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A meeting of the Executive Committee of the Board of Governors
of the Federal Reserve System was held in Washington on Saturday, November 2, 1935, at 11:30 a. in.
PRESENT:
Mr. James, presiding
Mr. Hamlin
Mr. Miller
Mr. Morrill, Secretary
Mr. Bethea, Assistant Secretary
Mr. Carpenter, Assistant Secretary
The Committee acted upon the following matters:
Letters to Mr. Curtiss, Chairman of the Federal Reserve Bank of
Boston, Mr. Sproul, Secretary of the Federal Reserve Bank of New York,
Mr. Wood, Chairman of the Federal Reserve Bank of St. Louis, and Mr.
Sargent, Secretary of the Federal Reserve Bank of San Francisco, stating
respectively that the Board approves the establishment without change
by the Boston bank on October 30, by the New York bank on October 31,
by the St. Louis bank on October 30, and by the San Francisco bank on
October 31, 1935, of the rates of discount and purchase in their existing schedules.
Approved unanimously.
Telegram to Mr. Sargent, Assistant Federal Reserve Agent at the
Federal Reserve Bank of San Francisco, reading as follows:
"Your telegram November 1. Board's resolution of
December 25, 1915, contained in circular number 21 series
of 1915 still effective and under this resolution N. T.
Edwards would not be eligible to serve as Class A director
of Federal Reserve bank if at the same time he occupies
position of State Senator. However, his name may be
omitted from list of nominees only upon request of all
member banks which nominated him. Accordingly, it is suggested that you notify banks which nominated candidate of
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"Board's views and omit name from list if nomination is
withdrawn at request of all such banks. In notifying such
banks reference should be made to expression of Board's
views in footnote appearing in letter sent to all member
banks in your district by Deputy Chairman of Board of Directors of your bank under date of September 27, 1935. It is
suggested that you also notify candidate of Board's views.
If nomination is not withdrawn by all nominating banks but
candidate signifies desire to withdraw his name from consideration Board feels that you should bring such fact and
reasons therefor to attention of all voting banks either
by notation on list of candidates or by letter inclosed with
such list."
Approved unanimously.
Letter to the board of directors of the "Washington State Bank",
Washington, Iowa, stating that, subject to the conditions prescribed in
the letter, the Board approves the bank's applications for membership
in the Federal Reserve System and for the appropriate amount of stock
in the Federal Reserve Bank of Chicago.
Approved unanimously for transmission through the Federal Reserve Agent
at Chicago.
Letter to Mr. Sargent, Assist4nt Federal Reserve Agent at the
Federal Reserve Bank of San Francisco, reading as follows:
"Receipt is acknowledged of your letter of August 27,
1935, regarding the application for membership which has been
filed with your office by the First Security Bank, of Beaverton, Oregon
"Under the provisions of Section 345 of the Banking Act
of 1935 the capital of a bank applying for membership and which
has outstanding any capital notes or debentures of the type
which the Reconstruction Finance Corporation is authorized to
purchase pursuant to the provisions of Section 304 of the
Emergency Banking and Bank Conservation Act approved March 9,
1933, as amended:
may be deemed to be unimpaired if the sound
value of its assets is not less than its total liabilities, including capital stock, but excluding such
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"capital notes or debentures and any obligations of
the bank expressly subordinated thereto.?
"Accordingly, if the sound value of the assets of the First
Security Bank of Beaverton is equal to the total of its liabilities (exclusive of the liability for capital debentures sold to
the Reconstruction Finance Corporation) and the par value of
its capital stock, the bank may be considered as having an unimpaired capital, and, therefore, as you have assumed, eligible
for membership in the System.
"According to your letter of January 29, 1935, the First
Security Bank of Beaverton was formerly the Gaston State Bank,
which was permitted to move to Beaverton upon the condition that
its capital be increased from $10,000 to $25,000. It is assumed
that in considering the application of the bank you will satisfy
yourself whether or not the capital increase was legally effected, inasmuch as in your letter dated January 29, 1935, it was
stated that the increase in common capital stock was effected
in part by the use of some of the proceeds of the sale of capital
debentures, which, if true, might raise a question as to the
validity of the increase in capital."
Approved unanimously.
Letter to Mr. Austin, Federal Reserve Agent at the Federal Reserve
Bank of Philadelphia, reading as follows:
"In accordance with your recommendation, the Board of
Governors of the Federal Reserve System approves the establishment and operation of a branch at Shrewsbury, Pennsylvania, by the 'York Trust Company?, York,Pennsylvania, provided
the establishment and operation of such branch is approved
by the appropriate State authorities. Please advise the bank
accordingly and forward copies of any amendment to the articles of incorporation which may be effected in connection
with the transaction."
Approved unanimously.
