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3140 meeting or the L;xecutive Committee of the 2!ederal Reserve Boay.,1 waS held in '::ashington on Thursday, October 11, 1934, at 3:30 P. PRESENT: /Jr. Mr. Mr. Mr. Thomas, Vice Governor Hamlin Miller Tames La% Bethea, _ssistant Secretary Mr. Carpenter, _Issistant Secretary The Committee considered and acted upon the following matters: Telegram dated October 11, 1934, from Mr. Hoxton, Chairman of the , cleral Reserve Bank of Richmond, advising that, at a meeting of the to ard of directors today, no change was made in the bank's existizitt 8 , enedule of rates of discount and Purchase. ..iithout objection, noted with approval. the bi Ir.emo randum. dated October 3, 193, from Er. :)aulger, Chief of NrIsi°11 or Examinations, recommending the extension, for another thirty cia'Y Period from October 14 to November 12, lajq, inclusive, of the tem D°1'erY employment of Miss Beverley 1:.athews as a stenographer in divi . s1(:) , with compensation at the rate at which she was previously .141 °Yed. 1:61-a°1"andum dated October 8, 19.34, from i. aulger, Chief of "ion or ,2,x 83aination3, recommending the extension, for another d or two months, of the temporary employment of Liss Hazel E. 'Iltz.ickas a clerk in the division, with compensation at the rate at ahe was previously employed. Approved. 3141 10/11/64 -2Letter dated October 10, 194, approved by four members of the 13°811'd, to r, Austin, Federal deserve 2_gent at the Federal Reserve k or r hiladelphia, re dini; as follows: "IIT• Hill's letter of October 5, 1934, aduressed to r. Paulcer, Chief of the iiivision of Examinations, tranalitted eogY of your letter ol Lay 18, 1934, which was not received by the 3oard, and, in accordance with the request contained in Your lett,er, the Board approves the desic-pmation of the seventeen employees of the bank as special assistants to !xaziners. The Board understands that such designations are be on a temporary basis for the our-nose of lending clerie l assistance in the examinations of larger banks, and that 11c)ne of the indiviuuals will be transferred permanently to e)caminin,l; work without the Board's approval." Approved. Letue- uated October 10, 1934, apnroved ID:: four members of the 4(1 'to the board of directors of the "Iowa state Bank and Trust CO ) of 2 a1rfie1d, Iowa", Fairfield, Iowa, stating that, subject to the cot iditions prescribed in the letter, the Board approves the bnnk's .1313lication for membership in the 7ederal Reserve L;ystem and for the 4DDI 'oloriat e amount 01' stock in the Federal Reserve Bank of Chicago. ,nproved. Letter dated October 10, 19‘:)4, approved by four members of the Llr. Stevens Federal _eserve .:..gent at the Federal leserve Of Chloa*,o, reading as follows: 21 1:Reference is made to I,Tx. Young's letter of September st 342 aavisin,] that on August 6, 1934, the 'Cherokee 13enk t, Cherokee, Iowa, assumed be deposit liability or ove 4ae State Trust and .Davinzs Bank, luimby, Iowa, and took like amount of assets from the latter institution. totai rit is observed from the information suUditted that tae deposit liability assumed by the member bank aggregated the",.J18; that the „Dtate Banking Department of Iowa approved t1.0,arallsact10n and is satisfied that the assets taken over the quizaby institution are good and collectible; that e°11ase1 is satisfied as to the legality of the proceediE:s 3142 10/11/34 -.37and that uhe transaction has resulted in no material change 311 the general character of the assets of or broadening in the functions exercised by the member bank. "The Board has reviewed the information submitted and in view of your recommendation will take no action affecting the Me rabership of the Cherokee State Rank by reason of the transaction.” ,.pproved. Letter dated October 10, 19'34, approved by four Rembers of the 1:30az,ci ) uo • 0,Conaor, Comptroller of the Currency, reading as rollows: lits" t:::ei o:t, : e a::71e.:ged of your : 34 'with reference to the proposed reduction in common capir on ,ounuy iational Bank of L:edford', po °rds New Jersey, which was approved by the Board on Tune 193 ) pursuant to a clan which provided among other things the sale of v50,000 of preferred stock to present directors other stockholders at a premium of ',25,000. You advise uhat the original plan of recapitalization has 171 amended and that the bank now proposes to sell „;50,000 of reeaterred stock to the Reconstruc3ion Anance Corporation and to lice its cammon capital 50,000, using the released capital a, eliminate unsatisfactory assets; also that the existing -L 'Iarectors) guarantees in the amount of c74,000, will continue 1'1.1,11 force and effect until the capital