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194 meting of the Federal Reserve Board was held in 1;as1thngton 011 Tuesday, November 28, 1933, at 2:30 p. in. PRESENT: Mr. Mr. Er. Mr. Er. Black, Governor Hamlin James Thomas Szymczak Er. Morrill, Secretary Mr. Carpenter, Assistant Secretary Bethea, Assistant Secretary Er. 'Martin, Assistant to the Governor Er. Wyatt, General Counsel Ni'. Paulger, Chief of the Division of Examinations Mr. Chamberlin, Federal Reserve Examiner The Governor presented the following letter received by him /111cier date of Lovember 21, 1633, from Mr. Albert A. Sprague, Director Continental Illinois National Bank and Trust Company, Chicago, 13 "The Board of Directors of the Continental Illinois National „ealk and Trust Company, through an appropriate committee, has, 11. -L y tendered the office of Chairman of the Board to Mr. George anneY, of Chicago. Ranney, uho is conversant with the particular situation of thA "ank, and familiar with the important part that our institution itaY in the Federal Reserve System in the Middle West, asks us to Rerlre if his selection meets with the full approval of the Federal or if they have any person in mind who would be more ace; l;Zeabi 0 am Sure his query will appeal to you as it does to us as most 4„_1 a,l prlate and indicative of his understanding of the entire situOf c-L km enclosing copies of letters sent today to the Comptroller porefreneY and to the Director of the Reconstruction Finance Corprompted by other points raised by Mr. Ranney. •ffith at ea, ny best wishes to you, and asking that you favor us with 41y reply.ft The Governor also presented a copy of a telegram received by 4131'it CeraPtroller of the Currency Amult under date of November 25, 1933, I'll°1111Zre C°Connor, Comptroller of the Currency, who is in Los Angeles, 195 13128/33 -2- requesting that the Board withhold action on Mr. Sprague's letter until 141** O'Connor's return. 18 4 Governor Black stated that he felt lir. Ranney very satisfactory man for the position referred to; that the ap- P°irrtzlent of Mr. Ranney would be entirely satisfactory to him; and that, Ishile he vas leaving Washington this afternoon and mould be away the reet of the meek, if agreeable to the other members of the Board, he 11°111d Place the correspondence above referred to in the hands of Mr. 4/111"E‘k as Chairman of the Executive Committee, with the suggestion that the matter be taken up when Mr. O'Connor returns to his office on PridaYs December 1. No objection was expressed to the suggested Procedure, although Mr. Szymczak stated that he felt that action on the matter should be deferred Pending the Governor's return to Washington on Monday. Reference mas then made to a memorandum dated November 25, 1933: *(3111 Acting Comptroller of the Currency Await, recammending that, sub- Jeet to the conditions. stated in the memorandum, the Board approve the 4°1-Cation dUce its of "The National City Bwrik of New York" for permission to re- present common capital stock from $124,000,000 to $77,500,000, 144der a plan which provides also for the sale of $50,000,000 of preferred Stock to the Reconstruction Finance Corporation and/Or others; no part of the roloased capital to be returned to shareholders, but to be used in the out manner and under the conditions set forth in the memorandum to charge estimated losses and depreciation as classified in the report of exkkination of the bank as at the close of business on April 7, 1933. G(Ivernor Black stated that Mr. J. H. Perkins, Chairman of the 91; 11/28/33 -3- 4ard of Directors of the National City Bank, and :Ir. Lancaster, : 1 .oart of counsel for the bank, called on him on Saturday in con- nection with the proposed capital reduction, and that a telegram was r°°eived today by the Comptroller's office from Mr. Case, Federal Reaerve Acent at New York, st,Lting that he has no hesitancy in recommending t hat the proposed reduction be approved on condition that no part of the ProPosed reduction be returned to shareholders; that the bank be requi A re" to make such charge-offs and set up such reserves as the Comptroller of the Currency may require; and that before such reduction ahall uecorne effective the bank's capital shall be increased by the issuanee and sale of50,000,000 of - referred stock to the Reconstruction Finazee C orporation and/or others. Governor Black added that Y.essrs. Perkins and Lancaster had been in conference with the Reconstruction Pinai Corporation since last Saturday, November 25, and that Mr. Lanad reported that an agreement had practically been reached with l'egard to the C°rPoration. issuance of preferred stock to the Reconstruction Finance LI Paulger stated that his division had checked the l'iCures s ubmitted in Mr. Amalt's meriorandum with the report of examinati°4 °f the bank and, felt that the atr°11ø.er found that they are in agreement, and that it is completion of the plan will place the bank in a much positi0n. After discussion, itir. Szymczak moved that the aPplication for reduction of stock under the plan submitted be approved. Carried. Governor Black referred to the consideration given at the meeting !) 4 ,:;Ji 11/28/33 -4f the Board on October 19, 1933, to the request from the Federal Reye Bank of Chicago for approval of additional compensation for eclAncel for the bank, and stated that when he MS in Chicago he discussed the matter with Mr. Stevens and Deputy Governors McKay and Preston; that thc latter two were very much in favor of trying to obtain the exclusive " 8 of ix. Dunn as counsel for the bank; and that, while Mr. Stevens erilii 's° in favor of arranging for the exclusive services of Er. Dunn, 71" al he 4elt that the firm of Layer, Yleyer, Austrian and Platt should be retaineA to handle the larger legal matters of the bank. Governor Black 8tatcd that he had advised the officers of the Chicago bank that the ' 3°11rd feels the bank should have the full time services of competent 1 but 3111"1 " that the bank should arrange to discontinue the present arr141 ent with the firm of Layer, Meyer, Austrian and Platt, which is alzo counsel for the Continental Illinois National Bank and Trust CamParo, wq Du • -rlne; the ensuing discussion, Mr. Szymczak stated that he under00d that 'What the bank desires at this time is some arrangement under Idlich it can obtain the full time services of Mr. Dunn until the end of thc current year When the present arrangeme It with Mayer, Meyer, Austrian e'lld Platt c7Pires and when it is 1)elieved a new arrangement can be made 141,th v -r• Dunn independently of the firm. Mr. Wyatt stated that he understood btaziks rti"Kair that Mr. Dunn is now giving all of his time to the At the conclusion of the discussion, Jr. Ss,zymczak was requested to take the matter up with lire Stevens by telephone to ascertain the exact nature of the present arrangement with Jr. Dunn and the firm of Mayer, Meyer, Austrian and Platt, 11/28/33 _5_ and what the present desire of the bank is with regard to any change in the present arrangement and compensation of counsel. '-ieference was then made to a memorandum dated November 22, 1933, Prepared in the Board's Division of Examinations with regard to a letter dated November 18, 1935, from Lir. Austin, Federal Reserve Agent at setting forth proposed plans of reorganization, and reoPening wIthout restriction, of the "Equitable Trust Company" and the !to Azar-u-ntee Trust Company", member banks located in Atlantic City, New jer20 Y3 ITy•• Austin stating that the banks are about to fib o their applieatioris with the Secretary of the Treasury for a license to open on an 1111reatricted basis and that, before submitting his recomniendation to the Secretary of the Treasury, he would like to have the views of the Board 1111°11 the various questions involved. After discussion, the Secretary was requested to advise Mr. Austin that the Board feels that it Would not be justified in approving the reorganization of the trust companies under the plan submitted. There was also presented a copy of a circular letter dated 11°\reLlber 20, 19 33, from Mr. Wm. H. LicReynolds, Administrative Assistant to the c)cretEtry of the Treasury, addressed to all offices of the Trea4111rDePartment, in vhich was quoted a letter dated November 18, 1933, r141111° L. Vir. Douglas, Director of the Bureau of the Budget, stating 111, i4 order that there may be uniform practice throughout the van of the Government, it is requested that, in so far as 111*(letl-able, all employees be authorized to enjoy a half holiday on the Preceding Th csgiving. Mr. McReynolds' letter stated that, in 199 11/28/33 -6accordance With Mr. Douglas' letter, all employees of the Treasury Dewhose services can be spared, will be excused from duty at P. m. on Wednesday, November 29, 1933. Upon motion, it was voted that the Board's Offices be closed at one p. m. on Wednesday, November 29, 1933. Morrill alluded to the action taken at the meeting of the 4ar ' on November 15, 1933, with regard to inquiries by banks located in Al "ka and Puerto Rico concerning membership in the 'Federal Reserve SYstem -" Under and stated that a further letter had been received from hr. Case date of November 21, 1933, in which he referred to inquiries which have been made at the New York bank by representatives of the Banco de ?once, Ponce, the Banco Popular de Puerto Rico, San Juan, and the Banco de Norto Rico, San Juan, and in which he stated that the inquiries by the Plaerto Rico banks suggest the desirability of an early decision by tho Federal Reserve System as to the broad principles involved, as outin his letter of October 20, 1933. '1' Liorrili also said that the matter of membership of banks in came up at the meeting of the board of directors of the New c3I'lcba.nk on November 23, at which Mr. Goldenmeiser, Director of the 1)Qard's D ivision of Research and Statistics, was in attendance, and that Lir. Goldenweiser, at tho request of Mr. Case, had reported in a 14°111°ra1duza dated November 24, 1933, that it was apparently the feeling or the bo„d of the bank, or directors of the bank that the Federal Reserve Board, the two jointly, should make an investigation of the 8 -4ti°4 in Puerto Rico and decide what policy to pursue in regard to 11/28/33 -7- inc Puerto Rican banks to membership, and that the discussion at the meetin2; ended by the appointment of a committee consisting of Mr. °7ren D. Young and Governor Harrison to take up the matter. Governor Black stated that Mr. Case had called him on the telePhone this morning and had expressed the opinion that, in view of the 111(1111'1'i-es regarding membership received from banks in Puerto Rico, it is \r"Y d esirable that a survey of conditions in the island be made and that he would be glad to have such a survey made by the Federal Reserv e Ballk of Ilew York, or, if the Board desired, in conjunction with repreatilres of the Federal Reserve Board. A discussion ensued, at the conclusion of Which Mr. Hamlin moved that Mr. Case be advised that the Board offers no objection to the iTow York bank making such a survey of the banking and general business conditions in Puerto Rico as is necessary to enable the board of directors of the bank to reach a considered decision as to the recommendation it will make to the Federal Reserve board in connection with the question of the admission to membership of banks located in Puerto Rico. Carried. In connection with the above, idr. Hamlin stated that Ur. Herbert bitrol„ ' called on him recently and advised him of a survey which he made Et:N ori the 41co about three years El.o as an investigator of the Bureau of Y Part the and 1,1r. Hamlin inquired whether there would be any objection of the members of tho Board to his transmitting to Mr. Case °I.rlation given to him by kr. Brown. No objection was expressed by the other members of the Board to the action proposed by r. Hamlin. The ,„4 "LI-flutes of the meetings of the Federal Reserve Board held 201 11/28/33 -8- ell November 6 and 7, 1933, were approved. The Board then considered and acted upon the following matters: Letter dated November 23, 1933, from Mr. Sproul, Secretary of the Federal Reserve Bank of New York, and telegrams dated November 23, 433, from Mr. McClure, Chairman of the Federal Reserve Bank of Kansas 414'2 and November 24, 1933, from Nr. Stevens, Chairman of the Federal Reser,„,,, -w Bank of Chicago, all advising that, at meetings of the boards Of di rectors on the dates stated, no changes were made in the banks' ezist schedules of rates of discount and purchase. Without objection, noted with approval. Memorandum dated November 22, 1933, from Er. Smead, Chief of the 41181,,21 L. But of Bank Operations, recommending the appointment of Mrs. Libbie as a stenographic clerk in the division, with salary at the rate (11'4 ' 8°0 per annum, effective November 27, 1933; the recommendation hay'.beell approved by four members of the Board on November 24, 1933. Approved. klemorandmm dated November 23, 1933, from Mr. Faulger, Chief of theDi7ision of Examinations, requesting the appointment of Mrs. Nadine 144411agher as a clerk in the division, with salary at the rate of 41'66° Per annum, effective as of the date upon which she enters upon tilePertormance of her duties; the request having been approved by six Illszobers of the Board on November 27, 1933. Approved. theti .Lemorandum dated November 25, 1933, from Mr. Smead, Chief of .7.181°r1 of Bank Operations, stating that on October 20 Mr. Merret 202 11/28/33 -9- Caskey, an on employee in the division, was obliged to leave the office account of illness and has since that date been under treatment for krtial paralysis; that it is understood that a somewhat prolonged peri0(1 will elapse before Mr. Caskey can return to duty; and that, in view ()this he be record since appointment in August, 1919, it is recommended that granted sick leave with full pay until February 1, 1934, before 17111eh date a further recommendation with regard to his leave status will be zlade to the Board. Approved. Telegraphic reply on November 20, 1933, approved by five members ,, el' the B oara to a letter dated November 14 from Mr. Stevens, Federal Re serve Agent at Chicago; the reply reading as follows: t "Your letter fourteenth. Board approves appointment Wilbur 1,88er as Assistant Examiner in Federal Reserve Agent's department bank at salary rate of 02,400 per annum with understanding he .L1 continue systematic reduction indebtedness Menasha bank. ig1ease : 0 advise effective date. In connection with future selections examiners your attention is directed to the importance of bearin mind the expression contained in X 7638 of the Board's view that eo ,_lt is clearly undesirable for employees in the Federal reserve dellu's departments engaged in audits and examinations to be inilluted directly or indirectly to any bank or banking institution their respective Federal reserve districts." Approved. Telegraphic reply on November 20, 1933, approved by five members the Board, to a letter dated November 14 from Er. Stevens, Federal 4eeerve Agent at Chicago; the reply reading as follows: A. "Your letter November 14 re -7 exeoliner in Federal Reserve °17 information obtained from ! °r(1. as receiver, concerning """s Board feels that it would aPPaintment." % temporary appointment L. B. Achor Agent's department your bank. In Comptroller's office regarding his which Er. Paulger has already advised not be justified in approving his Approved. 