Memorandum dated October 25, 1955, from Mr. Smead, Chief of the
Division of Bank Operations, submitting a copy of the balance sheet
(Form 54) used by the Federal reserve banks during 1955 in transmitting
daily condition reports to the Board on which had been indicated certain
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proposed changes, and recommending that such proposed changes be incorporated in the form of balance sheet to be used by the banks during
1936.
The memorandum discussed certain of the proposed changes and
called attention to the fact that the item "Board of Governors - building account", had been eliminated from the proposed balance sheet for
1936 in order to conform with the recommendation of the recent Governors'
Conference that assessments levied by the Board of Governors of the
Federal Reserve System, to purchase a site and construct a building to
house the Board, be charged to profit and loss by the Federal Reserve
banks.
Approved unanimously.
Memorandum dated October 28, 1935, from Mr. Smead, Chief of the
Division of Bank Operations, recommending approval of a proposed revision of weekly statement of condition of reporting member banks
in
the form attached to the memorandum, and of the following explanatory
memorandum to accompany the first issue of the statement in the revised
form:
"Beginning this week the weekly condition statement of
reporting member banks, issued by the Board of Governors of
the Federal Reserve System, will cover reporting banks in 101
leading cities as it did prior to the banking holiday in 1933,
instead of 91 cities as in the recent past. When publication
of the statement was resumed following the banking holiday,
11 cities were dropped from the published statement temporarily
because all or some of the important reporting banks in each
of those cities had not then been licensed to resume full banking operations.
"The weekly statement has been revised further so as to
show additional items which have been reported to the Board
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"since September 1934. The amount of 'Loans to banks' was
included heretofore partly in 'Loans on securities - to
others' and partly in 'Other loans'. The item 'Demand deposits - adjusted' represents the total amount of demand
deposits standing to the credit of individuals, partnerships,
corporations, associations, States, counties, municipalities,
etc., minus the amount of cash items reported as on hand or
in process of collection. The new item is a more accurate
measure of changes in the volume of demand deposits available
for use of the general public than was the old item 'Net
demand deposits', which represented merely demand deposits
subject to legal reserve requirements. The method of computing the item 'Net demand deposits', furthermore, has been
changed in two respects in accordance with provisions of the
Banking Act of 1935: first, it includes United States Government deposits, against which reserves must now be carried,
while previously these deposits required no reserves, and,
second, amounts due from banks are now deducted from gross
demand deposits rather than solely from amounts due to banks,
as was required under the old law. These changes make the
present item 'Net demand deposits' not comparable with the
same item as shown prior to August 23, 1935. The item 'Time
deposits' differs from that previously published in that it
formerly included a relatively small amount of time deposits
of other banks, which are now included in 'Inter-bank deposits'. The item 'Due to banks' shown heretofore in the
statement included only demand balances of domestic banks.
The item 'Borrowings' represents funds received, on bills
payable and rediscounts, from the Federal Reserve banks and
from other sources. Figures are shown also for 'Capital
account', 'Other assets - net' and 'Other liabilities'. By
'Other assets - nett is meant the aggregate of all assets
not otherwise specified, less cash items reported as on hand
or in process of collection which, as previously indicated,
have been deducted from demand deposits.
"Data by weeks since September 5, 1934, for all reporting
member banks, for reporting banks in New York, and for those
in other leading cities, corresponding with the figures for
the current week, will be published in the forthcoming issue
of the Federal Reserve Bulletin."
The memorandum also stated the Division of Bank Operations had been looking into the desirability of recommending to the Board that a condensed
condition report be obtained monthly from all member banks, but that a
definite recommendation on this question had been withheld pending
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further study and pending the revision of the form of quarterly ca)) report, a tentative draft of which will be presented to the Board in the
near future; that it was thought that if monthly reports should later be
obtained from all member banks, it may be practicable to discontinue obtaining weekly reports from most of the present reporting banks, and
that if this were done the present series covering 101 cities, or some
modification thereof, could be continued on a monthly basis to provide
comparable figures for a year or so.
Approved unanimously.
Letter to Governor Norris of the Federal Reserve Bank of Philadelphia, reading as follows:
"This refers to your letter of October 17, 1935, regarding the abstraction of a certificate for shares of stock
valued at l5 by Mr. Bertram H. Bradshaw, formerly employed
as a clerk in the transit department of your bank. In view
of all the circumstances involved and particularly in view of
the small amount involved, you request to be advised whether
the Board considers it necessary that this case be reported
to the Department of Justice.