is fully restored. its "In ack;ordance with your recommendation the board Emends rer Previous approval to provide for the sale of ,50,000 or preretred stock to the _eaonstruction Anance 0or,2oration, and the ention of the existing directors' guarantees, as set forth the olr letter or October 2, 193, i, with the unr'erstanding that Provisions or the original plan remain unchanged." l Approved. Letter dated October 10, 1934, approved by four members of the to O'Connor, Comptroller of the Currency, reading as follows: 1964 "P 'eceiPt is acknowledged of your letter of October 5, c4Dil th reference to the proposed reduction in the coon 2eatt or 'The University National Bank or Seattle', 4Dp,!;:: " -aehington, from 400,000 to i200,000, which was the.Board on .Tanuary 17, 1934, pursuant to a '000,00 provided, a,4ong other t_inzs, for the sale of eorp, ' or preferred stock to the iieconstruction ,in-nce -ration. 3143 14)/11/31 1 "You advise that the original plan has been amended bY reducing the amount or preferred stock to be sold to the -A3construction rinance ,;or-ooration from „;300,000 to :)200,000. 'In accordance with your reconmendation, the Board amends it8 Previous approval to provide for the sale of 200,000, of Prererred stock to be Reconstruction Finance Corporation as set iorth in your letter or October 5, 1934. . "It is understood that the other provisions or the original plan remain unchanged, with be exception of the amount °r eliminations to be effected. Your letter of January 8, submitting the original plan to the Board, indicated that, in addition to the released cauital, approximately ;122,000 from tile ; uankts surplus and undivided profits would be used to .1-rilinato undesirable assets, whereas, your letter of October 5, " - 341 refers only to the use of the released capital lor that 0/411 ' 13°se. In this connection, it is noted that, on the basis H. the report of examination of June 6, 1934, securities deprecia111°4 unProvided amounting to approximately :.;301,000, exceeds :bank's surplus and undivided profits by approximPtely ' 000- It is assumed, however, that you have this condition re' Iliad and that whenever it is practicable to do so you will quire such further corrections as may be feasible." Approved. Lleincrandum dated October 6, 1934, from Lr. Smead, Chief of the 4171si°4 c)f Bank Operations, stating that some time ago the Federal De143urance Corporation asked for copies of the division's State l'ee41)itU1ati 4-°rIs of the Tune 30, 1934, condition reports of 'state member bg contain certain figures not published in the :::ember Bank : C 11 that these figures were furnished co the Corporation with "IlellIQderstandinr that they would not be made public without the i)erru on; and that the Corporation has novt worked LID a state- practically all the details contained in the member bank Qc3litti°11 rePorts, including the items contained in most of the sche:7) 111(1 Proposes to publish State totals separately for national 1.°1 tate Doember ba i s, o: -tate nonmember banks, and for 11171 and industrial banks, and has asked permission to include 3144 10/11/64 -D14 the published table figures for State member banks. ...Ile memorandum subzitted a letter dated October 5, 1934, from Er. L'ortimer T. Fox, Chief Statistician of he Federal Deposit Insurance Corporation, sta itr.L' that in the iour States in which there are two or less State rcenther banks the figures for such banks will be consolidated with State 'c311Llember bank figures and not shown separately; and stated that this l'iould make it impossible for anyone to obtain the detailed figures 811017111 in the statement for any one State member bank; that it is underic' (3d that the Comptroller of the Currency has authorized the Federal 1)elposit Insurance Corporation to show uotal figures ror national banks illeaeh state separately in the Corporation's Printed statement; and tIlat it is recommended that the Board interpose no objection to the kl4e of the , tate totals for tate member banks unuer the conditions et fc)rth in L.r. Fox's letter. :Pproved. the rect Tel -egram dated October 10, 19e, approved by lour members of 41ar(1, (A) the Federal reserve agents at all Federal reserve banks, ite as roliows: qui,,iae Board has been asked whether Regulation T rethat adaitional nargin be obtained if in a restricted :11bined aceount containing securities and commodity commitrill. "'there are no new transactions but there are adverse adittlations of the commodity market. In reply the ioard objsed that Regulation T does not require the creditor to aduitional margin in the circumstances indicated and ; 114 17 under section 4(b) of Regulation T the creditor may le : cit credit to be maintained in such an account regarde41 °1 mere fluctuations in the camitiodity Larket and reti, -Lees of mere bookkeeping entries used to indicate such ' etuations." ;4.Pproved. 