203 11/28/33 -10Letter dated November 23, 1933, to Yr., Helm, Deputy Governor qthe Federal Reserve Bank of Ker.nas City, approved by five members of the Board, statihg that, in accordance with the recommendation contained 5441118 letter of November 7,'the Board approves changes in the personnel Classification plan of the Denver branch to provide for two new positions, the dis continuance of four positions, a change'in the salary range of one Pcicition, and changes in the titles of three positions, in various dektrtraents of the branch. Approved. Letter dated November 24, 1933, to Mr. Clark, Secretary of the Fe4erIti Reserve Bank of Atlanta, approved by five members of the Board, 13141ti4g tht, in accordance with the recommendation contained in his letter of November 13, the Board approves changes in the personnel clas6141c4t104 Plan of the Nashville and New Orleans branches to provide for th0 " 1 Positions of "elevator operator and guard" in the Custodian Ileootstruction Pi Ce Corporation Department of the Nashville branch, Ntesistant to chief clerk" and "messenger" in the Custodian - Re- k441 e°114t11.1etion Finance Corporation Department of the New Orleans branch, Or eL increase in the salary range of the position of "porter and i""itortt in the Custodian Of tal Reconstruction Finance Corporation Department liashville branch. Approved. Letter dated November 22, 1933, to Er. Stevens, Federal Reserve Etellt Et chi ---oago, approved by five members of the Board, reading as follows* 204 1 11/28/33 -11- "lhe hoard has given very careful consideration to your letter of June 8 in regard to your identification with The Texas Corporation, Diamond Match Company, and Wilson & Co., Inc., as a director thereof. As pointed out in its circular letter of ialy 7, 1924, X-4048, to which attention was called in its circular of April 29, A-7425, the Board feels that officers of the Federal reserve nks should not be identified with any outside business interests. ls the opinion of the Board that the holding of directorships of the kind referred to in your letter is inconsistent with the vie= expressed in the Board's letter of May 7, 1924." Approved. Telegram dated November 22, 1933, to Lir. Newton, Federal Reserve Itt Atlanta, approved by four members of the Board, reading as follow8t "Refer your August 31 reply to Board's letter B-906 of August 10 ,nrding Is compensation of executive officers and directors of Fed'l714 1 Reserve and member banks requested in Senate Resolution 75. ePorts received from 11 Reserve banks listed all or nearly all Re8erve bank officers while report from one bank listed only the fhairman, e governor and deputy governors. It is understood that no action has been taken by your directors to designate certain -61:,!cOrs as 'executive officers' and inasmuch as it is desirable 8 reports be uniform for all Federal Reserve banks it has been rtolCgested that reports show names and salaries of chairmen, goverfr,tdePutY governors and cashiers only for the head offices and waging directors, assistant managers and cashiers for the Elt"ches. This would comprise 5 positions, including one vacancy, yot Y°11r head office, 3 at the New Orleans branch and 2 at each of other branches and agencies. If this plan is adopted a sentenr son "mAght be inserted in letter sending reports to Senate reading pe4w114t as follows: 'Inasmuch as it is not the practice of the ti x-ral Reserve banks to designate certain of their officials as erjeutive officers", the inclosed statements relating to the Fedsuciti 111)eserve banks show the compensation paid to the directors of &13011.ZIcs and to the principal officers who have the primary reof carrying out the general policies adopted by the sil, er,fr8 of the banks'. Please advise whether you concur in above rep r °11 and, if so, whether proposed sentence in letter submitting aalar:'8 to Senate meets with your approval. If any portion of the ar enc2 ;e8 °f any of the officers of your bank wore paid by an outside 811°11 as the R. .1,4 G. or the Treasury Department, during the Period , office vulY 1, 1932 to June 30, 1933, please state the names of such per, I's, the exact amount so paid, the agencies by -whom paid, the .Lod covered and the net amount paid by the Federal Reserve bank." O 11/28/33 Approved, together with similar telegrams dated November 22, 1933, to the l'ederal reserve agents at other Federal reserve banks. Letter dated November 20, 1933, to the board of directors of the "8ecurity State Bank of Houston", Houston, Minnesota, approved by four members of the Board, stating that, subject to the conditions pre- eribed 4 4n the letter, the Board approves the bank's application for 11111er8hiP in the Federal Reserve System and for the number of shares °f 8tc)ck of the Federal Reserve Bank of anneapolis to which the bank 74 ' 11 be entitled upon the basis of its capital and surplus as of the dEtte t1Pon 'which its membership becomes effective. Approved. th, the Letter dated Lovember 21, 1933, to the board of directors of PeoPles Bank and Savings Company", Cincinnati, Ohio, approved by f011r Inelobers of the Board, stating that, subject to the conditions set north the letter, the Board approves the bank's application for memberahiP in the Federal Reserve System and for stock in the Federal Re"rile Bank of Cleveland, effective if and when such bank is authorized tc3re°13 "by the Superintendent of Banks of the State of Ohio, with the tillicier8t"ding that prior to admission to membership the reorganization Of th° bank will be effected in substantial conformity livith the plan of r"rDnization dated October 19, 1933. Approved. Letters dated lovember 22, 1933, approved by five members of the b°4rd, to the boards of directors of the following named State banks, s"11 letter 8tating that, subject to the conditions prescribed in the 206 11/28/33 -13- letter, the Board approves the bank's application for membership in the ?sclera.). Reserve System and for the number of shares of Federal reserve 1414cstoCk to Ithich the bank mill be entitled upon the basis of its capand surplus as of the date upon which its membership becomes effective: Federal Reserve Bank Applicant Dank "Via.dena County Sta-i,e Bank", Viradena, lannesota. "Iiittall State Bank", Vernal, Utah. Minneapolis San Francisco Approved. Letter dated iTovember 23, 1933, to the board of directors of the "Pirst State Bank of Rushmore", Rushmore, Minnesota, approved by four Illellibers of the Board, stating that, subject to the conditions prescribed ill the letter, the Board approves the bank's application for membership ill the Federal Reserve System and for the number of shares of stock of the ped.e_c i Reserve Bank of Linneapolis to which the bank will be entitled IIP°r1 the basis of its capital and surplus as of the date upon which its rile* ship becomes effective. Approved. the Letters dated riovember 23, 1933, approved by five members of Board, to the boards of directors of the following named Stale bank- ina tituti n, each letter stating that, subject to the conditions Pl'eceribed it the letter, the Board approves the institution's applica- toll for niembershiP in tIle Federal Reserve System and for the number of 1-larec of POderal reserve bank stock to which the institution will be entitled upou the basic of its capital and surplus as of the date upon 4r ...vv. , I" 11/28/33 -147thich its membership becomes effective: Applicant Bank Federal Reserve Bank "The Cortland Savings and Banking Company", Cortland, Ohio. r "The Bank of halifax", Halifax, Virginia. Cleveland Richmond Approved. Letters dated Eovember 24, 1933, approved by four members of the I3°ard, to the boards of directors of the following named State barar4 'Jag institutions, each letter stating that, subject to the condiprescribed in the letter, the Board approves the institution's 41°11-cation for membership in the Federal Reserve System and for the Illatber of shares of Federal reserve bank stock to which the institution 76.11 be entitled upon the basis of its capital and surplus as of the d4te 1113°11. vhivh its membership becomes effective: Applicant Lank 11, 1-enk of Bethleh em", Delmar, ICeig York. II 1 eattle Trust Company", Seattle, l'iashington. . Federal Reserve Bank New York San Francisco Approved. Letters dated November 27, 1933, approved by five menbers of 'Ole /3 °14 'rd, to the boards of directors of the following named State banks, et''eh 10A-4_ letter -"er stating that, subject to the conditions prescribed in the 'the Board approves the bank's application for membership in the Pedertti 141.1-Lk t &tea re: Reserve System and for the number of shares of Federal reserve "k to which the bank will be entitled upon the basis of its caprplus as of the date upon which its membership becomes effec- 208 11/28/33 Applicant Bank Federal Reserve Bank "Farmers State Bark", Victor, Montana. Solano County Bank", Fairfield, California. Minneapolis San Francisco Approved. Letters dated November 27, 1933, approved by six members of the lk)ard, to the boards of directors of the following named State banks, elleh letter stating that, subject to the conditions prescribed in the letter, the Board approves the bank's application for membership in the 'ckleral Reserve System and for the nutter of shares of Federal reserve ballk stock to which the bank will be entitlad upon the basis of its capi'411 and surplus as of the date upon which its membership becomes effectivel iicant Bank Federal Reserve Bank "The Bank of Amityville", Amityville, 0, liew York. The Peconic Bank", Sag Harbor, Now 0, York. 40bac00 Exchange Bank", Edgerton, " Wisconsin. State Bank of Belle Plaine", Belle Plaine, Minnesota. State Bank of Gibbon", Gibbon, L innecota. New York New York Chicago Minneapolis Minneapolis Approved. 4151*Ire Telegram dated November 21, 1933, to Mr. Curtiss, Federal Re- ACent at bo ton, approved by three members of the Board, reading rol, 4.4.0wt: etive as of 1:ovember 20, 1933, Board has amended condition 1933ered twenty-four, as set forth in its letter of November 1, to 1,Q, t° Beard of Directors of Merrill Trust Company, Bangor, Maine, ' ad Es follows Quote The plan for the reorganization of the 209 11/28/33 -1G- "old bank shall be duly consummated in accordance with its terns. Unquote." Approved. Telegraphic reply addressed to Er. Curtiss, Federal Reserve Acent at Boston, on :ovember 25, 1933, approved by four members of the Board, to telegr ams dated November 23 and 24 from Mr. Curtiss and Br. Younc, Governor of the Federal Reserve Bank of Boston; the reply rooda° follows: "Retels November 23-24 in re Bar Harbor Banking and Trust ComPanY, Bar Harbor, liaine, condition number twenty-ono stop In view .0tf advice that Parker loan VAS legal when made, has been reduced 162,500 since examination in July and is reported adequately .ecured and in accordance with your recommendation, condition number twenty-one is amended by striking out the first five words of 13tIell condition reading as follows quote prior to admission to memershiP unquote and inserting in lieu thereof the following words , : 111 c)te 'within one year after date of admission to membership unquote illth the understanding, however, that the loan will be reduced to 'Legal limits as rapidly as possible." Approved. Reply on hovamber 27, 1933, approved by six members of the toEtra, -ce a letter dated November 18 from Li-. Curtiss, Federal Reserve 4C' 34t at Boston; the reply reading as follows: ti Receipt is acknowledged of your letter of November 18, 1933, W_-'nutting a request from the New Britain Trust Company, New Britain, : inriecticut, for an extension of thirty days of the time within el : h the aamission of such trust company to membership in the Fedal Reserve System may be accomplished, and, pursuant to your recon, the Board extends the time within which the admission 21,th1s institution to memLership may be accomplished to December It is understood, of course, that Federal reserve bank tt, ' proe'c. will not be issued to this institution unless unqualified aperjal by the State Bank Commissioner to its subscription to Fedreserve bank stock is obtained.” Approved. Telegraphic reply on November 21, 1933, approved by four members 210 11/28/33 -17- Of the Board, to a telegram dated 1:ovember 20 from Er. Newton, Federal Reserve .miLent Aat Atlanta; the reply reading as follows "Referrinr; to your telegram of November 20, 1933 re application Bank of Slidell, Slidell, Louisiana, Board will consider bank has eeraplied with conditions of membership within the time granted if check now in your hands for payment of capital stock is collected in due course." Approved. T elegraphic reply on November 21, 1933, approved by four members of the Ti -oard, to a telegram dated November 20 from Mr. Stevens, Federal 4erlre Agent at Chicago; the reply reading as follows: n application Guthrie County State Bank, Guthrie Center, Iowa. grants applicant extension of time to December 20, 1933 wIthin uhich time to comply with conditions of membership. Please so advise the bank." Approved. T elegraphic reply on November 21, 1933, approved by four members °e the Board, to a letter dated November 16 from Mr. Peyton, Federal Re- 4ent at Linneapolis; the reply reading as follows: : E4 Referring to your letter November 16 re application Merchants ef Winona, 'Winona, annesota,Board grants extension of time uocen b .ber 20, 1933 within which to comply with conditions of mamershipsu Approved. Telecraphic Of reply on November 24, 1933, approved by five members h e 13°Erd, to a letter dated November 20 from Mr. Peyton, Federal Re- Or vs at i4inneapolis; the reply reading as follows: 0R—er of, Li,;'1your letter Lovamber 20 re application First State Lank ary Y, Libby, Yontana. Board grants extension of time to 4.Tax:.u'' 1934 within which to accomplish admission to membership.' Approved. 2'11 11/28/33 -18Reply on November 23, 1933, approved by five me-lbers of the L°ard, to a letter dated November 9 from itr. Curtiss, Federal Reserve ACellt at Boston; the reply reading as follows: "Receipt is acknowledged of your letter of November 9, 1933, I arding the opinions rendered by the Attorney General of the otate of Connecticut on October 24 And 25, 1933, with reference to admission of mutual savings banks and State banks and trust, comanies in Connecticut to membership in the Federal Reserve System. -Lou re quested advice as to whether it will be satisfactory to the • oard for you to advise each State institution in Connecticut which Is a member of the Federal Reserve System as to the problems inv Ao1vo d in their membership in view of the opinions rendered by the tt°rneY General of the State of Connecticut. The Federal Roserve Board has no objection to your advising each State morer institution in Connecticut of the problems inY°1ved in the membership of such institution in view of the opinas rendered by the Attorney General of the State of Connecticut. c)Illever, as you now know, the Board on November 13, 1933, forwarded a copy of a letter which it addressed to the Bank Commissioner cl() f, b the State of Connecticut on November 9, 1933, and also on Nevem& ti! : i 13 '1033, addressed a letter to you referring to the fact that a - admission to membership of the New Britain Trust Company, the !Placation of which had previously been approved, should not be snleted unless formal advice of the unqualified approval by the _IL() Bank Commissioner of the subscrintion for stock in the Fedreserve bank by that trust comnany was obtained. In these 2-r?umstances, it is suggested that before you take up with the .4.(1?-ndual member banks the question of the problems involved in t. membership in the Federal Reserve System you discuss the matthe Bank Commissioner of the State of Connecticut in the acht of the Board's view, as expressed in the letters referred to AtZve• In this connection, in view of the position taken by the it °P .fley General of the State of Connecticut, it also appears that c_ 17111 be necessary for the stockholders of the New Britain Trust 8i7a1,1Y to approve the application of that trust company for memberFederal Reserve System even if the Commissioner of Banks Should give his unqualified approval of the admission of .,tdecrust comnany to membership. Z tidr. rd e.w!11 appreciate advice as to any further developments in r Approved. o "lographic reply on November 23, 1933, approved by five members h0 130 arA CO a telegram dated November 9 from Mr. lioxton, Federal 212 11/28/33 -19Reserve Agent at Richmond; the reply reading as follows: "Retel November 9. On basis of Board's ruling of November 8 ‘Trans. 1905), State banks applying for membership will be re.1111red to treat proceeds of capital notes or debentures sold to " F. C. under the provisions of Section 304 Act :jarch 9, 1933, O.s amended, as part of their capital in determining amount of stock in Federal reserve bank to be subscribed for." Approved. Telegraphic reply on November 23, 1933, approved by five menbers eral of the Board, to a telegram dated November 4 from Mr. Walsh, FedReserve Agent at Dallas; the reply reading as follows: "Rotel November 4. Bank debentures in form substantially same R. F. C. form P.S. 2, revised August 18, 1933, would meet requirements in :.-7594a, in which position Was taken that the proof capital debentures may properly be included in determining 01 capital and surplus funds of bank are adequate in relation t0 its total deposit liabilities within meaning of Board's usual adition of membership number fifteen, provided such debentures ; ( . 1 subject to payment by bank only after claims of depositors and bre r creditors are satisfied. As stated therein, provision should : cr lade at time of issuance of such debentures for appropriate in— cf capital stock of bank if and when such debentures are to be °2 0, 4 retired. In deLermining whether a bank has minimum capital re11:*red by law for admission to membership, however, Board's wire of br.ember 8 (Trans. 