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3531 A. meeting of the Federal Reserve Board was held in dashington corllionday, November 19, 1934, at 3:00 p. m. PRESENT: Mr. Mr. Li. Lr. 1.r. hr. Eccles, Governor Thomas, Vice Governor hamlin Lililor James Szymczah Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Board acted upon the following matters: Lemorandum dated November 19, 1934, from Mr. Morrill submittine the request of Governor Eccles that the Board approve the em- 131°Alent, effective immediately, of Miss Va Lois Egbert as secreta'rY to the Governor, with salary at the rate of 43,600 per annum; Qt11 "henry h. Edmiston as an assistant to the Governor, with 41xlery at the rate of 44,500 per annum; and of Charles R. Norris 48 rrlessenger assigned to the Governor's office, with salary at thS rof W.,080 per annum. Approved. Ilemorandum dated November 6, 1934, from Mr. Parry, Assistant kreetor of the Division of Research and Statistics, recommending t4t the Board authorize the payment to the firm of Haskins and 444, Certified Public Accountants, New York City, of $361.18 rel3re8e4ting re imbursement of traveling expenses incurred by two 14141145ra of the firm, Mr. Andrew Steuart and Mr. C. R. Bowen, in °°1111tiorl with pr ofessional services renderedat by them Er. 3532 11/19/34 -2- request during August and September, 1934, in the preparati"' of the Board's Regulation T. The recommendation was approved /1 five members of the Board on November 17, 1934. Approved. Lemorandum dated November 6, 1934, from Lr. Parry, Assistant Director of the Division of Research and Statistics, proposing that the Board retain the firm of Haskins and Sells, Certified Public ite°01Antants, New York City, for a period of three months, for the lit4Tose of (1) Advising with regard to current interpretations of RegulatIon T and with regard to matters involved in such amendments to this regulation, if any, as may became necessary during this period; Advising with regard to the periodic reports to be required from members, brokers, and dealers; Advising with regard to procedure to be established for inspection of the records of members, brokers, and dealers looking towards enforcement of the regulation; Advising with regard to stock exchange and brokerage matters that will come up in connection with the Board's !segulation governing margin requirements for banks, which ls now in preparation; and (5) Th.e Such other services as may be required in connection with the foregoing, nielli°r8-11cluill stated that it is contemplated that Er. Andrew " "nkrit 1 4 Partner of the firm, would be prepared to devote a maxit11° N's a meek to the service referred to; and that, in °Ifices of the organization of Haskins and Sells located ‘Iew York might be required to perform certain services in 4PectiN0 localities. The memorandum also stated that hr. 3533 11/19/34 Stewart t 8 -.3services would be charged for at the rate of 00 a day, 411d the rates for other members of the organization would vary from day to $25 a day depending upon the class of men assigned in "'l ease, and that it is understood that the cost to the Board of the Proposed arrangement would not exceed 0_,000 a month. The pro- (181/"1 Nv4a approved by five members of the Board on November 17, 1934. Approved. Memoranda dated November 10, 1934, from Ir. Paulger, Chief "he Division of Examinations, recommending that Liss Elizabeth e riffiu, Liss Helene L. Kearney, Liss Frederica G. Ritter, and 448 44114 P. Scott, who have been employed temporarily as stenogrill**111 in the division, with salary at the rate of ii4.50 a day, be Pointed permanently effective as of November 19, November 30, 11°/teraber 29, and November 19, respectively, as stenographers in the division, each with salary at the rate of $1,500 per annum, 814/Ject to their passing a satisfactory physical examination, and that it, the event they do not pass a satisfactory physical examinat1(1 theY be c ontinued on the present temporary basis until such 48 their positions can be filled conveniently by permanent litellogrEtphers. The recommendations were approved by five members ofthe Board on November 17, 1934. Approved. .or 116113 andum dated November 14, 1934, from Er. Goldenueiser, 3534 114.9/34 -4.