3145 10/11h4 Telegram dated October 10, 1934, approved by four members of the BoarA reari s_ jIQg as ' Go he Federal reserve agents at all Federal reserve banks, follows: "In renly to an irruiry, the Board has ruled that 4(d) or Regulation f short sales may be made inundersctio a restricted account if the margin customarily recuired by the cdreditor on such short commitments is demanded on the same TIlY and is obtained within the time allowed by section 4(e). e s&me principle applies to he execution in restricted 'ee0unts of transactions of the kinds referred to in clause "t or section5(f)." 4proved. Telegram dated October 10, 193w±, approved by four members of the 1 (1) 1;0 the Federal reserve agents at all Federal reserve banks, 44c1111f. as follows: the n"In reply to an inquiry, the Board has advised that, in con,lace of an account which has been designated a: an old acor-" , Pursuant to section 7(a) of liegulation 2, a withdrawal i4 cash which is n-ae prior to October 10 and which thereby th:.1liease3 the adjusted debit balance or the account is neverztrieas Permitted if the account is not thereby made a rel., ,ctea account nnd ii, on uctober 15, the account is an un-stiricted account.'' I-_pproved. Telegram dated October 10, 1934, approved by four members of to the Federal reserve agents at all federal reserve banks, r011OWS: tO 13„ reply to an inquiry, hoard has advised that in order rlis4i,e°flsidered a 'combination or transactions' within the the i'g or the second proviso of section 7(a) of Regulation T, O t.Illlansactions constituting such combination must be made ecnsil"ule day except that any substitution of securities Of a sale of securities in the account and the plIrch. tz.. ia : se of other securities may be considered as a single cizr, ion eccurriliv - on the day on which the purchase oc' completed within a -ceriod of two successive business 3146 -7"days, regardless or whether the sale occurs before or after the Purchase." Apr roved. Letter dated October 10, 1934, approved by four members of the 0eat. T ' -0 zir. Austin, Federal Reserve Agent at the Federal Reserve Bank ot '411ade1phia, reading as follows: "Receipt is acknowledged of your letter of September 25, with inclosure, in regard to the application by the 1!!ting Service Company, Ardmore, Pa., for a loan under section "u or the Federal Reserve Act. "From the information which you have submitted and from the ,711 ter to he Board from the Heating Service Company, a copy of You have received, it appears that the arplicant is enect la the business of leasing to the public, installing, and t;71-eing automatic heating equipment and that it desires to ob1317; 1 11 a loan under section 2.1) of the Federal Reserve Act for the 41°2e or i,urchasin: adaitional heating equipment which will or eased under the company's service plan for a period of one 4.2,Tfc Years. In a recent letter from. Er. W. J. Davis, an l-,:want Deputy Governorreserve of the Federal Resee Bank of Philath p ia) the au,licant was advised that 'general counsel for cieil : 1,bank has rendered an opinion that your application for a 10 under Section l‘plo or the 2edoral Reserve Act as amended o413',4)t eliible as the proceeds would not be used for working atil talt - In your letter of September 25 to the Board, you /lot e that the Advisory Committee refused to recommend the lonn ot °fllY because the troceeds would not be used for the purpose bQenrnishing the campany with working capital but, in adaition, the financial condition of the company was unsatiarac-k)1 " and acceptA)le security could not be offered. Llitt "After consideration of the inzollaation which has been subthe !,c1 "d Particularly of the nature of the applicant's business, the -°ard is not prepared to concur in counsel's opinion that Droj,i:°ceeds or the loan would not be used for the purpose of workinr-; capital, and feels that the question is a th.t 42..: 11 one. In view or such uncertainty and of the belief out law shoulu be liberally construed in order to carry or •Purposes of continuing and increasing employment and dolibtdine; 113.a11 commercial and industrial businesses, the Board declis Whether the Federal reserve bank would be justified in 11 ,11G the application in cuestion solely on the ground that .j eEttit : 14.e loan is not for the purpose of furnishing 'working th. the loan would meet the other reuirements of the 1v/ tile Board's Regulation S. V 3147 f 4*°/11/64 ti "Of course, the cuestion whether a loan is acceptable frcmi a credit standpoint is a matter