1905) only authorizes proceeds of capital deMarchpurchased by R. F. C. under provisions Section 304 Act 9, 1933, as amended, to be considered as capital." r Approved. Telegraphic reply on liovember 23, 1933, approved by five members Of the 13 °ard, to a telegram dated November 16 from 1.1r. Newton, Federal " 0 APok at San Francisco; the reply reading as follows: "Ret T°- -0vember 16. On basis of Board's ruling of November 8 (Tra eli; 8 : 1905), Board would consider State bank in town of 10,000 e for membership mith 350,000 paid up and unimpaired common und:, , c and 50,000 proceeds of capital debentures sold to R. F. ,C. 4 provisions Section 304 Act of larch 9, 1933, as amended.' Approved. 11/28/3, 6 , -20Reply on November 21, 1333, approved by four members of the 1300.1.,; -"' “) a letter dated Lovember 14 from jr. Peyton, Federal Reserve liCont at Minneapolis; the reply reading as follows: "Receipt is acknowledged of your letter of :ovember 14, 1933, !!-Ivlsinc that the 'Peoples State Bank of tlainviewt, Plainview, L tinnesota, had increased its capital stock to Q25,000, and ins cl°sing a certification from the Commissioner of Banks of the tae of lannesota to that effect. iherefore, and in accordance with your recommendation, the board will take no action regarding the termination of the bank's insmbership in the System by reason of the failure to effect an .sj.rller increase in the capital stock as required under the conditl°n2 of membership prescribed by the Board and accepted by the ,ank at the time of its admission to membership in the Federal Re,ierve System." Approved. Reply on November 23, 1933, approved by three members of the 1.0 a letter dated November 3 from Er. 1.:cClure, Federal Reserve ,ent at xansas Laty; the reply reading as follows: 'eccipt is acknowledged of your letter of november 3, 1933 , t;',;75-sing of certain improvements effected in the condition of State Bank', Winfield, Kansas, together with advice as to Other Plans of the bank's management for making further necessary `TstmenLs to place the institution in satisfactory condition. co in ew of such improvements and the bank's plan for further lujrections and also in view of your recoinmendation, the Board be,,1 take no action at this time with respect to the bank's momsh in the Federal Reserve System. Owever, it will be appreciated if you will advise the Board, When SUch ormation is available, as to the classification of securities acquired by the bank in exchange for assets classithod as loss in the amount of %. 60,000, and also if you will keep ,"-rd advised from tie to time of further improvements in the barikB ter.,'3 condition in accordanoe with the plan outlined in your let- Approved. RePlY on November 27, 1933, approved by six members of the t a letter dated November 17 from 1:Ar. Case, Federal Reserve 214 11/28/33 -21- at Nev, York; the reply reading as follows: 'Receipt is acknowledged of your letter of November 17, 1033, tr ansmitting a copy of a letter addressed to you by the Chairman of the Board of the Bank of the Manhattan Company, with further reference to the disposition by that bank of its holdings of stock in the County Trust Company of Mite Plains, ilellf York, and the 9°I'llinc Trust Company and North Side State Bank, both of Corning, l'em' York, the correspondence indicating that arrangements have been Completed for the merger of the two last named institutions under the title of the Corning Trust Company. "In view of the facts that arrangements have been completed for the merger of the Corning Trust Company and the North Side State 31an1 and the sale of the holdings of the Bank of the Manhattan ComrPanY in the merged institutions and that a date has been determined 1Upon for the actual transfer, the Board in accordance with your 2?Qmmendation will extend to February 1, 1934, the time within r2-oh the Bank of the Manhattan Company may dispose of its interests L the Corning Trust Company and the North Side State Bank. view also of the information submitted relative to the situin;lt White Plains and your recommendation, the Board extends 11 April 1, 1934, the time within which the Bank of the Manhattan Companyc may dispose of its holdings of stock in the County Trust Bo'XinY of White Plains. You are requested, however, to keep the at. advised, from time to time, as to the procTess of any negotiations for the sale of such stock." Approved. Reply on November 24, 1933, approved by four members of the 130ard , to a letter dated September 18 from Er. Case, Federal Reserve at New York; the reply reading as follows: It Receipt is acknowledged of your letter of September 18, 1933, l ont°. si inc, a report of examination of the 'Montclair Trust Company', 1,33c'air, low Jersey, made as at the close of business May 24, , b for the purpose of developing further information requested a4 ss ule Board relative to the purchase of certain of the assets and the"tion of the deposits and borrowed money liabilities, as at and i'°8° of business March 22, 1933, of the Essex Title Guaranty mezio rust Company, a nonmember, by the Montclair Trust Company, a 4r institution, both of Montclair, New Jersey. actil'rom the information submitted, it would appear that the transnot result in any material change in the character of the provis of the Montclair Trust Company or broadening in the functions tiorl QuslY exercised by it within the meaning of the general conditinder mhich the Montclair Trust Company was admitted to the tA..d_ 11/28/33 -22- "Federal Reserve System, and in accordance with your recomendatlen the Board will interpose no objection to the transaction, provlded that the agreement and transfer are approved by the Department of Banking and Insurance of the State of I:evr Jersey and that krie legal phases of the matter meet with the approval of your C ounsel." Approved. Letter dated November 24, 1933, to Li-. Williams, Federal ReaQrve ACent at Cleveland, approved by four members of the Board, reading 48 follovitt 1,O "Receipt is acknowledged of Mr. Fletcher's letter of October 31, ,43, relative to the proposed merger of the Dollar Savings and .f11.73t. Company of wheeling, West Virginia (a nonmember bank) with he l'iheelinTz Bank and Trust Company of that city (a member bank) undv the charter of the latter institution. The Federal Reserve Board understands that the proposed merger : ill not result in any change in the corporate existence of the iner bank affecting its status as a member of the Federal Reserve ,4"era; that the proposed transaction will not result in any change r the gene ral character of the assets of the Meelinr; Bank and st Company or in the scope of the functions exercised by it 1.ra.n the meaning of the general condition under which the instith 1°11 was admitted to the Federal Reserve System; and that after be e transaction is completed the assets and liabilities of the memtl,r bank will be substantially of the same character and amounts as ti,;(1'le set out in the tentative consolidated statement contained in 14111emor andum of Mr. S. C. Shull, Examiner, forwarded to the Board tio41r.Pletcher's letter of October 31, 1933, except the elimina0„1s prescribed herein. On this basis, and pursuant to the rect;:n.etndation of your office, the Board will interpose no objection vit1,4° Proposed transaction, provided it is consummated in accordance an agreement of merger which meets with the approval of your 1, and the Banking Department of the State of West Virginia. Board's consent is given, however, on the condition that "Therit sonjcized assets aggregating approximately 2,448,000 and reprebe e lr) the items classified as doubtful and loss in both banks will ills,-;azinated in the consolidated institution; that the consolidated will agree to eliminate as soon as possible all loans Secured ,in whole or in part by its own stock or obtain other adelesecurity for each such loan; and that the member bank will t ,quire from the Dollar Savings and Trust Company as a result fuli!le,rnerger any corportLte stocks other than those which might lam, bo purchased by a national bank under the provisions of the .,onal Bank Act. Z 11/28/33 -23- . "It is also understood that, prior to the merger, representatives of your office will conduct an investigation of the Trust Department of the Dollar Savings and Trust Company to determine definitely whether the general character of its business and its IllanaZement and operation are such as to be acceptable in the member bank. "In order that the Board's records may be complete, it will be appreciated if you will forward to the Board copies of the merger agreement actually executed by the institution, any amendments to the charter of the member bank, and any authorizations of the State authorities coveriry; the transaction." Approved. Letter dated November 25, 1933, to Lr. Stevens, Federal Reserve ACerit at Chicago, approved by four members of the Board, reading as tollows t "Reference is made to Ir. Young's letter dated September 2G, 1933, in regard to the transaction whereby the 'Hillsdale Savings 41110 , a member institution, and the First State Savings Bank, a ITI?Ineler institution, both of Hillsdale, Michigan, and both of "Ilch were formerly under conservatorship, were merged under the jel ter of the Hillsdale Savings Bank and under the name of the 2-41sda1e to reopen State Savings Bank, and the continuing bank was licensed on September 6, 1933. th In view of the apparently liquid condition of the institution, C e liminaLions effected, and the fact that the merger has been -1?Preved by the State Banking Department and the institution pertrtted to reopen, together with the statement by Ir. Young that the 4112aotion did not result in any violation of the member bank's __;leral condition of membership under which it was admitted to the Reserve System, the Board will interpose no objection to . d; : 13. merger of the First State Savings Bank with the Hillsdale SayBank, provided that you ()I.:Lain an opinion from your counsel the consolidation did not result in any change affecting the statu5 of the Hillsdale Savings Bank as a member of the Federal Reof Ye System independently of the question of a possible violation opi s condit onof membership. Please forward a copy of the to tt°n rendered by your counsel on this point, giving a reference tio "e provisions of the Michigan lam under which the consolidaa„1_1 17as effected, and also furnish the Board with copies of any ements covering the consolidation. " r Approved. Letter dated november 27, 1933, to Li.. I:ewton, Federal Reserve 11/28/33 -24- Agent at San Francisco, approved by five members of the Board, reading as follows: "Reference is made to the absorption of the Peoples First Avenue Bank and the peoples :korth Seattle Bank, both nonmember banks in Seattle, c;ashinton, by the 'Peoples Bank and Trust Company', Seattle, Washington, effective as of Yarch 14, 1933. "The Board has reviewed the analysis of report of examination of the Peoples Bank and Trust Company as or :Lay 24, 1933, information .11bmitted with your letters dated idarch 31, 1933, and August 21, and other data inclosed with idr. Sargent's letter dated April 1933, and, in accordance with your recommendation, the Board IkLil interpose no objection to the transactions, provided that you an opinion from your counsel that he is satisfied with the legal. aspects of the matter and that the absorptions did not result l en any chance affecting the status of the Peoples Bank and Trust 1111PanY as a member of the Federal Reserve System independently of question of possible violation of its conditions of membership. t,'!ase forward a copy of the opinion rendered by your counsel in ; 11s matter, giving reference to the provisions of Washington laws Under which the absorptions were effected, and also furnish the Board with copies of amendments to the charter of the member bank, if any. In ,reviewing the information submitted however, it is noted the. the t4 _ Peoples Bank and Trust Company is undercapitalized, parularly in view of the large volume of criticised assets remain4G in the institution, and it is felt that steps should be taken, as it is practicable to do so, to effect a further eliminae_"._ 1 of substandard loans and securities depreciation, and to engthen the capital structure." 4 Approved. Letter Itent at lovm: dated i- -ovember 24, 1933, to 1;:r. Stevens, Federal Reserve Chicago, epproved by four members of the Board, reading as fcl- Hp _ . 1,3 "elpt is acknowledged of Lir. Young's letter of :,ovember 15, pa4Q, transmitting a request of the Luscatine Bank and Trust Com:1:118catine, Iowa, for permission to assigi without recourse a nY the"e securod by a first real estate farm mortgage inasmuch as rik has been offered a satisfactory cash settlement. general condition of membership numbered twelve restricts noter :'er bank from engaging in the business of issuing or selling debi:L_Icnds, mortgages, certificates or other evidences of insion'ness representing real estate loans except with the pernisof the Federal Reserve Board, and it seems clear that the bank 4Z 1-IA8/33 -25- should not be considered as engaging in the business of selling notes or other evidences of indebtedness secured by real estate mortgages by reason of the transaction referred to above. Thereftore, permissior of the board is not necessary to consummate the ransaction. It is suggested that you advise the bank accordingly aLid that the Board 1011 interpose no objection to the transaction." Approved. Reply on November 22, 1933, approved by five members of the 130ard, _ to letters dated October 16 and November 3 from hr. i!eviton, Federal Reserve Agent at Atlanta; the reply reading as follows: aeceipt is acknowledged of your letter of October lcd, 1933, , closure, advising that 'The Pascagoula National Bank of Noss liOdin3J Moss Point, Lississippi, has been continuously deficient itS required reserves for more than six months. Receipt is acowledged, also, of your subsequent letter dated November 3, 1933, dtinclosurec, in regard to such reserve deficiencies. is noted that the bank's delinquency has been called to the ention of its officers and directors and that steps have been ' ' co en to correct the situation. In the circumstances, and in ac„rdarIce with your recommendation, the Board will take no action at time regarding the bank's continuous reserve deficiencies, Other than to forwurd copies of your letters and inclosures to the teraptroller of the Currency for his information. However, it will t4_aPPreciated if you will advise the Board, within a reasonable as -0 =7: 1 the bank has restored and is maintaining its re reserves." Z Approved. Gr4ta r Letter dated November 24, 1933, to the "First National Bank in Grand Forks, north Dakota, approved by four members of t6 "-eard readin, as follows: Federal Reserve Board approves your application for pernisZZ_t° act, when not in contravention of State or local law, as 'executor, administrator, registrar of stocks and bonds, D.111;,;?° of estates, assignee, receiver, committee of estates of truaticc, or in any other fiduciary capacity in which State banks, 1; 111Paries or other corporations which come into competition .st , national banks are permitted to act under the laws of the jelelZe of Eorth Dakota, the exercise of all such rights to be subt° the provisions of the Federal Reserve Act and the regula" er the Federal Reserve Board. 4 219 11/28/33 "This letter will be your authority to exercise the fiduciary Powers as set forth above. A formal certificate covering such authorization will be forwarded to you in due course." Approved. Letter dated :iovember 21, 1933, to Lir. 1:AcClure, Federal Reserve ACent at Kansas City, approved by five members of the Board, reading as fel1owts: "Reference is made to the application of the 'National Bank of Tulsa,, Tulsa, Oklahoma, for full fiduciary powers, which has been held in abeyance awaiting a report of examination of the apPlirnt bank made as of August 31, 1033. 