this look 'ezerve a,ent at this Int° the tine in order to afford him an opportunity to natter, so that he may be prepared to submit promptly a recom- 14eti°11 to the Board in the event the proposed new bank is to apply for t1"44.t 1)0wera. 429 11/18/32 Approved. Letter to the 2irst National Bank, Plainfield, New Jersey, which institution is the result of a consolidation of the First National Bank of 114ill-faeld and the Sourth National Bank of Plainfield, inclosing a certifie4te of the consolidated bank's authority to exercise the trust powers granted to the Leirst National Bank of Plainfield. Approved. Telecram to Assistant ederal Reserve Agent Fry at Richmond advising or al val by the Board of the issuance of 21 shares of stock of the ezx Itese,ve 1,.ank of iiichmond to the First National Bank, Terra Alta, 7Test if and when the Comptroller of the Currency authorizes the bank to re°138/1 with a caT)ital of $25,000 and surplus of y.10,000; and that in `?1E11/ the fact that the stock is being issued in connection with a reo)enof a closed bank rather than the organization of a new bank, and as ?ederal reserve bank has received paynont On the subscription, no formal 414111eation for stock need be obtained. Approved. Letter to the Federal Reserve Agent at San Francisco referring to ?ederal Reserve Agent Sargent's letter of October 24, 1932, adv.01.11 that the Live Stock State Bank, liorth Portland, Oregon, whose 4tsV notice of intention to withdraw from membership in the Federal lieze Olkt 41,Da.r SYstem expires on s now been moved into an February 13, 1935, has district within the corporate limits of Portland where a State bank 1/1g ..a00 000 for Inembership would be required to have a capital of at least 't4teci whp, --eaa the capital of the member bank is only f ,50,000. The reply tht the Board has given further consideration to the request which 430 11/18/32 -6- accompanied the notice filed by the Live Stock State Bank of its intention to WI thdraw from membership' for waiver of the usual six months notice of ittention to withdraw, and, in view of all the circumstances involved, has Waived. the remainder of the six months period so as to permit the bank to Withdraw from membership immediately. Approved. Letter to the Federal Reserve Agent at Atlanta referrin to the 443,a/rais Of report of examination as of September 3, 1932, of the Bank of Dav%11, Georgia, which, in addition to other unsatisfactory features, dis]1,c)eer, Q that the bank is holding 21 shares of its own stock as a non-book a set. The J3oard's letter requested that the agent advise, within a time, as to whether the bank has effected the elimination of this "()cit' and as to any further improvement accomplished in the condition of the bkik /.11)86(1.4ent to its letter of October 21, 1932, to the Superintendent of the State of Georgia. Approved. Letter to the Governor of the Federal Reserve Bank of Richmond illosi/ig a bill in the amount of a5,746.73 received from Vr. 7ewton D. kkar coverinc; his fee and expenses in connection with his services in the Pederal Reserve Bank of Richmond v. Attmore and Lucas v. Federal 4er1re Bank of Rjohnond and in other related litigation. The letter stated t418 bill has been approved by the Federal Reserve Board and is trans- ktteci with the auggestion that, if approved by the directors of the bank, tle4Illeilt be Made direct to Er. Baker. let to liovezber 7, 1930' The letter also referred to the Board's advising that all Federal reserve banks had agreed in the employment of irr. Baker in connection with this litiga- 431 4/18/32 77 ticIll and stated that the Board would be glad to arrange to have the other ll'ederal reserve banks reimburse the Richmond bank for their pro rata shares cr-el Baker's fee and expenses as soon as advice is received that payment tollr. Baker has been made. Apnroved. RePlY, approved by four ne2.1bers of the Board on Novenber 16, to a letter dated roveraber 4, 1932, from the Chairman of the Federal Reserve Bark °t 1nquirin3 as to what theory has been used by the Board as a h4Sis for the classification of meuber banks for elections of Class A and 11 directors; 11r. Stevens statingthat this information is desired in °°411eetion with the consideration of the Board's telegram of September 10, 1932) Eategestinc a canvass of the situation in each federal reserve district Itita View to submitting recommendations as to changes in group classificatier e Prior to the regular annual elections in 1933. fkltb,otoi The reply stated that, it Was suggested in the Board's letter of October 12, 1923, (7:-6159) tItell'Ilsiaeration be given to the advisability of adopting the rule that tix aber banks are reclassified for electoral purposes group two should ElipPrexirriately one-third of the total number of member banks and croups laci three be determined with reference to both number of banks and araount of capital and surplus, the Board has not adopted this or any °111"riZed basis for dividing member banks into electoral groups. The letter 114° ealled at tention to the view expressed by the rovember, 1920, conference bkikz resorve agents that the classification and grouping of member Dr IN14. elect°ral purposes must be determined by the needs of each .0ederal reserve district. Approved. 