for the determination °r the 1Jederal reserve bank with the recommendation of the Industrial _Advisory Committee, and the Board does not cuestion the propriety of the Committee's or the bank's refusing to apProve the application on account of unsatisfactory credit conditions. However, in view of the possibility that the application IljaY have been denied by the bank primarily because the loan was 11(3t re6arded as one for the purpose or furnishing working cal)ital, the Board suagests that it may be desirable for the bank to witn the applicant m-id explore the possibilities °r correcting the objectionable features of the application with a view to determining if the loan may be made on a reasonably 1111c1 basis, unless you are fully satisfied that L;here is no ic)ssibility that the lo,,q2 can be made on such a basis. the "Althouch you stated in your letter of September 25 to 130ard that the ;,dvisory Committee refused to approve the .;°Dlioation for credit reasons as well as for the reason that 0T1 Committee did not believe the loan to be one for the purpose furnishinj; working ca-Dital, the letter to the applicant adit of the Federal reserve bank's denial of the applican ilerely stated that counsel had ruled that the loan was not ;-;1-1ible as the proceeds would not be used for working capital. 04.Board feels that it is desirable that an applicant should or be advised fully as to the reasons for the denial or 4:ts alo'-ilication and that, if it may be avoided, disapproval 11.1418'n application should not be based solely on legal grounds te , 2 e 3 iis cle:,r that the loan aoes not come within the inand language of the Act. , "It will be appreciated if you will advise the Board as 40. tat uisposition is made of this matter." Approved. Letter dated October 10, 1934, approved by four members of the 8Q1*(1) to Liz,. 6ecretary of the Federal deserve Bank of Chicago, as follows: oe iPt is Octob, acknowledged, with thanks, of your later of '43 1934, transmitting a copy of the minutes or the tileeti-1 of the board of airectors of your bank held on Septemthe: 4 E31 Your letter and its inclosure have been brought to ti0a—It°11t10n of the members of the Board for their informa1,-,_ 6-ile Board has noted the lollowing entry appearing on of the minutes: 3148 10/11/34 "'PROPOSED VISITS TO HAI:KERS RE INDUSTRIAL LOANS Governor Schaller submitted a letter fram the Federal Reserve Board suggesting that the officers of the Federal Reserve Bank of Chicago call on bankers in the principal cities of the district in regard to industrial loans.' is assumed that this entry refers to the Board's letter of .ePtember 19 suggesting that arrangements be made to call meetOf representative bankers in the Seventh district for the : -rix)se of discussing the industrial loan program. laile it 7:TDears that your directors took no action in this connection, lutae Board would appreciate it if you will advise whether there , 1 8 aaY discussion in regard to the proposal which would reflect f1" reeling of the directors in the mater." T Approved. Letter dated October 10, 1904, approved by five members of the Or tallala 8 LIcClure, Federal Reserve Agent at the Federal Reserve Bank City, reading as follows: reA "The Federal Reserve Board has given consideration to the le;°Inillendation of your Executive Caamittee, contained in your Or!" or September 21, 1934, and, pursuant to the provisions the ' 47ction 19 of the Federal Reserve Act, grants permission to National Bank in Denver', Colorado, effective with ette'•"'st semi-monthly reserve computation period beginning peder the date of this letter, to maintain a reserve with the or -LL:1 Reeerve Bank of Kansas City equal to not less than 75 aetr : aggregate amount of its demand deposits and 3% of the gate amount of its time deposits. or th"I'lease advise the Union National Bank in Denver, Colorado, the re 13°4rd t e action in this matter, calling its attention to i?ederact that such permission is subject to revocation by the ):::.Board at any time after appropriate notice to the Itta b:: 7 81 tt, Approved. Letter dated October 10, 1934, approved by four members of the v"raor McKinney of the "federal Reserve Bank of Dallas, reads, tta rolavirs: 14_ 3149 fi 10/11/64 -10"This refers to your letuer or September 13, 1934, toether with its inclosure, regarding the euestion whether the City National Bank, flainview, Texas, may lawfully pay interest on deposits of Hale County, Texas, which are payable on demand. It is unuerstood that prior to Tune 16, 1933, the City National Bank entered into a contract with the commissioners court of Hale County, Texas, to act as depository for all runds the county and to nay interest on such funds until Tanuary