'he application has been considered again in the light of the new report of examination, and, in view of the large amount of criticized assets shown therein, the aggregate of items classified as doubtful and losses exceeding the amount of the bank's surplus 1?d common capital by approximately 869,000, the criticisms made ty the examiner of the present management and of the officers and trust committee selected for the proposed trust department, and t'Le Unfavorable circumstances surrounding the activities of the ust departments in the preceding institutions, the Board feels u",t it should not grant fiduciary powers to the applicant bank IlL11 certain changes and corrections have been effected. "Consideration has been given to the circumstances surrounding ire or 7 ,ahization of this inIstitution, the important position held it in the banking and commercial activities of Tulsa and the f't:rCe territory tributary thereto, the desirability of assuring as as Possible its successful operation, and the value of fiduciary Powers to the bank in achieving that end. Consideration has been given to the fact that the Reconstruction Finance Corporathrouch its large investment in preferred stock, is the bank's m:ritY stockholder and therefore is vitally concerned that the and"nent shall operate the bank on a sound and conservative basis Le interested in seeing that such changes are made in t- "3r the directorate or the official staff as may become necessary et.ttain that end. of; in this connection the Board notes the statements in your letter bazieyember 13, 1933, that your Executive Committee feels that the being conservatively managed at this time, that the conditien the b°f its assets should improve steadily, that the management of e*nd its directors now appreciate fully the importance of !xdequate and careful attention to all bank business, and that if th; Dank should be granted permission to exercise trust powers the cenduct of its eislre trust department would not be subject to criti- J f "20 11/28/33 -27- ftin vievrof all the circumstances, the Board is prepared to a?Prove the application of the National Bank of Tulsa for full flauciary powers when it has been advised that action has been taken to the satisfaction of yourself, your Executive Committee, the Reconstruction Finance Corporation, and the Comptroller of the Currency, as follows: "1. That the bank has obtained an experienced and competent trust officer not previously connected with the L;xchange Trust C°mPfuly, the Exchange National Bank, or the Exchange Uational Company of Tulsa. '2. That a trust coliandttee has been selected composed only of the directors who bre most capable and experienced in trust matters, particularly in trust investments. "3. ahat the bank has retained competent legal counsel experienced in trust matters. 4. That the existing vacancies on the board of directors have been filled by experienced and competent individuals. 5. 'what adequate attention is being given on the part of the directors and officers to placing in satisfactory condition the laf;ge volume of criticized loans. G. That all amounts classified as losses by the national bank examiner in his report as of August 31, 1933, have been charged Off or otherwise eliminated from the assets of the bank. . 11hen satisfactory assurances covering these matters have been cl°e l ved by the Board, it will grant the application for full fidutrnr. P°17ers, with the understanding that to the extent that any ro:J''8 are taken over from the Exchange Trust Company and Exchange b lc"nal Bank they will be confined to those which have been approved Y the national bank examiner." Approved. Letter dated November 25, 1933, to hr. G. W. Bowen, President Or "The by `4- -,dewart National Bank of Livonia", Livonia' NEW York, approved three tiembers of the Board, reading as follows: - pl.:Reference is made to the resolution adopted by the Board of it400tors of your the bank's desire to surrender bank right to exercise the trust powers which ha have been granted to t by the Federal Reserve Board. cur The Board was advised by the office of the Comptroller of the reneY in a letter dated August 30, 1933, that The Stewart Latic)nal Bank of Livonia, Livonia, New York, had at that time been (lisohar or ged of „1,otherwise properly relieved in accordance with law ' tru1 of its duties as fiduciary, with the exception of a single Tic'in favor of the heirs of the Philips Ross Estate. ' Board has flow received from the Comptroller of the Currency a 221 11/28/33 -28- "letter under date of November 6, 1933, inclosing a certified copy ct a certificate executed by the Clerk of the Surrogate's Court of 14 ,Iv1ngston County, New York, certifying that The Stewart -143.tional Lank of Livonia, Livonia, New York, now stands discharged and released of all liabilities as executor under the above named trust. the circumstances, the Board understands that The Stewart NaBank of Livonia has been discharged or otherwise properly ?'elleved in accordance with law of all its duties as fiduciary, and ?.t has, therefore, issued a formal certificate to your bank certifythat it is no longer authorized to exercise any of the fiduciary 13°vIers granted by the provisions of Section 11(k) of the Federal Reerr Act. This certificate is inclosed herewith. In this connection, your attention is called to the fact that, under the provisions of Section 11(k) of the Federal Reserve Act amended, -when such a certificate has been issued by the Federal 4eserve Board to a national bank, such bank (1) shall no longer be Oeet to the provisions of Section 11(k) of the Federal Reserve 4,t or the regulations of the Federal Reserve Board made pursuant .vreto (2) shall be entitled to have returned to it any securities 4,11ch it may have deposited with the State or similar authorities the protection of private or court trusts, and (3) shall not !-Kercise any of the powers granted by Section 11(k) of the Federal ieserve Act except with the permission of the Federal Reserve Board." r Approved. Reply on Ilovember 23, 1933, approved by three members of the 13()Eir,ci ot to a memorandum dated November 7 from Lir. O'Connor, Comptroller t-le Currency; the reply reading as follows: /3 "In accordance with your recoimnendation, the Federal Reserve iirrd approves a reduction in the common capital stock of 'The A e Eational Bank of Brockton', Brockton, nassachusetts, from 500,o00 to [',100,000, pursuant to a plan of rehabilitation which 11"Dvide5 that the bank's capital shall be increased by the sale at cZr °f C=0,000 par value class 'A' preferred stock to the Reconaction Finance Corporation and the sale at par of 200,000 par preferred stock to present stockholders and others; aridue class aTs also that the funds released by the reduction in cornrnoll, p4;ncl stock in the amount of ,;400,000, together with funds pr the amount of193,000 from the bank's surplus and undivided eints, shall be used, if the bank has not already done so, to arici1P-Lnate estimated losses in the amount of approximately :7O,229 4p1, dePreeiation in securities in the lower grades in the amount of ci1222,800, as classified in the report of examination Of 1e 411a J o bank made by a national bank examiner as of August 19, 1933, establish a reserve for losses and depreciation in the amount Z 222 11/28/33 -29- "of c300,000, all as set forth in your memorandum dated November 7, 1953." Approved. Letter dated November 27, 1933, to LI-. O'Connor, Comptroller of the C urrency, approved by six merbers of the Board, reading as follows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The Irockton lational Bank', Brockton, :..assachusetts, from 00,000 to 20,000, pursuant to a plan of rehabilitation which provides that the bank's capital shall be increased by the sale at par of 5n, par value Class A preferred stock to the Reconstruction 1'3-nonce Corporation and the sale locally at par of :00,000 par Class B preferred stock, and that the funds released by the reduction in common capital stock, together with :,300,000 from the allk's surplus account and approximately Y10,000 from undivided Profits and reserves, shall be used to eliminate, if the bank has t already done so, estimated losses and depreciation in securitetltbtheh a grades aggregating approximately ;.550,000, and special reserve of y300,000 against doubtful assets „,oct depreciation in securities in the higher grades, all as set 4 rth in your memorandum of November 8, 1933." j Approved. the Letter dated November 27, 1933, to Ni'. O'Connor, Comptroller of Curr encY, approved by six members of the Board, reading as follow's: Bo In accordance with your recommendation the Federal Reserve , tpc .L.rd approves a reduction in the common capital stock of the 8t National Bank of Bar Harbor', Bar harbor, Llaine, from ,000 r P- to 50,000, pursuant to a plan of rehabilitation which cles that the bank's capital shall be increased by the sale at Par ,200,000 par value preferre stock to the Reconstruction d in—fee Corporation and that the funds released by the reduction prj?Inmon capital stock, together with ',J50,000 from undivided tio4rilts, shall be used to eliminate an equal amount of depreciaDietio in securities of the lower grades, all as set forth in your randuri of November 14, 1933." 4 Approved. ot the Letter dated November 20, 1933, to 1.:r. O'Connor, Camptroller eurr "cY, approved by four members of the Board, replying to his 22L) -30memorandum of October 24 recomending approval by the Board of a reduction in the capital stock of "The National hank and Trust Company of Port Jervis", Port Jervis, New York, from ;)195,000 to $130,000. The reply stated that the Board approves the proposed reduction under the Plan submitte d, subject to the conditions set forth in the reply. The rebi stated also that, in considering the plan under -which the reduccapital stock is to be effected, it was noted that no provisicn was , for the elimination of depreciation in securities below the tour highest grades amounting to 44,967; that, in addition, there will Iseillain in the bank depreciation in securities of the four highest grades 41°I.Iliting to :;31,519, doubtful items aggregating .69,749, slum items 61‘4(luntillg to ,:?290,667, and a heavy investment in bank premises; and that i4_ iS assumed that the Comptroller has these undesirable features itt Mind and will require further corrections to be made in the conditicn of the bank whenever it becomes feasible to do so. Approved. Reply on llovember 23, 1933, approved by three members of the bou.rd 'to a memoramdum dated loveml;er 11 from Mr. O'Connor, Comptroller of, the L,urre neY; the reply reading as follows: Bo "In accordance with your recommendation, the Federal Reserve 1 d approves a reduction in the comnon capital stock of the, yoalayette Lational Bank of Brooklyn in Law York', Brooklyn, hew. tLIV;' from a,450,000 to 500,000, pursuant to a plan of rehabillprovides that the bank's capital shall be increased LZ lpiZ-.:hat par of ;'g00,000 par value preferred stock to the °,nstruction Filvince Corporation; and provides also that the IZI3 r eleased by the reduction in common capital stock shall be preccl.to.eliminate estimated losses aggregating /148,673.07 and dedefil,:,,tslon in lower grade securities of W.18,694.28, to absorb a -4-L, in undivided profits account amounting to ,t136,586.33 and 11/28/33 -31"to establish a special reserve for depreciation and losses in :the amount of .200,000, all as set forth in your memorandum of november 11, 1933." Approved. Reply on November 23, 1933, approved by five members of the 13°ard, to a letter dated November 10 from Lr. Newton, Federal Reserve Agent at Atlanta tho reply readin,:; as follows: "Receipt is acknowledged of your letter of November 10, 1933, advising of the proposed reduction in the common capital stock of the'Savannah Bank and Trust Company of Savannah', Savannah, Georgia, from V700,000 to ,, 1 350,000, and the sale of '350,000 of eaPital notes to -uhe Reconstruction Finance Corporation, and rec" ( ending that the reduction in common capital stock and the sale °I te.pital notes be approved. e * Since it appears from the information submitted that the el.,11re amount of the reduction in common capital is to be used to j. flinate objectionable assets from the bank, and will effect a improvement in its condition, and since the Board's coneent.to the reduction in capital is not required by law, or the ...,(311ditions of membership applicable to the bank, the Board offers : 4! 1 ?b Jection to the reduction in capital in the amount indicated, c _ 1,0 the issuance of capital notes, with the understanding, of :: .11ree, that your counsel has considered the case and is satisfied :; to its legal aspects, that such reduction in the common capital 11°°?z and the sale of capital notes will not result in any change b, tile corporate existence of the bank which will affect its menin the Federal Reserve System, and that the transaction he..” aPProval of the Superintendent of Banks for the State of Georgis 1 Approved. or Letter daLed November 21, 1933, to Er. O'Connor, Comptroller the CrA,ur lOwz2 - --10Y, approved by four members of the Board, readinc; as fol- rec 441:erence is made to your memorandum of November 15, 1933, 1141enain approval of a reduction in the conuaon capital stock Of Z17, 14,01,C 'Lincoln National Bank and Trust Company of Fort -i':ayne with 4Vfle, Indiana, from 4,250,000 to U00,000, in accordance Roe, Plan of 1ehabi1itatioT1 which provides for the salo to the -netruction Finance Corporation of ,:/700,000 par value preferred t3t) Ow,ofve 11/28/33 -32- n QL,ock at per and provides also for the use of the released capital funds, together with .c100,000 of funds made available by the sale of doubtful assets to certain directors and ,93,785.49 from the bank's surplus and undivided profits, in eliminating substandard ”sets and depreciation aggregating 4943,785.49, all as set forth In Your memorandum dated November 150 1933. In accordance with your recommendation and the plan submitted . 111 connection therewith, the Federal Reserve Board approves the reduction in cammon capital stock." Approved. Letter dated November 27, 1933, to Lir. O'Connor, Comptroller Of the Currency, approved by six members of the Board, reading as follerWs: -L11 accordance with the recommendation of Acting Comptroller the Federal Reserve Board approves a reduction in the common Oat stock of 'The Citizens National Bank of Chicago Heights', ricago Heights, Illinois, from :,200,000 to '50,000, pursuant to ..,Plan of rehabilitation which provides that the bank's capital ; 11411 be increased by the sale at par of c)50,000 par value pretrod stock to the Reconstruction Finance Corporation, and that bee fUnds released by the reduction in common capital stock shall Inaturd to eliminate substandard assets in the amount of approxi:4 , 51 0.17,000 and to establish a surplus fund in the amount of .),(), all as set forth in lir. Awalt's memorandum of November 21, 1933. v Approved. Letter dated Eovember 27, 1933, to Mr. O'Connor, Comptroller Of the c urrencY, approved by six members of the Board, reading as fol101rt z ”Ref °1111,1e)1,14erence is made to your memorandum of November 15, 1933, rec1 Th aPproval of a reduction in the common capital stock of ,a0e Pir6t National Bank of Antioch', Antioch, Illinois, from *() to 40,000, in accordance with a plan of rehabilitation , Ilihic : tio-'Provides for the sale to the .-econstruction Finance Corporafor 0O0 par value preferred stock at par, and provides also eziou 20 use of the released funds, together with funds in the °f .5,000 to be made available by voluntary ontrlt)taPproximately acgr, in eliminating substandard assets and depreciation m d4m egatillg aPproximately 45,000, all as set forth in your meoranilovember 15, 1933. 11/28/33 "In accordance with your recommendation and the plan submitted in connection therewith, the Federal Reserve Board approves the reduction in common capital stock." Approved. Letter dated November 21, 1933, to Mr. O'Connor, Comptroller of thee urrency, approved by four members of the Board, replying to his Illem°randum of October 31 recommending approval by the Board of a reduction A 44 the comon capital stock of "The Fremont County National Bank Of canon City", Canon City, Colorado, from 4100,000 to $50,000. The reP1Y stated that the Board approves the proposed reduction under the Plan submitted, subject to the conditions set forth in the reply. The rspl-, 4 "ated also that, in considering the plan under which the reduction 4 ' 11. the bank's common capital stock is to be effected, the Board has noted , tha'13after the application of funds, in amount of 450,000 relelleed by the capital reduction and $10,000 taken from the reserve Itee°114t, to the elimination of estimated losses, substandard assets, 4nd depr eciation in securities, there will remain in the bank a material kount 4 of criticized assets and securities depreciation in addition to heaw the 6 ',PSS Investment in banking house and furniture and fixtures in which nati°nal bank Oxaxriiner estimates depreciation of approximately and that the Board has assumed that the Comptroller has these 44desirable features in mind and that he will require further correc- ti°113 to be made in the condition of the bank whenever it becomes feasisolo to do so. Approved. Letter dated November 27, 1933, to Hr. O'Connor, Comptroller of the CurrelacIr V, approved by six members of the Board, reading as follows: 11/28/33 "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The City National Lank of Atchison', Atchison, Kansas, from ,100,000 t° "°,0000 pursuant to a plan of rehabilitation which provides at the bank's capital shall be increased by the sale at par of 02000 par value preferred stock to the Reconstruction Finance ' L orporation, and that the funds released by the reduction in corn'non capital stock shall be used to eliminate substandard assets in 'he amount of approximately ,;35,000 and to increase the surplus frcount by approximately ‘,;15,060, all as set forth in your memorandum of November 13, 1933." Approved. Letter dated i‘ovember 27, 1933, to Mr. O'Connor, Comptroller Currency, approved by five members of the 3oard, reading as fol- It "In accordance with your recommendation, the Federal Reserve uctrd approves a reduction in the common capital stock of 'The niori I Tational rank of Wichita', Achita, Kansas, from 2.00,000 t° v100,000, pursuant to a plan of rehabilitation ullich provides 61 ) . 