"While it is appreciated that the circumstances involved are such that the Attorney General of the United States
might decide not to prosecute, nevertheless, the Board feels
that a failure to report a possible criminal violation by an
employee of a Federal Reserve bank might subject the Board and
the Federal Reserve bank to unfavorable comment, in view of
the fact that numerous cases involving apparent criminal violations by employees of member banks have been reported to the
Department of Justice. Accordingly, it is requested that you
report the facts in the present case to the local United States
District Attorney and forward three copies of such report to
the Board for transmittal to the Attorney General in accordance
with the usual practice in such cases. As noted in the Board's
letter of April 4, 1923 (X-3683), it will not be improper for
you to recommend clemency if you still feel that the circumstances justify such a recommendation."
Approved unanimously.
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Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve
Bank of New York, reading as follows:
"Mr. Gidney's letter of June 27, 1935, regarding the
status of Mr. F. C. Ferguson under the Clayton Act, referred
to the fact that the Board had issued a permit authorizing
him to serve as director and officer of Hudson County National Dank, Jersey City, New Jersey, as director and officer
of, Merchants Trust Company, Union City, New Jersey, and as
director of West Bergen Trust Company, Jersey City, New
Jersey; that Mr. Ferguson was no longer serving the West
Bergen Trust Company; that he had, however, been serving as
director and officer of Ampere Bank and Trust Company, Fast
Orange, New Jersey, but had tendered his resignation on
February 6, 1935, and had not served as director or officer
since that time, although his resignation had not been
accepted by the trust company.
"In view of the provisions of section 8 of the Clayton
Act, as amended by the Banking Act of 1935, and in view of
the Board's letter of September 16, 1935 (X-9318), it appears that Mr. Ferguson was 'lawfully serving' the Hudson
County National Bank and the Merchants Trust Company on the
date of the enactment of the Banking Act of 1935 and that
the prohibitions of section 8 will not be applicable to
such relationships until February 1, 1969.
"Since neither the Merchants Trust Company nor the
Ampere Bank and Trust Company is a member bank, the question whether Mr. Ferguson may now serve the Ampere Bank and
Trust Company apparently depends upon whether or not East
Orange is 'contiguous or adjacent to Jersey City. The Board
does not know whether Mr. Ferguson now desires to serve the
Ampere Bank and Trust Company; but, in the event that you
feel that it is desirable to advise him whether or not he
may do so, it is suggested that you give consideration to the
matter in the light of the Board's letter of October 11,
1935 (X-9341). Of course, if you feel that the matter
should be considered by the Board, the Board will be glad to
do so upon receipt of full information and such comments as
you may care to make."
Approved unanimously.
Letter to Mr. Wood, Federal Reserve Agent at the Federal Reserve
Bank of St. Louis, reading as follows:
"Reference is made to the applications of Mr. R. Wallace
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"Karraker, Jonesboro, Illinois, and Mr. John B. Jackson,
Anna, Illinois, for permission under the provisions of the
Clayton Act to serve at the same time as directors and/or
Officers of The First National Bank of Jonesboro, Jonesboro, The Anna National Bank, Anna, and First State Bank,
Dongola, all of Illinois.
"It appears that Dongola, which has a population of
about 600, is located about ten miles from Jonesboro and
Anna, which have populations of approximately 1200 and 3400,
respectively, but that Jonesboro and Anna are not over a
mile apart. In the circumstances, it would seem that Dongola
is probably not 'contiguous or adjacent' either to Jonesboro or Anna, but that Jonesboro and Anna are probably 'contiguous' or 'adjacent' to each other within the meaning of
those words as interpreted in the Board's letter of October
11, 1935 (X-9341). If these suppositions are correct, section 8 would prohibit these gentlemen from serving both the
Jonesboro and Anna banks, but it would not prohibit their
serving the Dongola bank and either one of the other banks.
"However, in that event the applicants could nevertheless continue to serve both the Jonesboro and Anna banks,
as well as the Dongola bank, until March 1, 1936 or until
the adoption of general regulations by the Board, whichever
is the earlier, pursuant to the permission granted in the
Board's resolution of September 12, 1935, a copy of which
was forwarded you with the Board's letter of September 13,
1935 (X-9317). As you know, that resolution granted permission to any person who had filed an application for permission to serve two or more banks, which had been received
at the offices of the Board on or before August 23, 1935,
and on which the Board had taken no action prior to that date,
to serve any member bank named in such application and any
other one bank named in such application, in addition to any
service otherwise lawful under the Clayton Act, until the
adoption of general regulations by the Board or until March 1,
1936, whichever is the earlier.
"If, in the light of your familiarity with the situation,
you agree with the above suppositions regarding the questions
whether Dongola, Jonesboro and Anna are 'contiguous' or 'adjacent', it is suggested that you advise the applicants in accordance with this letter. Of course, if you feel that
either of these questions should be considered further by
the Board, the Board will be glad to do so upon receipt of
full information, together with such recommendation as you
may desire to make."
Approved unanimously.
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Thereupon the meeting adjourned.
(-1(")erL Le.,P
Secretary.
Approved:
Acting Chairman, Exe
ive Committee.
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