m' 6 1965. Under section 19 of the l'ederal Reserve .1ct the bank lawfully pay interest on the funds in question in accordance th the terms of such contract, and the principal question to °e.determined, therefore, is whether the funds in question contitute a 'deposit of public funds * * * with respect to which _3rillent of interest is required under State law' within the mean04g of thiss section so as to authorize the bank to pay interest 4 such funds after the expiration of the contract. th„„ "Under Article 254Y1 of Vernon's Annotated Texas Statutes, oomissioners court of each county is 'authorized and reeilred e at the lebruary term thereof next following each general rrection ''o receive proposals for the custody of county funds any banking corporation, association, or individual bal*er r.laY desire uo be selected as a depository. Article 2b45 SeclettinT banking corporation, association or individual to bid shall deliver to the county judge a sealed ria2°sal 3tatinE; the rate of interest offered to be paid on the opecbi °I* the county. .:rticle 246 prescribes the procedure for to bids and makes it the duty or the commissioners court be2 cV-ect as the deoository of all the funds of the county the to :jag co rporation, association or individual barker offering Th,i_aY the largest rate of interest per annum ror said funds. 1.1Z section lUrther provides -uhat the interest upon such county the sh:-111 be computed upon daily balances to the credit of ecu4;0untY with such depository and shall be payable to the act aY treasurer monthly. In the event that no proposals to Dr0;003_?euntY depository are received or in the event uhat all 1.equils should be declined, the commissioners court is then with l'ed by ...rticle 2550 to deposit the iunds of the county i4ciivr ly one or more banking corporations, associations, or eet bankers at a rate of interest not less than 1-i:37 1)erPer annum. !i r 131,:t oDitli : It is noted that counsel for your bank expresses the ao not4,that rticles 2544, 2545, and 2546, above referred to, cer materially tQ from the statutory provisions relet. B, Y d epositories; and uhat inasmuch as the ;JecleFal (1kIrd has (1° the40t:2quire heretofore ruled that the latter provision the payment or interest on funds of cities in State inter, et -texas, it must be concluded that the paymentfund of ot 13 not required under State law with respect to 14 a n i e3) except in the event that such funds are deposited c-'ruance with the pivisions of _rticle 2550. 3150 -11"In letters dated i)ecamber 0, 19,3,D, and I:arch 27, 1934, ill connection with the payment of interest on funds of the ity or Dallas and of the City of Vernon, respectively, the 14ard stated that althoush Article 2559 of the Texas statutes appears to authorize a city to receive proposals from banks 8tatinE the rate which will be Paid on daily balances of city ilinas, the procedure prescribed therein apparently is not TandatorY as it was not followed by the City of Dallas, and uhe Board concluded that the payment of interest is not required with respect to runds or the cities of Dallas and Verl 0;iever, it is to be noted that under such 1-rticle 2559 t' fle governinL; body of every city, town and village in the tate '2exas is merely 'authorized' to receive proposals for the -11st°dY of city funds, whereas under :_rticle 2544, which is :Dial-cable in the instant case, the commissioners court of ! i. ch county is 'authorized and required' to receive proposals ", act as deository of county funds. Loreover, it is the duty ILthe commissioners court to select as depository or county s the bank or banker offering to pay the largest rate of ri/ter st per annum and ir all proposals are declined it is inulred that the funds be de_,-sited at interest with a bank'', institution in the sane or an adjoining county. . "Accordinzly, in view of the fact that the statutory pro: 13 (3113 _?,overning depositories of county funds are in terms clatorY, it is the opinion or the vederal Reserve Board that DaYment of interest on funds deposited by Hale County, 011: (Q81 in the ..;ity National Bank of Plainview, Texas, is reUnder ,:tate law within the meaning or section 19 of the bed ' eral _;eserve ,xct, and that, therefore, interest may lawfully paid on deposits of such funds which are rayale on demand." Approved. ttsr dated October 10, .194, approved by four members of the ot.11,c1, to 1, argent, Assistant .b'ederal 2eserve :gent at the _ederal Barik of ',;an Francisco, reading as rollows: ."2his refer- to your letter dated ‘Jeptember 14, 1934, l'eEard. ,;or 111C the termination of the status of .Lerndale tjinancial J2ernda1e, ,ashinc_;ton, as a holding company affil-te 01: The _irst ::ationfll Bank or