1 t the bank's capital shall be increased by the sale at par of 000 par value preferred stock to the Reconstruction Finance °r ation, and that the funds released by the reduction in conalpital stock shall be used to eliminate substandard assets sur , cle preciation in the amount of )96,000, and to increase the me 94 '11s account in the amount of )4,O00, all as set forth in your Inor alldum of November 13, 1933." 0 Approved. Letter dated Eovember 27, 1933, to lowzt r. O'Connor, Comptroller durrency, approved by six members of the Board, reading as fol- "Refer recomlne °nee is made to your memorandum of November 13, 1933, 11iflg approval of ct . a rock : a reduction in the common cap , 250 'The onn4Yominz National Bank of Casper', Casper, Wyoming, from .1rh it oenci ;;ot 7.01a225,000, in accordance with a plan of rehabilitation for the sale to the Reconstruction Finance Corporaalse _ 25,000 par value preferred stock at par, and provides starld "r "he U20 of the released capital funds in eliminatinf; sub4rd azsets and depreciation. ac ", cckuance with your recommendation and the plan submitted 228 11/28/33 -353.11 connection therewith, the Federal Reserve Board approves the reduction in common capital stock." Approved. Letter dated November 24, 1933, to Lir. O'Connor, Comptroller °I' the Currency, approved by four members of the Board, reading as e°110ws: "In accordance with the recommendation of Acting Comptroller Amat, the Federal Reserve Board approves a reduction in the com: ,11 ,1(Ini capital stock of vlhe First National Bank of Fort Worth', Fort , Texas, from 1.,100,000 to :750,000, pursuant to a plan of reh abilitation which provides that the bank's capital shall be in! l'eased by the sale at par of ::;750,000 par value preferred stock to the Reconstruction Finance Corporation, and that the funds reteased by the reduction in common capital stock shall be used, ,.otf,ether with 250,000 from the bank's surplus and approximately %:63,277 from the bank's undivided profits, to eliminate substandard ,!?ts and securities depreciation in the amount of approximately ,nu6,'-77, all as set forth in LI-. Awalt's memorandum of November 1933." Approved. of Letter dated November 27, 1933, to :dr. O'Connor, Comptroller urrenoy, approved by six members of the Board, reading as fol- accordance with the recommendation of Acting Comptroller the Federal Reserve Board approves a reduction in the comon capital stock of ''.1he First National hank of San Marcos', San hall:?0,s, Texas, from c:160,000 to 430,00O3 pursuant to a plan of re:dilatation mhich provides that the bank's capital shall beincreased toe tileased by the sale at par of 40,000 par value preferred stock oconstruction Finance Corporation, and that the funds reloe f„-,°" by the reduction in common capital stock, together with t;"Qs from the sale of 1.2,000 of eliminated assets to the director8e,for cash, shall be used to eliminate substandard assets and ?"tablish a surplus account of :,;12,000, all as set forth in Lr. memorandum of November 17, 1933." ‘raj..t, Approved. Letter dated November 27, 1933, to r. O'Connor, Comptroller of 11/28/33 -36the currency, approved by six members of the Board, reading as follows: It accordancemm with your recommendation, the Federal Reserve J,eard approves a reduction in the common capital stock of 'The 14erchants and Planters National Bank of Sherman', Sherman, Texas, f?"om 500,000 to .400,000, pursuant to a plan of rehabilitation wnich provides that the bank's capital shall be increased by the sale at par of :,;400,000 par value preferred stock to the Reconstruction Finance Corporation, and that the funds released by the uction in corrrnon capital stock shall be used to eliminate subandard assets, all as set forth in your memorandum dated November 16, 1933." T Approved. Letter dated November 27, 1933, to Er. O'Connor, Comptroller Of the Currency, approved by six members of the Board, reading as fol- 1.01p,m 1 "Reference is made to your memorandum of November 10, 1333 recct?ndini,; approval of a reduction in the common capital stock of ,''"0 First National Bank of Floydada', Floydada, Texas, from '50 oon to 4_ .e25,000, in accordance with a plan of rehabilitation •th jlen provides for the sale to the Reconstruction Finance Corporafl°n cif .125,000 par value preferred stock at par and provides also for the use of the released capital funds, together with approxitttelY til.,030 from the bank's undivided profits, in eliminating (e0 tandard assets and depreciation aggregating approximately 1933.30, all as set forth in your memorandum dated Lovember 10, ii -Ln. accordance with your recommendation and the plan submitted 4 41:4 co nnection therewith, the Federal Reserve Board approves the eduction in common capital stock." Approved. Letter dated Lovember 22, 1933, to Er. O'Connor, Cometroller "the Currency, approved by five members of the Board, replying to 4411tter of iiovember 9 recommending approval by the Board of a rethe common capital stock of "The First National Bank of Nra. ler", Parlier, California, from 75,000 to 50,000. The reply 8t,lt ed that the board approves the proposed reduction under the plan 4,1 4-13 Aft,tJ1LJ 11/28/33 tibmitted, subject to the conditions set forth in the reply. Approved. Letter dated November 27, 1933, to Yr. O'Connor, Comptroller Of the Currency, approved by six members of the Board, reading as folleWs t 13 "In accordance with your recommendation, the Federal Reserve approves a reduction in the common capital stock of the rescenta-Canada National Bank at Lontrose', Lontrose, California, %=,000 to 25,000, pursuant to a plan of4rehabilitation Ithich provides that the bank's capital shall be increased by the ”le at par of 25,000 par value preferred stock to the Reconstrucen Finance Corporation, and that the funds released by the reducal°n in common capital stock shall be used to eliminate substandard ! ii,3ets in the amount of 018,911.40 and to establish a surplus fund he amounj-1; of c6,000, all as set forth in your memorandum of 14°vember 11, 1933." Z t Approved. the Letter dated November 21, 1933, to lir. O'Connor, Comptroller of CurrencY, approved by four members of the Board, reading as follows: 11, -)11 October 19, 1933, the Federal Reserve Board ;rote to you ng the reduction in common capital stock of the 'Continental „ 111.°18 National Bank and Trust Company of Chicago', Illinois, suant to a plan outlined in your memorandum to the Board dated tx,"Ther 16, 1933. One of -the conditions under which the BatIrd's 'Pr°val vitas given was as follows: t 'That prior to the time when such reduction is effected, the pank's capital shall be increased by the sale for cash to the "econstruction Finance Corporation of :•50,000,000 par value of pireferred stock at par'. The iloard understands however, that the preferred stock is be1ZILoffered pro rata to the present shareholders of the National chas_i:or subscription, and that only the balance which is not pur'''cl bY them will be purchased by the Reconstruction Finance CorPeration Z T- . , 11_,."1. the circumstances, the condition of the Board's `"*.ecl above, is modified to read as follows: That, concurrently with such reduction in common : 86 . 0ck, the bank's capital shall be increased by the cash of 0,000,000 par value of preferred stock at Approved. approval, capital sale for par'." 231 11/28/33 -38Telegram dated hol)ember 25, 1933, to 1,1r. Newton, Federal Re(1.1Jre Agent at Atlanta, approved by four members of the Board, reading as follows: "Board approves application of St. Charles Bank and Trust Corn131Y, Norco, Louisiana, for original stock to be issued in name of St. Charles National Bank of Norco, effective if and when authorized by Comptroller of the Currency to commence business. . Board reouests that revised application be obtained and sub111tted substantially in form of one inclosed with your letter of "'ember 21, except that in first line of last paragraph of first lt ? 'St. Charles National Bank' be chanLed to read 'St. Charles and arust Company', that signature to application be that .6t. Charles Bank and Trust Company' rather than 'St. Charles 41.tlenal Bank' and that seal of State institution rather than seal of national bank be affixed." 1 t Approved. Telegram dated November 20, 1933, to Mr. Stevens, Federal Reeerve 4 ent at Chicago, approved by four members of the Board, reading follolv;s: card approves amended application First National Bank of Hampton H a, ampton, Iowa, for Federal reserve bank stock, and revokes vPr°17a1 7,ranted i.ovember 8 of previous application." Approved. Letter dated November 23, 1933, to Mr. Peyton, Federal Reserve '1/4ent at Mi nneapolis, approved by three members of the Board, stating that El Preliminary examination of the application for a voting permit 11114" authority of section 5144 of the Revised Statutes, as amended, riaea Y First bank Stock Corporation, lanneapolis, Minnesota, indicates that 4., wie application should be supplemented as set forth in the letter. Approved. Tel °graphic reply on November 24, 1933, approved by three merr Of the u oard, to a telegram dated November 23 from La.. Calkins, .5)41 11/2v33 -39rlovernor of the Federal Reserve Bank of San Francisco, referring to the B°ard's telegram of November 23 to all Federal reserve agents CRIc 'ting a message from the President of the United States under date Of -uvember 22, 1933, requestin7 the cooperation of all banks in the eountrY in cashin- pay checks received by employees of the civil works administration. (-overnor Calkins' telegram stated that it is assumed that it is not contemplated that the Federal reserve banks will cash the cv, 'Leeks referred to for payees and that such warrants will be aceePted (3nlY in accordance with Treasury circular 176 when properly endor ea 1, uY banks. The reply read as follow: of "Your wire November 23. Treasury checks received by employees ion,fle civil works administration should be handled by Reserve -s'"':8 in same manner as other Treasury checks." Approved. Reply on November 20, 1933, approved by five members of the to letters dated September 28 and November 3 from Mr. Case, Fed- oral .0 ' Lee"ve Agent at New York; the reply reading as follows: "leeA. 4 -1Pu is acknowledged of your letter of September 28, 1933, 'ncl; a copy of a letter received by you from the ManufacturO'5 ?c4 Tr 19 ust Company, Now York, 1.-.ow York, under date of September 25, Tr '' together with a copy of a brief prepared by counsel for the ofILItC°11PanY, relating to the necessity for publishing reports ceioertain corporations as affiliates of the Trust Company. Rewit„!t 18 also ackalowledged of your letter of November 3, 1933, a '" r eference to the subject of your earlier letter and inclosing 'Copy °f a letter from the Trust Company dated October 30, 1933. ra, Jae letters from the Trust Company and the brief submitted ril?e the question whether the Huron Holding Corporation is an af13ah lte within the statutory definition of Section 2(b) of the r(;.; 11k,7 Act of 1933. It is explained that this corporation was oala ° r,d at the time of the merger of Chatham Phenix National Bank linutrust Company and lanufacturers Trust Company in order to zlate certain doubtful assets for the benefit of the then 'floldersof the memergingnr banks. ahe brief points out that rib 233 11/28/33 -40- "nether the shares of its stock nor outstanding receipts for its deposited shares are 'tied' to shares of stock of the Yianufacturers Trust Company and that the majority stockholders of the Huron Holding Corporation may no longer be majority stockholders of the Trust Comoany. If the argument is correctly understood, the only reason which is given for holding that the Huron Holding Corporation does not fall within the language of the definition is that the registered holders of a majority of the shares of the lb:emufacturers Trust Company may not control, directly or indirectly, the Huron Holding Corporation, inasmuch as certificates of stock and receipts for stock may have been transferred without a corresponding transfer on the books of record, so that the persons owning the 'beneficial' interest in the stock are not necessarily the Persom mho appear as the owners of record. The situation mould em to be not different from that which arises in the usual case. nt iS always necessary to determine whether as a question of fact, -11 organization falls within one or more of the categories enumerZ ed in the statutory definition. The possibility or probability .nat stock certificates have been transferred without correspond.221e; transfers of record may increase the difficulty of determining ' 4.?e question of fact, but the question remains and it is a quesn which the Federal Reserve board is not able and should not be ailed upon to determine in the first instence. 171-th the possible exception of the Huron holding Corporation, it: 4 J lete ir eiri.tood that all of' the companies named in the letter and are admitted to be affiliates within the language of ,_!,statutory definition, although, for various reasons, it is contended that they are not the kinds of affiliates intended to be incial, l d within the scope of the definition, or that, because of peICar circumstances, the publication of their reports is either th,ecessary or mould prove to be misleading. The reasons urged for pa-'11. conclusion follow three lines of thought and divide the com105 nerned into that nunber of groups. In the first group are ?O Panies each iti of mhich is a subsidiary of a corporation which is 1.4idfEtsaftlf.liate of the Manufacturers Trust Company. It is 1 report will be published for the intermediate corporaporationt, makingit unnecessary to publish the reports of that cor- subsidiaries. The second main group of corporations consi tns of companies, which like the C. P. • Realty Corporation for Gotham National Bank Building, Inc., appear to exist only locts e purpose of liquidating real estate, or which represent co4:'which have been defaultod or charged off. Certain of the 1„1ies in this group are referred to as 'nominee' corporations. both : to thkefroxtare subdivided into those companies which are indebted cklice of . Company and those which are not, although the signifithis distinctio ,, is not explained. Aot"' o"iltie definition of an 'affiliate' in Section 2(b) of the Banking Pedern,19 , 33 is applicable to those provisions of Section 9 of the Reserve Act which require a member bank to publish the r 234 11/28/33 tt reports of its affiliates. Section 9 goes further and specifically provides that, for the purposes of the paragraph containing this requirement, the tern 'affiliate' shall include holding comPE‘nY affiliates as well as other affiliates. The purpose for wlijoh a corporation was organized or is existing has no place in tne definition. There is no provision that the reports of a certaln corporation which is an affiliate within the language of the tatutory definition need not be published because the corporation •ls merely a nominee company, or because it represents a charged°ff loan, or because it is the subsidiary of an affiliate as to ' lAllch a report will be published. The law does not raise an ex?ePtlon due to peculiar circumstances of any such character and it does not vest the Federal Reserve Board with the duty or privilege of so doing. It is suggested in the brief that, inasmuch as the Act prolades a specific penalty for failure to make reports and does not pi escribe a penalty for failure to publish them, such omission in,cL , eatcs that the Federal reserve authorities have a substantial 9.scretion in deciding whether or not a given report should be pubbIshed. The argurent, however, is suggestive as to what might have enidone rather than convincing as to the proper construction of e r l_am. as enacted, and it is the opinion of the Board that with oefsPect to companies which are affiliates when tested by the letter e_ the statutory definition, the Board has no discretion to raise ' eetions to the mandatory and inclusive provisions requiring the Pub l:lcation of reports. a, :the third of the three groups of organizations referred to Ii°°03 includes only one of the companies named in the brief, the 17,17 Lrokerage Company, Inc. with respect to this company it is nad 1 4 ILa It,this nufacturers on June 30 owned the entire