- Director of the Division of Research and Statistics, recommending the. -PPointment of Lrs. Julia Haigh as a clerk in the division, 'with salary at the rate of 0,800 per annum, effective as of the cllite upon which she enters upon the performance of her duties. The memorandum stated that hrs. Haigh was employed in the Division "Research and Statistics from February 20, 1928, to September 11, 1934 'when she resigned to accept a position at the Denver branch Or the Federal Reserve Bank of Kansas City; that in the intervening 454t418 111.8* 'itit Haigh has found it difficult to adjust herself to the of Denver; that, for this reason, the Denver branch is 11:41111g to release her and has given her leave of absence to look ter 4N4loyment in a more favorable altitude; and that, since Lire. '18 service with the Federal Reserve System has been continuous 1141" 1928 and she is now a member of the retirement system of the ?oder 41 reserve banks, it is assumed that no physical examination °I required in her case. The recommendation was approved by _ members of the Board on November 17, 1934. Approved. XeMorandum dated November 14, 1934, from Liz'. Goldenmeisers vett- or the Division of Research and Statistics, recommending the tzl 4PPointzment of Nr. Leroy Li. Piser as a research assistant in division, With salary at the rate of 44,200 per annum, effective Ite or the date upon which he enters upon the performance of his (14148 Etter having passed a satisfactory physical examination. the 3535 11/19n4 -5- The r ecommendation was approved by five members of the Board on November 17, 1934. Approved. Telegram dated November 17, 1934, approved by four members q the Board, to hIr. Walsh, Federal Reserve Agent at the Federal Reserve Bank of Dallas, reading as follows: "Your mires. Board approves November sixteenth instead of December first as the effective date of appointment of A. 0. N icholson." Approved. Letter dated November 16, 1934, approved by five members of the Board, to Lr. O'Connor, Comptroller of the Currency, reading tollows g "In accordance with Acting Comptroller Amult's recom/endation, the Federal Reserve Board approves a reduction of 0 in the common capital stock of 'The Abington National ' 61-4k of Clark's Summit', Clark's Summit, Pennsylvania, purInt to a plan which provides that the bank's capital shall ' t 4nereased by the sale of 450,000 Class 'A' preferred stock c; . ) the Reconstruction Finance Corporation and $26,000 of 'B' preferred stock and $40,000 of new common stock to c44. interests; that the resultant amount of common capital es°dt 0191%( 1) .00, shall be reduced to $50,000 by the proposed @10,000, and that the released capital shall be a_:d to eliminate a corresponding amount of unsatisfactory ,4 ets, all _ s a set forth in 1).1r. Awult's letter of October 31, 1934. 4 041 "Although the plan as stated provides for the use o . tete.t the 4i40,000 of released capital in eliminating unsa:o.sthe crY assets, it is assumed that your office will require fiedctitination, at least, of all estimated losses as classiAu Y Your examiner in the report of examination as of gue28p 1934. eottrn. „4-3a considering the plan under which the reduction in there- eaPital is to be effected, it has been noted that 111.11 remain in the bank unprovided for a substantial securities depreciation, which, if considered as a 3536 11/19/34 -6"loss, mould impair the bank's common capital stock. It is assumed, however, that you have this condition in mind and that 'whenever it is feasible to do so, you will require such further corrections as may be practicable." Approved. Letter dated November 16, 1934, approved by four members of the Board, to Er. Austin, Federal Reserve Agent at the Federal Re"I've Bank of Philadelphia, reading as follows: "Reference is made to your letter of November 9, 1934, roc .°Inmending that the 'West Branch Bank and Trust Company', lliamsport, Pennsylvania, be granted permission to reduce ' ts capital stock from $725,000 to 4475,000 by the retirement :and c ancellation of $250,000 of preferred stock awned by the Rec onstruction Finance Corporation. The Board has reviewed' the information submitted, towith the report of examination of the bank as of June 1934, from which it appears that upon completion of the ProPosed retirement of preferred stock the bank will have a !Lt isfactory capital structure as compared to its deposit Jilabilities. In accordance with your recommendation, there4.orss the Board approves a reduction of 4250,000 in the capi,n1 of the nest Branch Bank and Trust Company by the retiretent of that amount of preferred stock with the understanding, tp,,,e°ursei that the transaction has been approved by the Secre0f Banking of the Commonwealth