rerndale, Ferndale, WashinL:1, within the meaning or section 2(c) or the Banking Act of 33. dElle the opinion of your counsel, it uppears that Fernzhinancial Corporation now holds only 1 of the 250 outstandares of capital stock of The l'irst National Bank of Fern- 3151 10/11k],1 -12- "Although the Federal Reserve Board believes Ghat it shQuld not attempt to pass upon the questions or local earl:oration law and practice invoked in the transfer or the.bank stock by Ferndale Financial 'Corporation to certain 01 its stockholders, the Board finds nothing in the facts 11D.L11tted to cause it to dif.er from the conclusion reached Your counsel that Ferndale Financial Corporation is no " - )11C:er a holding company afiiliate of The First National Bank Of Ferndale." :)proved. Letter dated October 10, 10'0/1, approved by our members of the 13oax,A, " to :Jr. Case, Federal Reserve Agent at the Federal Reserve Bank tiew York, statinc that the Board has given consideration to the rolaDDlication or a permit under section 32 of the Banking Act of 13`1; that, in the light or the information set rorth in the letter, t/le 24111,_ d is of the opinion that section 32 is applicable to the relatinn h 6 covered by the application; and that, therefore, unless re Other circumstances which the agent believes should be conb' the Board, it is requested that he advise the applicant a a e-zlato.ely, although in the event the applicant desires to submit l'41ther l'acts or arguments in support of the application the Eoard is 1)1'e.Pel'ed to .6;ive them careful consideration: n ti17 `4°rdon Luchincloss, for permission to serve at the same : 17s a director or The Chase National Bank or the City of New York, New York-, and as a director or the .meriIliternational Corporation, New York, New York. Approved. )8c1 _ `'eltire Lettor dated October 10, 19(4, approved by four members of the --• .Elrgent, .s.sistant Federal Reserve Agent at the Federal ' -411k ',1;an Francisco, reading as follows: 3152 "Consideration has been given to your letuer of :lepteme b "1 , 1934i, and inclosures, reigLrding the applicability of section 32 of the Banking _et or 103 to the service of S. 'alldo Coleman as a director or the Bank oi California, National :.ssociation, as president and director or the Commonealth Investment Company, and as president and director of liorth .:,:merican Securities Company, all of San Francisco, ,Californie. "It appears that Commonwealth Investment Company, which ' 1 3 an investment trust of the management tiype, was organized Septamber 6, 1932, and that its capitalization consists of 00 of Par value stock, of which there were out 37,500 as of August 31, 19,54. Commonwealth In:7'dttlIent Company, in order to increase the size of its invest',411.t lune, is offering aaditional shares of its capital stock. , -,( 1118 Operation O peration is now beinghandled through 17.orth American See Comuany, which purchases such shares for its own ?count and resells them to dealers, absorbing any profit or toss incidental to such purchLse and sale. Because of these „T cts, he Board stated in its letter of July 17, 1934, to Coleman that it appeared that :orth American Securities bnpany, which transacts virtually no other business, should reGarded as 'engaged primarily in the business of Imrchasor negotiating securities' within the meaning oOfl 32. th is now suggested that the present arrangement between WO ceuPanies be altered so that North American Securities 00 ; lanY will act merely as the agent of Commonwealth Investment 44841Y in the acceptance of subscriptions for shares of the in consideration of a fee, with the result that 1.orth ecurities Company will not :Airchase shares of Commonwealth po:Investment Company for its own account nor take any 'itIon in such shares. st.1:“ "It aPPears that it is the purPose of section 32 to rerelation3hips betl,een member banks and organizations iirtaeu aze directly interested in issues of securities through Of jviritinC, distributing, or dealirw in such issues, because Ihe n! possible undesirable effect of such relationships upon 14 cr'raher bank's credit or investment policies or its policies it a alinl: with its customers. Under the suggested arrangement, dire ars that the relationship would be one which would fall zecur7-ci within the purpose of the law, since North Lmerican IlessOaupany would be enga'ed in virtually no other busiezeep;'"33 would receive income from virtually no other source 0r the the Sale and distribution to the public of the shares belie Com monwealth Investment Company. Therefore, the Board " 3 11a-l.d et. th at) under the suggested arrangement, section 02 111 be applicable to Ir. Coleman's service as a directhe Galilornia, National _Lssociation, and as '.)z‘e:310/1t and Bank Ol director of North American Securities Company. 