capital stock of corporation, but since that date has sold it.' pa,48 is suggested by the statement quoted, Harvey Brokerage ComTr-1;: Y . Inc., has ceased to be an affiliate of the Manufacturers wol" C°111Pany within the letter of the statutory definition, there pall'd seem to be no reason compelling the Manufacturers Trust Gemto Publish reports of the Brokerage Company which are compiled to , °12, a* date subsequent to the date upon which the Company ceased ;;;',euPY the status of an affiliate of the Trust Company. ter 41°I. Your convenience in transmitting the substance of this lethere L0 the Lanufacturers Trust Company, a carbon copy is sent you It should be pointed out to the Trust Company that, as expi arid aye suggested in your letter of September 23, 1933, statements .riatory of the actual relationship between the Trust Company affiliates may be included in the reports which are pubin order Order to avoid those misleading statements and suggest0 putlielNhj :ch the Trust Company regards as a probable result of the Approved. „5 11128/33 -42- Telegraphic reply on November 21, 1933, approved by five mombers of the Board, to a telegram dated November 16 from Er. Neuton, Federal Reserve Agent at San Francisco; the reply reading as follows: . "Retel November 16. Limited voting permit mailed First SecurltY Uorporation of Ogden on November 17 and corporation notified bY telegram. Board reluctant to issue limited permits because of duPlication of work and delay resulting therefrom as well as other reasons. In this case, however, Board will consider application in connection with Utah banks as application for limited Permit as requested your telegram but cannot give application even when so considered immediate attention due to many other urgent cases awaiting consideration.” Approved. Telegraphic reply on November 23, 1933, approved by three tlerabers of the Board, to a telegram dated November 18 from Er. Newton, Pectoral Reserve Agent at San Francisco, stating that Mr. T. A. Work individually owns control of the First National Bank, Pacific Grove, ealifc)rnia, the Hollister National Bank, Hollister, California, and the First National Bank, Monterey, California; that both the Hollister bank arid the Pacific Grove bank have voted for Class B directors of the Federal Reserve Bank of San Francisco; and that advice is requested as to whether the reserve Lank is correct in its interpretation that, in l'iet7 of the provisions of section 4 of the Federal Reserve Act, Yr. 743rk will be construed as a holding company affiliate and therefore ()111Y °no of the member banks may participate in the nomination or elect. 11 Of di rectors of the Federal reserve bank. The reply read as folIowa: "In bsence of pertinent facts not revealed in your telegram Novo 18, Board is of opinion that T. A. Work individually is riot rtel,L,er vuote corporation, business trust, association, or other "36 11/22/33 -43.imilar organization Unquote and therefore not a holding company affiliate as that term is defined in section 2(o) Banking Act of 1933 and that designation by him of member bank to participate in nomination or election of Reserve bank directors is therefore unneeessary.ft Approved. Reply on November 24, 1933, approved by five members of the Eloar,a, -co a letter dated November 21 from Nr. Downs, Assistant Federal Reser70 Agent at New York; the reply reading as follows: "In compliance boar 21, lIew York1933, the City, an which it may file with the recommendation in your letter of NovemBoard grants to the Manufacturers Trust Company, extension of time to December 1, 1933, within the reports of its affiliates." Approved. Reply on November 24, 1933, approved by four members of the board 'to a letter dated October 10 from Lir. A. II. Marble, President or Ihe c"ock Growers hational hank, Cheyenne, ayoming; the reply readas follows I ,IolAr letter of October 10, 1933, addressed to the Comptroller the has Loon referred to the Federal Reserve board Currency, 4or repl y. „,4 Lat7From your letter, the hoard understands that the Stock Growers st l e, ) ic nal Company is a securities company and an affiliate of The Growers Lational Bank, and that you are under the impression bj . hrowe Banking Act of 1933 requires the bank to dispose of this "17 'January 1st next'. You anticipate that the bank will bc'3111e to find a purchaser for the business by that date, and You de be to whether the affiliation may be lawfully advised cotc ' lecire il;, Z efIe January 1, 1934, provided that the company refrains f1:80/1:111tr any new business after such date and is liquidated 0n as practicable thereafter. elearliZievi of your reference to 'January 1st next', it is not that "mat Provisions of law you have in mind, but it is assumed of 10Kour inquiry has reference to Section 20 of the Banking Act 16, 19 , 17hich provides in effect that, after one year from June scrib no member bank shall be affiliated in any manner deatione ' in Section 2(b) of that Act with 'any corporation, associ'business trust or other similar organization engaged 4 237 11/28/33 -44II 'Principally in the issue, flotation, underwriting, public sale or distribution at wholesale or retail or through syndicate participation of stocks, bonds, debentures, or other securities.' Although section 20 clearly requires each member bank to divorce anY affiliate which may be engaged in the business of a securities comPany on or after one year from June 16, 1933, it is the opinion of the Board that the provisions of that section do not require a member bank to divorce an affiliate which shall have been engaged in the business of a securities company prior to June 16, 1934, unless such organization is actually engaged in such business on that date or thereafter engages in any such business. Accordingly, it would seem that it will not be unlawful under Section 20 of the Act for The Stock Growers rational Bank to continue its affiliation ith the Stock Growers National Company from and after June 16, 134 9.p, provided that the latter company is not engaged in any kind ; : ),busilless described in section 20 on that date, and that it does ok,"thereafter engage in any such business. n this connection, however, your attention is directed to rctlon 5139 of the Revised Statutes, which provides that, after cs ,1e year from ! June 16, 1935, no certificate representing the stock a_ anY nwtional banking association shall represent the stock of Oh corporatior (with exceptions not here pertinent), nor the ownership, sale or transfer of any certificate representStock of any such association be conditioned in any manner reatsoover upon the ownership, sale or transfer of a certificate baaesenting the stock of any other corporation, except a member such °I. ' course, The Stock Growers Lational Bank must comply with o _provisions of Section 5139. Act Your attention is also directed to Section 32 of the Banking a 1933, and for your information there is inclosed herewith copY of deal the Board's Regulation R, relative to relationships with ers in securities under that section." Approved. Reply on November 20, 1933, approved by five members of the Board, to letters dated September 13 and Lovember 1 from flr. Norris, Gcverzor of the Federal Reserve IstInk of Philadelphia; the reply read11). 413 f°11.oym t tt14_ 40ference is made to your letters of September 13, 1933, and 11,4:raber -' -1 933, trenrve requesting an interpretation of the Federal Loard's Regulation Q. I regret exceedingly that the exan 2 e f ressure of other matters of urgent importance has prevented --" der co ill nsideration by the Board of the questions presented Your letter of the former date. "38 11/28/33 -45- "You refer to the Board three questions submitted to you by 11, Valli= T. Gest, Chairman of the Board of the FidelityPhiladelphia Trust Company and Chairman of the Clearing House , Committee of the Philadelphia Clearing House. Mr. Gest requests to be advised, in the first place, whether the printed notice contained in the passbook issued by the Fidelity-Philadelphia /rust Company in connection with its Savings Department complies with Section V(a)(2) of Regulation Q. Such notice provides that deposits and interest thereon will be paid after thirty days' uritten notice but that the Savings Department may, in its discretion, waive this requirement of notice and make payment upon n?tice of twoweeks or less. The Board is of the opinion that, since notice in writing of not less than thirty days nay be required before withdrawal, the fact that withdrawals may be allowed upon notice of less than thirty days does not prevent the deposit .s1bOect to such withdrawal from being a 'savings deposit' within he Illeanin of the definition contained in Regulation Q. It Should be noted, however, that the Fidelity-Philadelphia Trust eonT allY must comply with the provisions of Section 19 of the Fedai- Reserve Act that no member bank shall waive any requirement s 1.1etiee before payment of any savings deposit except as to all 1?-;1111Ss deposits having the same requirement, and that it must '14:emise comply with the provisions of Section VI of Regulation Q on t;this subject. It is asked, in the second place, whether loans may be made ;II the assignment of the whole or part of a savings fund account. (3 4,ctflote 10 to Section VI(d) of Regulation Q prohibits the making , a.loan to the owner of a savings deposit for the purpose of w31./ 11g any of the requirements of that section. A loan may be "ln the prohibition contained in this footnote irrespective of T:et,her it is secured by an assignment of the savings deposit it0 , or by other collateral or by no collateral at all, provided ofel 2 lean is in fact made for the purpose of evading the provision itsL-he regulation. Each case must be determined on the basis of ett.eval particular circumstances. The fact that a loan is secured co , lrelY or in part by an assignment of a savings deposit may, of 1711; ; 1 seseonstitute a circumstance to be considered in determining tiela , her the loan Was made for the purpose of evading the requireSection VI of the regulation. ruln (lth respect to Id.. Gest's third question, it is noted that a any cf the Philadelphia Clearing House authorizes the waiver of dia. ; equired notice of withdrawal on accounts subject to thirty tin :rInotice, or more, and armits the withdrawal of unmatured provided the rate of interest on such withdrawals doe,a Period of at least thirty days prior to such withdrawals than Ilc) exceed the rate applicable to deposits payable on less 418,virithirty d ays' notice. Even thou ll notice of withdrawal of /le os deposits is not required by a member bank, it is only eel3sarY that the interest paid thereon shall not exceed the J 239 11/28/33 -46' maximum rate prescribed by Section V(c) of Regulation Q, provided the provisions of Section VI of the regulation, already 120ted, are fully complied with. Your attention is called to the ract, however, that Section IV of the regulation prohibits the 1.3ayment in any case of time deposits (as distinguished from 'sav1 21gs deposits') before their maturity. It is suggested, therefore, that the reference to the withdrawal of unmatured time dePosits be eliminated from the rule in question." lipproved. Reply on Lovember 20, 1933, approved by five members of the oard, to a letter dated June 28 fram John - J.0 Sanders, Treasurer of the Cl inchfield Railroad Company, Erwin, Tennessee; the reply readas follows: "Reference is made to your letter of June 28, 1933, addressed to the Comptroller of the Currency and referred to the Federal Rer79 Board for reply. The Board regrets that due to the pressure ;-;.Litother natters of an urgent nature, it has not had an opportuYvt° Cive earlier consideration to your inquiry. 2 °u inquire whether the payment of interest on deposits of ti;;Z2 of your company in national banks under contracts, providing stb, such banks will pay interest on daily balances, is pornisy_ le subsequent to the enactment of the Glass-Steagall bill. 11.state that the contracts do not provide for any certain term l'hich payment of interest shall be made, but the intention they should apply to all daily balances thereafter main`'EJaled. 48 "Under the provisions of jection 19 of the Federal Reserve Act batrended by section 11 (b) of the Banking Act of 1933, a member IllaY not pay interest on a deposit payable on demand except " cordance with a contract entered into in good faith prior to jull qui;2,6 '1933 and in force on that date; and a member bank is retO eliminate from any such contract any provisions for the zill oTent of interest on deposits payable on demand as soon as posoer4.0.consistently with its contractual obligations. Deposits of butlln kinds are exeepted from the provisions of law in questions woiadePosits of the kind which are the subject of your inquiry aPpear to come within any of the exceptions mentioned in the i statute. n 4 uch as you did not submit copies of the contracts referred to la.ib tioll °ye, the Federal Reserve Board is unable to answer your quests a 8Pe oifically; and although your letter does not so state, it able81.1med that the deposits to which you refer are deposits pay°11 demand. In deciding whether a valid and binding contract 240 11/28/33 -47- "for the payment of interest exists, the determinative factor 18 whether the bank in question is under a legal obligation to Pay interest on deposits in accordance with the terms of a bona fide agreement in force on June 16, 1_33. Accordingly, if the Igreement to pay interest on any such deposit was entered into 11:1 good faith and was in force on such date and is the valid and binding obligation of the bank in question, interest may be paid on such deposit in accordance with the terms of the agreement. On the other hand, if the agreement in respect to the payment of interest on such deposit is not a valid and binding contract, or 14 it is subject to cancellation or modification at the option of the bank or without liability on the part of the bank, the men member bank may not continue to pay interest on such deposit 11111 11 is payable on demand. In this connection, it is quite likely that the contracts to ' lleh you refer, in that they do not provide for any certain term during which payment of interest on daily balances shall be 1.:”.e, are subject to cancellation or modification by the banks Iuhout excepted by the liability and are, therefore, of a character not statute. If this is the case, it became the duty of such national banks as soon as possible after June 16, 1933, to take ern.action as was necessary to terminate the contracts or to 111114Rte any provisions for the payment of interest on deposits Y?.1010 on demand. No interest may be paid by such banks on dejt which have been received under the contracts and which are 1:c!.,fab1e on demand for any period after the eVfective date of modification of the contracts." 2 Approved. Reply on I;ovember 20, 193, approved by five members of the 1c)41.d, to a letter dated October 25 from Mr. I. R. Alter, Executive Vies -President of the First ilational Bank, Grand Isla:id, ::ebraska; the readinz as follows: dr_ le ererence is made to your letter dated October 25, 1933, adto the Comptroller of the Currency, which has been rered to the Federal Reserve Board for reply. You state that pa tent of a time certificate of deposit, dated June, 1933, is4114 ,by your bank, payable to the depositor or to the survivor, 'eft with your bank to protect funeral expenses, has been reLle t the e`4 oy the survivor for the purpose of securing funds to meet funeral expenses of the depositor. Although your inquiry is ;„sPeeifio, it is assumed that payment of such certificate has T requested prior to the date of its maturity. Section 19 of the Federal Reserve Act, as =ended, provides Z̀ t 241_ 11/28/33 -48o. In part that no member bank shall pay any time deposit before iLs maturity. The language of the statute is explicit and does not authorizethe Board to make an exception for any purpose. t. .in connection with the making of a loan against a time Ger, lfleat,e of deposit by a member bank, your attention is invited u? the footnote on page G of the Board's Regulation Q, which prolades as follows; 'The making of a loan to the owner of a time deposit in a menber bank by such bank, or by any other bank, person, partnership or corporation in accordance with any agreement, arrangement or understanding with such bank, for the purpose of evading any prohibition of Sec. IV above, will, to the extent of such loan, be deemed to be a payment of such deposit ln violation of such prohibition; and, in any case in which a ?Tear' is made to the owner of a time deposit in a member bank 0Y such bank or in accordance with any agreement, arrangement or understandint- with such bank, the member bank must be pref Pared to show clearly that it was made in good faith and not ,,or the purpose of evading any such prohibition'. A eoPY of Regulation Q is inelosed for your information." Approved. l ePly on November 24, 1933, approved by five merdeers of the 4ctrd, -0 a letter dated November 15 from Mr. A. D. Shackelford, ExecIltiye v. lee President of the National Bank of Wilson, North Carolina; the 'Ply reading as follows: in " eference is made to your letter dated November 15, 1933, whether your bank would be permitted to anticipate pay' de of certain certificates of deposit which were issued to the BallrisltOrs in settlement of their claims against the First National eel:.nd the Wilson Trust and Savings Bank. You state that the it .11 loate5 in question become due on January 15, 1934, and that peals the intention of your bank, if permission is granted by the ' 1 111 ReserveB Board, to pay such ' certificates on November 15, 1933. '11,eotion 19 of the Federal Reserve Act, as amended, provides 1(/ . member bank shall pay any time deposit before 11.1.b!::ttuzno The language of the statute is specific and does Ac. authorize the Board to make any exception for any purpose. not(TdillGlY, the certificates of deposit to which you refer may be Paid prior to the date of their maturity." Approved. Reply on November 27, 1933, approved by six members of the 11/28/33 49 d, to a letter dated November 22 from :Jr. Downs, Assistant Federal- Reserve Agent at New York; the reply reading as follows: , "In compliance with the recommendation you make in your leter of I:ovember 22, the Central hanover Bank and Trust Company, i2e17 York City is hereby (-)ranted an extension of time to :ovember 48 mithin which to submit the report of its deposits on Schedule 'Qt ." Approved. Letter dated November 21, 1933, to the Federal reserve agents at all Federal reserve banks, approved by four members of the Board, reltdinz as follows: oection IV(e) of Regulation R, dealing with the provisions Z71. 