of Pennsylvania and that "unsel is satisfied as to the legality of the proceedga in oonnection therewith." Approved. Letter dated November 16, 1934, approved by four members of the 8 oard, to Mr• O'Connor, Comptroller of the Currency, reading Eta follows* "In a ccordance with Acting Comptroller Awalt's re?om:dation, the Federal Reserve Board approves a reduction in Ti:,1111°n capital stock of 'The Citizens National Bank of liPton, Indiana, from $100,000 to 450,000, pursuant a. Ilhich provides that the bank's capital shall be r--sed by 0,000 of preferred stock to be sold to the T 3537 11/19/34 -7- 0, xteconstruction Finance Corporation and that the released capital, together with a portion of the bank's surplus and undivided profits, shall be used to eliminate or reduce undesirable assets, all as set forth in Lir. Amult's memorandum of November 8, 1934." Approved. Telegram dated November 16, 1934, approved by four mambers or the Board, to Er. Peyton, Federal Reserve Agent at the Federal Reserire Bank of Linneapolis, stating that the Board has given consideration to the application of "1;ATsha11-McCartney Company", 1341ces, iiorth Dakota, for a voting permit under the authority of section 5144 of the Revised Statutes of the United States, as 841ellcieds entitling such organization to vote the stock which it 41113 or controls in "The First National Bank of Oakes", Oakes, Dakota, and has authorized the issliAnce of a limited permit to the applicant for the following purposes: 0 At any time prior to December 31, 1934, to act upon a toal Pr°P°s or proposals to issue and sell preferred stock and i). rnake such amendments to the articles of association and W5 aE said bank and to take such other action as shall be R4 " to authorize the issuance and sale of such -voek e essary st The+ 'elegram stated also that the issuance of a limited voting per41:1t to reduce the common capital stock of The First National Bank Of okk -elS 111.11 be considered in connection with an application for 1° of caPital stock when such application is received by the 4ard. The te, J-cgram authorized the agent to have prepared by counlaei tor t C he Pcderal reserve bank, and to issue to Earshall-McCartney el111-441 Et limited voting permit in accordance with the telegram. Approved. 3538 11/19/34 -8- Letter dated November 17, 1934, approved by five members of the Beard, to Mr. Edward C. Moore, Vice President and Treasurer °f the Erie City Iron Works, Erie, Pennsylvania, reading as follows: "This refers further to your letters of October 5 and October 22, 1934, relative to a claim by the Federal Reserve Bank of Cleveland fcr expenses incurred in connection with the aPplication by the Erie City Iron Works for a loan under section 13b of the Federal Reserve Act. "Mr. Levis B. Williams, Federal Reserve Agent at the Federal Reserve Bank of Cleveland, has advised the Board that he will be pleased to discuss the natter with you and that he is confident that a satisfactory agreement can be !leached. It is suggested, therefore, that you see Mr. $ and it is hoped that the matter can be settled to your satisfaction." Approved, together with a letter, also dated November 17, 1934, and approved by five members of the Board, to Mr. Williams, Federal Reserve Agent at the Federal Reserve Bank of Cleveland, reading as follows: Receipt is acknowledged of your latter of November 2, 1034, relative to a claim by the Federal Reserve Bank of Cleveland for expenses incurred in connection with an apiieation by the Erie City Iron Works for a loan under see13b of the Federal Reserve Act. "In view of Mr. Moore's feeling and of your desire to ??rrect his impression that the charge is unjust, it is belleyed that it would be desirable for you to discuss the :atter with Mr. Moore and endeavor to reach a satisfactory ., ettlement. There is inclosed herewith a copy of a letter 11 J-11 Which it has been suggested to Mr. Moore that he call P°11 You in regard to the ratter." dEtteci ths In connection with the above there was presented a letter 4011-ember 17, 1934, approved by rive members of the Board, to Chair a all Federal reserve banks, reading as follous: for "The board recently received a letter from an applicant an industrial loan under Section 13b of the Federal 3539 11/19/34 -9- "Reserve Act stating thiA he had received a bill from the Iederal reserve bank to which the application was submitted, for several hundred dollars, representing the charge made by at outside firm of auditors for