482 11/18/32 -8- The Governor reported thatnr. Jams P. Warburg, President of the 14te raational Aceeptance Bank, New York City, called on him this morning in cc)ntect* len vTith the. Proposed reorganization of the Ilanhattan Company and its _ sued organizations, and stated that the Ilanhattan Company had just been lidvised +, vast the Board would Probably require, in connection with its con4:Lerat* h the application of the proposed Bank of IT.smattan Company for Illenabere41P in the Federal -Reserve System, current examinations of the Bank lIellhatt41). Trust Company and the International Acceptance Bank, and an in- Vestigation of the assets of the Fanhattan Company, and might also require the dis position of the stock now held by the Uanhattan Company of the County Nat ComDanY, New York, and the Corning Trust Company and the Aite Plains, liorth Side State Bank, both of Corning, New York. F:r. Warburg referred, 4°1.eriaor Lieyer stated, to the meeting of the shareholders to approve the proDozed reorp,Anizati°n which had been called for Tuesday, November c"), and illaicated that it is planned to complete the organization so that the new ihetitution can open for business on November 23, 1932, and that it would be 41Dossible in the meantime to comply with reported requirements of the Board; 114t that it is d ired to open the new institution as a member of the Federal tieserve Zystaa, gtvinC the Board, if desired, commitments that the bank stock 1Yel'erred to will be of within a reasonable time and that the bank 174,4 disPose t the requirements of the Board as to the correction of criticized tkIttera, reilowinr, an examination sub equent to admission to membership. The , ')ecretary stated that the proposed reorganization of the 11-aialattan aria -- its affiliates had first come to the attention of the Board a rticle in a New York newspaper of October 19, 1932, and that when "tober Assistant Federal Reserve Agent at New York, was in Washington 'the examination division discussed these matters fully with 22 438, 11/18/32 -9- • Dillistin and pointed out to him the desirability of giving them 114'"ate consideration in order that the consideration of the prospective alPleation for ne:thership might be expedited as much as possible. The Secret l'Sr also stated that Ta.. Siers of the Division of Examinations had Dillistin on the telephone several times during the following week the Parpose of ascertaining what had been done with respect to these 41tter'") and that, with the approval of the Board a letter was transmitted to the Federal reserve agent on November 3, 1932, when the suggestion was again tna.(16 that these natters be brought to the attention of the partieQ concerned. ell the 88;Me date the formal application of the naw bank for membership in the Reserve System was transmitted to the Board by Assistant Jederal ReACent Dill The Secretary added that on Monday, November 14, 1932, 711111e /.Tr. Case was in Viashinton the matter was discussed with him at length, tilt he indicated that he had not appreciated the significance of the infor414ti ell that flx. Dillistin had received, and that he agreed to cooperate here41'teZ the handling of these natters. While there is nothing in the Board's z.e Qozcis -r, iOrrill stated, indicating exactly when the matter of the pro- 11%e(1 I'e°rganization was fir t taken up with the Federal reserve agent, it 174 411d stood that such action was taken by the organizers in late August °1‘ e4r1Ir "tr an and it appeared that there had been ample tine to d thc (1°.ve101) current information concerning the assets of the Fanhattan Company 1)a(1. its aff iliates and to determine what should be done about the bank ztc,e po, referred to. 1°4 Or thakt He also stated that the Chief of the Board's 1aminations is now in New York City for the purpose of rendering e4e1 tanoe as he can in the assemblins7 of all additional information 4 Oa•ilable in connection with the application. During the ensuing 434 , 11/1a/32 -10-- ) T. Siens, Federal Reserve Examiner, joined the meeting. tl.r. Warburg was invited into the room and I Ir. Wyatt, General Counsel, ale() io. 4 ined the meeting. 