17eetion 32 of the Banking Act of 1933, one of the factors which be considered in determining whether the issuance of a permit '1-41 te compatible with the public interest is stated as follows: 'Ilether the proposed relationship will have any undesirable effect upon the member bank's financial condition, its credit or or its policies in dealing mith its ti nahere appears to be some likelihood that, in answering quest.° 8 411Mbered I and 4 on Fern' 99c, sufficient detail will not be ,ven to p nor. ,It the Board to determine whether or not the business of the , dealer in securities customarily includes the undemriting, tr°tation and distribution of securities or participations in such thtetinactions, and whether the customary business dealings between 17144.1!lember bank and the dealer involve securities in the underflotation or distribution of which the dealer has been pi;ele,ted. It is, accordingly, requested that, in submitting ape4tlone to the hoard involving Section 32, you advise the Eoard re, these matters in each case." Approved. Telegram dated November 23, 1933, to the Federal reserve agents RI: (Ill Federal reserve banks, approved by four members of the Board, ac fofl "Ixl co nnection zerve with applications of directors of Federal r?-. proh.l oanks or branches for permission to serve other banks within 3-jit1ons of Section BA of Clayton Act it is not necessary for 243 11/28/33 fl, zederal reserve bank or branch to submit statement on Form 94a; but Federal reserve agent should submit information as to the extent to which other banks covered by application have used credit facilities of Federal reserve banks, as to applicant's record of attendance at directors' meetings, whether he has served as member of executive, discount or other committee of Foederal reserve bank or branch and whether he is regarded in er respects as a desirable director of Federal reserve bank or b ranch." Approved. Letter dted :lovember 23, 1933, to £r. Williams, Federal Reserve Agent at Cleveland, approved by three members of the Board, reacling as follows: ,c,,:Reference is made to Mr. Fletcher's letter of Lovember 13, regarding the services of three directors of branches of T(?Ilr bank who are serving at the same time as directors of na.ti(Tal banks and State banks. in view of the fact that a Federal reserve bank is a bank A or -zed or operatins under the laws of the United States', the : 0: a director of a Federal reserve bank, or of one of its m' 01 ; 1: 17i a director of any corporation coming v4ithin the pro11Ditions of Section CA, will be prohibited after January 1, 1934, by the n rr°vizions of Section 8A unless permit has been issued nrins such service. is, Az you are of course aware, the Board is not authorized to permiL covering the service of more than three banking ItstitutiQns comin - within the Prohibitions of the Clayton Act. ar"noted that two of the directors referred to in your letter 13 . 1117.1t,; more than three institutions which apparently cone prohibitions of the Clayton Act; and it will, accordnecessary for such directors to cease to serve all but three Re such institutions. In this connection see Section V(a) of gul4tion L." Approved. En Reply on November 23, 1933, approved by five members of the a letter dated November 16 from Lir. Sterling 1emll of qUire, ariders Re Dempsey, Cleveland, Ohio, counsel for the Federal Bank of Cleveland; the reply reading as follows: ) 44 11/28/33 -51- "Receipt is acknowledged of your letter of November 16, 1933, to Lir• ilYatt, in which you state that your office, at the request of the Federal Reserve Bank of Cleveland, has prepared an opinion holding that Section SA of the Clayton Act does not prohibit one the directors of that bank from serving at the some time as a director of a Pennsylvania building and loan association which °ooasionally makes loans to its own shareholders, secured by its °I'm stock. You state that your opinion was based upon the Board's let er of September 11, 1933 (X-7584). Before transmittin; your opinion to the Federal Reserve Bank, ye ask to be advised whether the Board's letter' of November 10, 7677), should be regarded as qualifying or overruling the (1 e%sion contained in the Board's letter of September 11, 1933. ,., It is of course possible tat a in enacting Section BA Congress fz:lo not have in mind loans by a manufacturing corporation to its vimPl ,?Yees, secured by its own stock; but it does not seem that the vrilut.; of the Sectioa is such as to leave room for a construction ich vould exclude such loans. The stock of the manufacturing ,corporation is evidently stock of precisely the kind referred to 1 - t he phrase 'stock or bond collateral'. 10 °11. the other hand, it appears that the stock of a building and acall association is issued merely as a part of the plan for the : 0 1114.1,11ation of the funds of members under which such associations tf a-race. The loan on the stock is, therefore, merely a part of Ete!,Plall Pursuant to which the stock itself is issued and the transfel'.104, therefore, appears to be of a different kind from that to in Section BA. ,,ardlhe letter of September 11, 1033, should therefore not be re" "as altered by the letter of November 10, 1933." Approved. Reply on November 27, 1933, approved by six members of the 13°ard, to a letter dated november 16 from 1,:r. hoxton, Federal Reserve at 1Z1. ond; the reply reading as follows: lifter vihich erence is made to your letter of November 16, 1933, in oisTissot(1!It7;t one of the Class A directors of your bank another bank has sumested that he should not ForIl rluired to fill out and submit an application on the Board's tu for a permit under the Clayton Act to serve the two in1 , tionG. t appier°ful considerfttion has been given to the matter and it 8 that, since the Act places upon the Board the responsibility 0, c01134.determining whether or not the issuance of a permit will be shoia2-1)1e with the public interest, the filing of an application 'I be required in cases of the kind to which you refer. It "45 11/28/33 -52"doos not appear to be necessary, however, in connection with an aPplication involving the service of a director of a Federal ReServe Bank or branch to include a statement of the Federal Reserve Bank or branch on Form 94a, and, in this connection, reference is made to the Board's telegram of November 23, 1933, Trans. Lo. 1 915." Approved. Telegraphic reply on November 20, 1933, approved by five mem- bers ofthe Board, to a telegram dated November 13 from Jr. Robert S. 1)arker, counsel for the Federal Reserve Bank of Atlanta, with regard to the question ac to whether the Board can grant permits to serve as a director of a national bank and at the same time as a director of a L:crris plan bank or similar institution making loans on stock or bond e°11aterca. The reply read as follows: "Your . tut. wire 13. Section 8A of Clayton Act applies to any instiialarri making loans on stock or bond collateral but, in the few or &noes in which question has been presented, :,:orris Plan banks under laws of particular States have heretofore been con; ed tbarik.2, within meanin of Section 8, and in such cases perh°°uld be issued. Board has not ruled generally on question ! e 7 all Morris Plan banks are 'banks' within meaning of Sec0. With regard to 'installment stock', Board is without sufa °lent informaUon to state definitely whether situation would be bng°us to loans made by building and loan associations secured s" r own stock, but if transaction is essentially similar, am° Principle& might be applied." Approved. ReplY 011 November 23, 1933, approved by four members of the t° a lettor dated November 13 from Lr. 1\ewton, Federal Reserve /t ellt at 4 tlanta; the reply reading as follows: re, “ucelpt is acknowledged of your letter of November 13, 1933, r4rding the service of Li-. E. i4. Lane of Jacksonville as a diof tr andAr officer of three naLional banks and as a director You --e Jacksonville branch of the Federal Reserve Bank of Atlanta. Ilre correct in concludins that the Board is authorized to is4 Permit coverinr the service of not more than three banking ‘-.14 11/28/33 -53o. institutions and that, therefore, if Mr. Lane continues to serve !s a director of the Jacksonville branch, he cannot be authorized !do serve at the same time as a director or officer of more than tao national banks. In this connection, see Section V(a) of Regulation L." ,Ipproved. Reply on November 24, 1933, approved by four members of the B°ard, to a letter dated November 17 from Yr. F. M. Farris, Executive Vice -President of the Third National Bank, Nashville, Tennessee; the reply reading as follows: "1 have received your letter of November 17, 1933, regarding "he question whether I]r. C. A. Craig and Mr. C. R. Clements, Chairman of the Board of Directors and Executive Vice-President, re:Peetively, of the National Life and Accident Insurance Company, ' sll,eentinue as directors of your bank after January 1, 1931. L. gihen you were in Washington, you stated that the National cif° and Accident Insurance Company occasionally makes loans seed by stock or bond collateral. In the circumstances, the sore.of these gentlemen would come within the prohibitions of jectl°n 8A of the Clayton Act, and the question which you raise ,therefore, whether the Federal Reserve Board is authorized 1 Issue permits coverinr, the services in question. This matter S under consideration when you were in Eashin:ton, but the Board ths 11°1v reached the conclusion that the provisions of Section 8 of oriT Clayton Act which authorize the Board to issue permits refer boj,,to b ankinginstitutions of certain classes, and that the 1s, accordil,gly, without authority to issue permits invo1vr61at1 onships between naLional banks and non-banking orc;aniza, tiuo t40-e yhich come within the prohibitions of Section 8A. Of course, res e is true with respect to relationships between Federal pra : Iiive banks and non-bankinr, organizations which come within the 01,- ;:g1.t114f Section 8A since Federal reserve banks are 'organized under the lam of the United States'. e1 ,1f3 You know, Section 8A refers to any corporation which 'shall nlai, 1c)ans of the kind described; and that section, therefore, doc;, 4 e'4 not refer to the business which may have been transacted by in the past, but refers only to the business transacted after January 1, 1934, the effective date of the section. dire°f°re, the prohibitions of Section 8A are inapplicable to a or eTr of a national bank who shall serve as a director, officer, of a aeclI which, in the past, has made loans by*stock corporation make or bond collateral, if such corporation shall 40 loans of such character after January 1, 1934. However, if Z ,Z Z The:T;T 247 11/28/33 ft the corporation shall make such loans after January 1, 1934, Section 8A will forbid the service of a director, officer, or emPloyee of a national bank or of a Federal reserve bank as a director, officer, or employee of such a corporation; and, if the ?orporation is not a banking corporation, the Board is not authorized to issue a permit covering such service." Approved. Reply on November 27, 1933, approved by six members of the t° a letter dated November 18 from Mr. Newton, Federal Reserve AZent at 'Jan Francisco; the reply reading as follows: ft, iteference is made to your letter of bovember 18, 1933, regard11:1G the applicability of Section 8A of the Clayton Act to the serd.2 of /Ir. Andrew -elch as a director of your bank and as Presi_:" of V:elch Company. In view of the fact that 1.e1ch & Company es loans secured by stock or bond collateral, you conclude that oe.?ti°n BA is applicable to his service and that the Board is 'Athol " , authority to grant him a permit. As is shown by Section V(a) 1„..110Gulation L, this conclusion is correct, with the result that '1"0111. Welch will nut be authorized to serve as a director of your and as President of aelch (v.:, Company after January 1, 1934, if Company shall make loans secured by stock or bond collate41ch ral after that date." r Approved. Rnni -z--y on November 20, 1933, approved by five members of the Board tn 3 a letter dated September 7 from Mr. Newton E. Anderson, Los Ca lifornia; the reply reading as follows: ft v Ge J-eur letter of September 7, 1933, addressed to the Attorney the United States has been referred to the Federal Re-' serve B Board for reply. You request to be advised whether a Fedoral b al reserve bank note is an obligation only of the Federal reserve issuing such note or whether it is also an obligation for thcch the Treasury of the United States would be responsible in n eye . nt that the Federal reserve bank could not respond. Act Illth respect to such notes, Section 13 of the Federal Reserve amended provides in part as follows: Upon the deposit -with the Treasurer of the United States, (a) of any direct obligations of the United States or (b) of : 1 !