making an examination in conhection with the application. The applicant for the loan states that he either overlooked entirely a paragraph in the b411kI s application form relating to payment of expenses, or else took it for granted that when he furnished a full detailed report by auditors of recognized standing there would be little $ if any, expense involved for further investigation. "After considering the correspondence in this case, and the replies to the board's telegram of October 12, 1934, Trans 2124, it is felt that, in order to avoid misunderstand1.11i's, it would be desirable for the Federal reserve bank be.ore undertaking any investigation or examination in connection.with an application for a loan under section 13b which MaY involve expense to the applicant to advise such applicant aa to the bank's policy with respect to the payment of the Tense of such investigation or examination and to give the :713Plloant an estimate of the amount of the charges it will be expected to pay wherever it is possible to do so. It flea not appear to be sufficient to rely upon a printed state' 4ent in the application form, since such a statement may be overlooked or not fully appreciated by the applicant." r Approved. T elegram to Ir. hoxton, Federal Reserve Agent at the Federal 415"1113 Bank at Richmond, reading as follows: ir "Referring to kr. Fry's November 13 letter, Board re( A, ) ,k!'s aPProval application The National Bank of Ansted$ le.el:tanrginia, for Federal Reserve bank stock granted -6;8Lt4ce l ; ap proves new application for 36 shares made T_r x suant to resolution adopted at meeting of board of direcheld on October 20, 1934, effective if and when Comptrol' 14 of Currency authorizes bank to commence business." Approved. Telegram dated November 16, 1934$ approved by four members 'arthe Board, to Mr. Stevens, Federal Reserve Agent at the Federal 11eaer lie Bank of Chicago, reading as follows: "Your -wire november 16. Consideration now being given 3540 11/i9/64 -10- "to question hether blanket permit under section 32 of Banklng Act of 1933 as contained in Trans. 2015 should be extended after December 1, 1934. In event such blanket permit is not extended, Board will issue permit under section 32 to Harris Trust and Savings Bank, Chicago, Illinois, covering corresPcndent relationships referred to in your telegram in connectIon with ce30,000,000 State of Illinois relief bonds to be offered for sale November 22. Such permit will be subject to terms and conditions stated in Trans. 2015 except as to date Of expirat ion." Approved. Letter to 'Dir. Sargent, Assistant Federal Reserve Agent at the Federal Reserve Bank of San Francisco, reading as follows: "heceipt is acknowledged of your letter of November 8, 1934, regarding the applicability of section 32 of the Bnrking Act of 1933 to the service of Li.. Paul Shoup as a director of two national banks and as president and director of the Railroa d Securities Company, San Francisco, California. 'You state that it is the opinion of counsel for your bank that Railroa Securit d ies Company is not engaged primarily . 11 the business of purchasing, selling, or negotiating securiire within the meaning of section 32 of the Banking Act of ,33 'and in view of the information submitted the Board sees freason to differ with that opinion since it appears, among _1/4"acner things, that purchases and sales of securities for the .sttlfour years averaged, respectively, less than 30% of t ,a- assets and that, as of September 30, 1934, over 60% of tr_ securities owned by the company had been held for over " 1 years and only about 80 had been held for less than six Irlonths. II A _ 'la you know, if the company is actively engaged in selling such its Own shares or other securities to the public, plie might raise a further question as to the ap19, aellity of 04, x,809-, section 32 (see Board's letter of October 26, /). liowever, no information has been submitted indicating such activity on the part of the company." 1 L ”tivity Approved. There were then presented the following applications for e4Nes ln stock of Federal reserve banks: 11/19/34 l D' ications for ORIGINAL Stocks No. 7. e Firs iational Bank in Dolton, Dolton, Illinois 4e0kuic National Bank, Keokuk, Iowa District r0. 146,1 Na ional Bank of Gladewater, 41 adewater, Texas District No. 12. The ational Security Bank of Toledo, Toledo, Oregon 36 Total Approved. Thereupon the meeting adjourned.
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