1,7x. Warburg briefly outlined the difficulties which are presented tlY the 4. 4a1lure to advise the organizers of the pro-Posed new bark as to the liecillirements of the Board in connection with the company's application for 1111423 " 1P in the Federal Reserve System, and various possibilities of the ' 1311 were discussed with him. He then left the meeting to confer over the t01°Pholle With Lr. Stephen Baker, Chairman of the Bank of the Manhattan Company, Mew York City. la% Wyatt called attention to the fact that section 0 of the Federal Re8e Act Provides that no State bank nay retain or acquire stock in a Nerea zeserve bank except upon the relinquishment of any branch or bTanches ettlbiished after February 25, 1927, beyond the limits of the city, town or 111141ge in which the parent bank is located, and that while the banks in Inay not be branches, as such, of the new Banlz of the Manhattan a°4113EulY, it ary)ears that ownership or a controlling interest in each was c(Illired by the Llanhattan Company subsequent to February 25, 1927, and that t°eIlllit the new bank to become a member without disposing of the stocks 111 giletiorl would see tile to be in contravention of the spirit ard purpose of or un evuoion of its requirements. In this connection, Mr. Warburg atated that the conpany would like to retain the County Trust Company and 11rart it into a branch if the law should be amended this winter to permit ba nki4e. 41bkea 14 J1A lie expressed the hope that, in view of the unusual circum- which the membership application is before the Board, it would titled in admitti the bank with the assurance that it would dispose 4185 11/18/32 -11- er the be stock holdines referred to within a reasonable tine if so re- 11110n his return to the meeting, Er. Jarburg stated that he had been "1°11 zed to advise the Board that, if the application is approved, the bank will agree to use its best efforts to remedy any criticized matters disclosed by Ilbeequent examination; alno, that it will use its best efforts to disDese 4 the stock of the three banks within a reasonable time, possibly by J*Illy '19332 although the bank would -prefer to retain the stock of the 1111ty LI/ st Company of White Plains with the idea of converting it into a brat b should the law be amended so as to permit such action. Li be ert ected e. tilleraber tile Zaraes then suggested that the organization of the new bank could ill accordance with the present plans and that it could establish clearing account with the 2ederal Reserve Bank of New York until 'eTt.lirements of the Board can be net and the application for membership Zoved the regular course. Upon inquiry by Mr. Tames, Mx. Wyatt stated C/1 a Procedure is permitted by law. Mr. Warburg stated that while atzett atle.cested procedure is Possible, in his opinion, it would be inadvisable st andpoint of the bank. P4rther discussion followed during which Governor Meyer left the room, lat4111 PrelTiously stated that he had made arrangements which necessitated Q't.Q11111: an early train, and the meeting continued as a meeting of the O ommittee with Mr. Magee presiding. the At the conclusion of a Ourther discussion, Mr.T.7arburg withdrew from () t T heretm On it was agreed that Er. 1:agee should arrange for a meeting he ea'd on 7 :onda1 at such time as he and Governor Meyer may determine 11/18/32 -12r0r the purpose of considering further the application of the proposed Bank or /.:Eithattan. Company / and flr. Harrison was requested to inform Yr. Paulger bYtelel)hone that the Board desired hin to continue as vigorously as Possible te illqttiries which he had been ma'King and to arrange as far as practicable r"he c ooperation of vederal reserve and State examiners in developing 41141railable information with regard to the present condition of the 7anhattan Cc1.13411/r and its affiliates and the plans of the organizers of the new bank, 11(1 thut he urge thera to use their best efforts to arrange by November 21 for cli133?°2ition of the stock of the three State institutions; also, that he (1°11 inro tion as to whether the new institution might open as a clearing 11°11raerabez until it is in a position to meet the requirements of the Board fully. Thereupon the meeting adjourned. 411%'011ea: • irman, Executive Committ
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