=s, drafts, bills of exchange, or bankers' acceptances a -- 112 under the provisions of this Act, any Federal reserve .4 :I)4 11/28/33 -55- bank making such deposit in the manner prescribed by the Secretary of the Treasury shall be entitled to receive from the Comptroller of the Currency circulating notes in blank, duly registered and countersigned. ;4hen such circulating !otes are issued against the security of obligations of the United States, the amount of such circulating notes shall be equal to the face value of the direct obligations of the United 6tates so deposited as security; and, when issued against the security of notes, drafts, bills of exchange and bankers' acceptances acquired under the provisions of this Act, the amount thereof shall be equal to not more than 90 per cent of the esvalue of such notes, drafts, bills of exchange and bankers' acceptances so deposited as security. Such notes Slall be the obligations of the Federal reserve bank procuring "irie same, shall be in form prescribed by the Secretary of the , P?asurY, shall be receivable at par in all parts of the uluted States for the same purposes as are national bank notes, azd shall be redeemable in lawful money of the United States Oh presentation at the United States Treasury or at the bank cf issue.' sm "It is the policy of the Federal Reserve Board not to express ariePinlon upon any question of law unless such question has n or is likely to arise in a particular case. In the circumtinces, therefore, the Board does not feel that it is in a posih express itself with reference to your question. It is s40d, however, that the above quoted excerpt from the Federal ReAct may furnish the information which you desire." Approved. ReplY on November 23, 1933, approved by five members of the 13c3ard' t° a letter dated November 13 from Lir. L. S. Whetstone, Tacoma, 'ItLv,hirictorl, requesting to be advised whether he is doing anything wrong tlakinc s tatements over the radio that postal savinF,s deposits are thkn 4_ .17 deposits in banks and building and loan associations. read as The follows: , dre,Ilecelpt is acknowledged of your letter of Lovember 13 adre ' 30d to 'U. S. Federal Reserve Bank', Washington, L). C., in %. ; / c1 t° statements made by you in radio broadcasts. whi: 1 1 8 it does not appear that the determination of the questions eo c'L you ask regarding these statements is 'within the authority tElk,(5fred upon the Federal Reserve Board by law, it cannot under- ") express any opinion regarding them." Approved. Q 249 11/28/33 -56-Reply on Lovemter 27, 1933, approved by six members of the to a letter dated November 23 from Er. Williams, Federal hoServs Agent at Cleveland; the reply reading as follows: "Receipt is acknowledged of your letter of hovember 23, 1933, d its inclosures, in regard to an advertisement published by pe Peoples Savings Bank Company, Delta, Ohio, a member bank, reecting 1, 1934. the insurance of its deposit accounts beginning January n r "rihe Board is thoroughly in accord with your method of dealwith situations of this kind as indicated by your letter of nvember 21 to the President of the institution. In this connecon, however, it is noted that reference is made in your letter fik)veraber 21 to 'subsection (v) of section 12B of the Banking s, , ; of 1933', whereas it appears that you intended to refer to ,use of section 12B of the Federal Reserve Act. 19_"IhEtnis (v) inclosed copy of a regulation dated November 22, ' 53, issued by the Federal Deposit Insurance Corporation with respect to 'bank advertising' which you may find helpful in dealwith this subject." l L Approved. Letter dated November 27, 1933, to honorable W. A. Julian, Treasurer of the United States, approved by six members of the Board, re4dinc as follows: 4:41 response to your recent request, the Federal Reserve Board , v 6 taken up with the Federal Reserve banks the question as to xther they - would be willing to undertake the holdingin custody binde which are pledged as security for postal savings deposits 3;1/41: replies indicate that they are willing to undertake this arlovice, althou]h there is a considerable diversity of opinion pris.the several banks as to just what this service should cornthi 'use Board, however, understands from hr. Smead, who discussed Pecl (1"Gtion with you recently, that you would like to have the aseeral Reserve banks hold in custody, for their member banks only, allerties of the United States Government and coupon bonds isser, states, and that you have no objection to the Federal Reexp ve oanks reserving the right to obtain reimbursement of their 11t,r; IT : I min this connection from such member banks as elect to Perform this service. If you will be good enough to tZlse the Board in this respect and furnish it with a tentative of c ustodianship agreement, the Board will be glad to submit ,250 11/28/33 -57, suea agreement to the Federal Reserve banks for any conuaents and 8uggesti0n5 they may wish to make." Approved. Letter dated November 14, 1933, to La. Harrison, Governor of the Federal Reserve Bank of New York, prepared by Governor Black and 11.11 '1"".er in accordance with the action taken at the meeting of the 21°11rd on November 7, 1933, approved by six members of the Board, and rellding as follows: "The Board has considered your letter of October 19th in which aceptingYOUsk for an expression of the views of the Board with respect 1.to your accepting the post which the statutes of the Bank for InRernational Settlements reserve for the Governor of the Federal Bank of New York on the Board of Directors of the Bank for Ior I nternational Settlements. "The Board has carefully considered this matter in view of its Coneral conduct supervisor respect the to and operaduties with y tion of Federal Reserve Banks, and especially in vievrof the replaced upon the Board under sub-section (g) of sectrans4 of the Federal Reserve Act relating to relationships and actions with foreign banks and bankers. c__,The Board has reached the conclusion that you should not ac1,7%-pe appointment which has been offered you by Mr. Fraser, _,e;3--ent of the Bank for International Settlements, and begs to vi that at the present time it would not be willing to grant 1.)ermi ssion for such step made necessary by the sub-section of section 14 cited." Approved. Carter Reply to a letter dated November 23, 1933, from Honorable Glass, 'United States Senator; the reply reading as follows: havo your letter of Hovember 23rd acknowledging mine of th"°4Dor 21st concerning your inquiry, through Mr. Hamlin, as to oi,ej_?1Tlission from the recent issue of the Federal Reserve Bulletin review of business conditions of the country. LY letter to you of November 21st was intended to be a full lir specific reply to your inquiry as transmitted to the Board by The Board is very glad to answer your further inas contained in your present letter. #.„.4 "51 11/28/33 "In order that you may see how the Bulletin is made up, there ls inclosed herewith copy of the November issue. The first part Of the Bulletin contains two principal sections. One of these, °II Page 679 in the November Bulletin, is entitled 'National SumarY of Business conditions'. The other, page 669, is entitled Reiew of the Month' "The National Summary of Business Conditions is a regular feature of the Bulletin, appearing every month, and is in a standardized form. It is prepared in cooperation with a cormittee of Federal reserve agents and is intended to show, so far as this ls possible by statistical indices and comparable indicators, changes that have taken place in the month covered in the Sumnary ln.industrial production, emnloyment, construction, distribution, Prices, foreign exchange, bank credit, and money rates; To repeat, : Ileh a National Summary appears in every Bulletin and in substanlaly similar form. fi The Review of the Month is of a different character. It is r -exlble, lending itself to the presentation or discussion of the aos significant events of the month in the perspective of a longer erl°d and to an analysis and interpretation of important business, nank1nG and financial developments. It occasionally contains imi7tEnt Public announcements which are incorporated as a matter of nlstcrical record or for reference purposes. It has, therefore, standard form. Vihile it has often contained a survey of business c developments from a broader point of view or for a longer , ' 0 4 .„1 -Led of time than is deemed appropriate in the National Summary ' Plsineso Conditions, such surveys are not an invariable or et,, - ?rilarY feature of the Review of the Lonth. the Hovember Bulletin treated as an outstanding development in ° financial field the Administration's position on banking and linetarY matters as outlined in the address of the Iresident deOr2 on October 22nd, and the proceedings of the Deposit Liquidapr-"Board as announced in its telegram of October 18th, end other .,!edings of the Deposit Liquidation Board; announcements relative to°c Ree°1e rchase of preferred stock from non-member banks by the re , 1sIruction Finance Corporation; certain executive orders and tion relative to newly mined gold and the action of the to 7:1Ilictration relative to such Fold; and proceedings with respect he purchase of gold in foreign markets. It was felt that this information was of paramount importance .6;1 should be presented in full and in its official form. For season the , 1 review for November consists of quotation of oficj statements. off.11:le course taken by the review in I:ovember in presenting only lal statements was exactly the same as was taken in March of th hol:' Year, when the review consisted of a summary of State bank tt,,ldaYs, the Proclamation of the President of March 6, his mesall e to Coni;ress of March 9, the emergency bank act of flarch 9, ci other Pertinent public documents relating to the banking T Z t 4 252 11/128/33 -59- emergency. The review for arch contained no editorial discusr. Of business and banking conditions, but that issue of the "lletin, as every other issue, carried the national summary of business conditions, which appeared on page 134. In view of the impression to which you refer that a change . ln the form of the review for November was related to a protest ade by General Johnson about a sentence in the October review, %sh to state clearly what occurred in that connection. , On October 26th General Johnson called Dr. Goldenveiser over uhe.telephone and took exception to the following sentence in the .°172.evi* of the month in the October Bulletin: 'It (the decline in Inaustrial activity) has also been marked in industries in -which ?r°oessing taxes and codes have become effective recently', stat14f;; to Dr. Goldenweiser that this was not correct. Dr. Gol6enwel5er called General Johnson's attention to the context of that Part of the review of the month and stated that the sentence ob!oted to should be read in connection with the full context, and the statement atement to which objection had been taken was true. Goldenmeiser nor any member of the Board or its staff sp ozz other cement or suggestion of any kind from G:sneliZeJohlrn theAt the time of this telephone conversation, on October 26th, L ovember bulletin was in the hands of the printer and the eej 'ePhone conversation with General Johnson had no effect on its ents. Nothing -was taken from it after such telephone conver07,10n and there were added to it only official statements and )r ofLicial matter which had not been published at the t io the "'e tin vent to the prinLer. It follows that the omission of the 11r .1 w from the November Bulletin was in no way related to General H2°n's protest over the telephone on October 26th. yon Ihe i)oard trusts that the above statement will make clear be"314 radventure that the way in which the Kovember issue of the low..!tPein was prepared was identical with that which has boon folth,;Z' ln past years. There is nothing whatever in connection with bulletin which marks a departure from the well-established )1edure of the Board and the Board desires me to add that no dee is in contemplation." T X BZ 4 1 Approved. the 0t Letters dated November 24, 1933, approved by five members of 130ard, to applicants for permits under the Clayton Act, advising eq)Proval of their applications as follows: a, d,enry Hornbrook, for pernission to serve at the same time ,trector of lhe Indiana Lational Bank of Indianapolis, Indian1.'41,t1s, Indiana, and as director of The Union Trust Company of '1sinaPolis, Indianapolis, Indiana. “53 ) 11A3A6 i -60La.. Fred G. Appel, for permission to serve at the same time as director of The Indiana rational Bank of Indianapolis, Indianap?1i8, Indiana, and as director of The Union Trust Company or India:_apolis, Indianapolis., Indiana. Edgar h.. Evans, for permission to serve at the same time as uir .ector of The Indiana National Bank of Indianapolis, Indianap. c) 1e, Indiana, and as director of The Union Irust Company of Inclianapolis, Indianapolis, Indiana. John Lallantyne, for permission to servo at the same time as ;0-rector and officer of the Lanufacturers i- .ational Bank of Detroit, ,etroit, and as director of the Detroit branch, Federal Michigan' 41eserve Bank of Chicago, Detroit, Lachigan. G. ."rGe J. Schaller, for permission to serve at the same time ,” director and officer of the Citizens First National Lank, Lake, Iowa, and as director of the Federal Reserve Bank of `413-cago, Chicago, Illinois. Approved. There were then presented the following applications for origi/lal stock, or for the surrender of steck,of Federal reserve banks: ShLres or ORIGliaL Stock: uo. 2. DTT.7 t ehl r7a7r Bank, Belmar, New Jersey National Bank, Branchville, New Jersey 72 /15 Dictrict 1.o. Strap_t_ustetval ational Bank in Strausstom, stown, Pennsylvania _ ' 1;4.4e-l1/4'raus8 11.118 13a zirik ivai()ifi alkes-Barre, Viilkes-Barre, • 36 3,900 4. LEIA7,377Z -Bank in Bryan, Bryan, Ohio cirjt Lational Bank of Caldwell, Ohio Ohio Albion, Penn !Ylania Iirl;tt;ellttitotnian.113catilltjAYltreld' 117 3,936 36 54 36 33 hational Bank, Blairsville, ertlfniasylvania atonal Bank, 14ercer,Pennsylvaniaja Grafton, liational Bank LowPennsYlvan vc) of ?aitors 1:a-Lional Bank, Wilmington, slansylvania 72 66 36 36 369 11/28/33 -61- ii. strict1j-cations for ORIGINAL Stock; (Continued) Di ,....... No-• 5• Cecirra71771717Bank at Port Deposit, Port Deposit, Maryland Shares 45 45 Listrict No. 7• CitY National Bank in Dixon, Dixon, Illinois 75 75 trc1 O " First NatICTIZT-Bank of Lount Vernon, Illinois 75 75 1;0. 11. 41/.41 Arintinal Bank, Santa Anna, Texas 36 Total 36 4,653 Ap '-ications for SURRENDER of Stock: ZEITict No. 1 Portland, Maine FirarBank, ?'00Ples-Ticonic National Bank, Viaterville, 4ine ebster (Insolvent) National Bank, .;ebster, Massachusetts (Insolvent) pnistrict No. 2. iational Bank, Orange, levr Jersey liquidated through conservator) crst Lational Bank, Gouverneur, New York (EeinE liquidated through conservator) Dist • Po 3. 41111t earl hational Bank, nount Ephraim, ,versey (Insolvent) It 141tional Bank, Goldsboro, Pennsylvania \Insolvent) ripl*."'triet (Let N ational B , Barbourville, Kentucky liquidated throuL;h conservator) Eank of John A. Black, Barbourville, Pir4i. li0kY (Being liouidated throu-h conservator) (; 1 -Rtional Bank, Portsnouth, Ohio Pir,t°1-11C l iouidated through conservator) (1 '44tional Bank in Derry, Pennsylvania Firl, us olvent) (Bei a Bank 4Rtion1 FinleiTva*11e, Pe Pennsylvania liew 1,1 11 l iquidated conservator) throw,h pen°rence Lational Bank, Lew Florence, c0;;;%1 .:t 11. .a ) (fleinr, liouidated through 540 300 132 972 360 180 540 30 42 66 63 540 60 41 30 72 11/2e/33 -62- 4Plications for SURRENDER of Stock: (Continued) District No. 4. — 1Continued) Pleasant Unity National Bank, Pleasant Unity, Pennsylvania (Insolvent) 5* Cltizens raTronal Bank, Gastonia, North Carolina (Voluntary liquidation; succeeded by The Citizens rational Bank in Gastonia) 'llsst rational Bank, Keyser, :1 .est Virginia (Being liquidated through conservator )listrict No. 6, 'Ll7c1,rd National Bank, Hartford, Alabama pe\2eing liquidated through conservator) Soto National Bank, Arcadia, Florida Fir(!ecrease in surplus) 't national Bank of Commerce, Tarpon Springs, Piorida (Insolv ent) District No. 7. First National Bank & Trust Company of p Bloomington, Illinois (Insolvent) irt*-11enry National Bank, Henry, Illinois an colvent) liew1/144 National Bank, Newman, Illinois ,. (Insolvent) 'Irt National lInsolvelt) Bank, Ransom, Illinois Ir” National Bank, Savanna, Illinois pi acing liquidated through conservator) ”t co l national Bank, Steward, Illinois Insolvent) 11,creial National Bank, Wilmington, Illinois p Shares 84 360 72 Viabash National Bank, Wabash, p. 14cliana (heinP liquidated through conservator) - vator) Nat conial Bank, Exira' I"a eitlze ilireclvent) ns N ational Bank, hampton, Iowa (13cing 'irst liquidated through conservator) (BeNational Bank, Hawarden, Iowa pi l '4rz3t iquidated through conservator) National Bank, Little Rock, Iowa (I liational Bank, Almont, Michigan lis°1vent) (, Lational Bank, Avoca, Michigan \-Llas olvent) 432 36 11 69 240 60 75 30 90 36 an8Olvent) 41'r.rS 884 60 177 26 120 60 30 19 24 116 ' N' 11/28/33 -63- cations for SURRENDill of Stock ' 'fjgZIEL..a1_7. Continued) (Continued) Lachigan (I nsolvent) r8t National Bank, Richn"d' Lachigan (I nsolvent) F.3.1.8t N ational Bank, Shawano, Wisconsin (Insolvent) Pirt Dardanelle, Arkansas lI nsolvent) National Bank, Columbia, Illinois Ofoluntary liquidation; succeeded by p Pirst Nationa.1 Bank in Columbia) ar i erns a oliIa ve ti nt orl Bank, Dahlsren, Illinois T Dist • Shares 18 54 72 18 51 17 86 0 lIat10771—Bank, Lake Linden, Michigan (Decrease In capital and surplus) lrst Rational Bank, Joodhue, Amnesota F. (Insolvent) lit national Bank, Valier, Montana In solvent) triet Ro. 10. 1;ationa.1 Bank, Boulder, Colorado 4,0(13;3111g liquidated throush conservator) -7`Aer -National Bank, Boulder, Colorado through conservator) R Central City, Colorado (Insolvent) ubst:7 national Bank, Golden, olorado p. 84 21 15 120 102 60 21 60 Bank, La 'zeta, Colorado uvir.?11 Col.ulty National Bank, Burr Oak, Kansas (Voluntary licuidation, absorbed by Fir 1:hu ' r Oak State Bank, nonmember) ' t ilati°nal Bank, an Haviland, Kansas ‘/ITI°11antary liquidation; succeeded by ceirCalriland state Bank, nonmember) (1.:'1.1 City National Bank, Central City, Nebraska \.1.4solvent) 18 42 36 60 pitzt,,,rict No, 11. i.4,1111.tionirrank, Sylvester, Texas °11rent) r 21 399 257 11/28/33 -64- A l ications for SURRENDER of Stock: (Continued) DistrictLo. 11. (Continued) 117117171:7 1Bank of West, West, Texas (Insolvent) Shares 57 36 !,:jFI._rict No. 12. Albany, Oregon (Insolvent) a M. Peterson Bank, Riohfield, Utah (I nsolvent) 45 60 Total 105 4,974 Approved. Thereupon the meeting adjourned. Secre ary.
@FedFRASER