3153 10/11/,4 -14- Colcian is also serving as president nnd director of Collamonwealth investment Company, and the applicability of secOn 02 to such service under the suggested arrangement is also The information which has been submitted in connec' 1°n With that company coverin,: its operations for the four zonths in 1932 following its organization and for the twelve la°11ths 1933 shows that Turchases and sales of securities bore the n relation to total assets: followi-g Purchases 1932 (4 months) 13.8.; 108, 193'0 (12 ) 125% It also appears that profits from the sale of securities bore the following relation to total profits: 1032 ( 4 months) 1933 (12 " ) Percent of profits from sale of securities to total Gross Profits 46.5% 67.2(„; al0appears that the securities in the company's portfoli ° on June 30, 190,L, had been held for the following periods: Held Held Held Held less than 6 months ' from 6 to 12 months from 12 to 18 months ror more than 13 months 0.0(70 22.2% 14.6% it an. 011. the basis or the inioniation which has been submitted, act.v..ears that Commonwealth Investment Company has been engnged ID111%11relY in the purchase and sale of securities primarily for the triP ,,°se c)f obtaining the advantage or appreciation in market t' ell es. Under the ciTicumstances, the Board believes tat it is 4e4Ei. l ed Primarily in the buJiness of purchasing, selling, or ZRIL-44ting securities' within the mem-ling or section 32 of the 01 1933; 1 933; and, for the reasons stated in the Board's ,111Y 17, 1934, to Lir. Coleman, the Board does not feel 'chat ft7 properly issue a permit authorizing the service of, ell or director of such a corporation as a director of lezbe whieb- uank. Thererore, unless there are other considerations t4 t .You believe should be lyrought to the attention or the Board iliely "ease, it is suggested that you advise idr. Coleman accordr4cts the event that Mr. Coleman desires to submit further serve °r arc;uments in support of an application for a permit to as °flicer and director or the Commonwealth Investment tioil%and as director of the Bank of Calirornia, National -ssocia-e(pard is prepared to give such facts or arguments carerlal raolltz-eration. However, any such additional facts or argu34ould be submitted as promptly as pos,ible through you 3154 -lo• wri GinF. Approved. Letter dated October 10, 19, approved by four members of the B'oard, to • (3 se, federal L?,eserve Agent at the 7Cederal deserve Bank of rew York, 1114Eas follows: "Reference is made to r. Dillistin's letter of September 28 194 , t q, transmitting a copy oi a letter addressed to you by 17t etC. Lehman, to whom the Board recently granted a permit to serve at the same time as a director or The "Union 1:ational Bank of _Pittsburgh, ittsburgh, Pennsylvania, lied as a uirector oI the Llanufacturers Trust Company, rew York, caw Y0rIc-, which permit had been forwarded by you to the applilaint with a letter expressing the Board's views with regard to 1.618 ctillnlr:c117t . ta=ze at directors' meetings of the Lanudi "lir- Lehman states that it has always been his opinion that aallijectorts value to a bank was based to a great extent on his 04 for advice on the Eeneral problems ot the bank, abi.?.'s knowledge of creuits and trade tendencies, anu on his oil ty to secure business for the bank, particularly business Leth ! ilde of the locality in which the bank might be located. Lr. to 1,all 3tates that he lives outside of rew York and can4ot arrange bat weekly directors' meetis meetings but that ho irecuently 1414= ; Y the bank by letter and telephone and that he cons with the oflicers of the bank when he is in row York. Tru,t"The Board realizes that i rs Lehman and the L]anufactur, tO " ' Ill1PazY may feel that his services are of peculiar value Y01.k bauk and that by reason of his residence outside of L-ew 4everi. !cannot be present at all meetings of the directors; liez,10:-'eless when a director or a bank assumes the duties and statesibilities incident to that ofrice, the Board feels, as 3atis( 1',t11 itS letter of illAgust 27, 1934-, that he should have a , , et0rY record of discharging his duties and responsibibar Participating in the management and operations of a i4g2.7"ich he is serving through attendance at directors' meet1304.A. 4t8 further stated in its letter of 2lugust 27, 19w,L, the • - l'ques a t- that, when you submit your recomenciation as a ni Y°ur annual review of this permit, you report fully • to Lehman's attendance at directors' meetings." itipproved. Letter , eted October 10, 1934, approved by four members of the 3155 1°/11/34. P4ezo the —15— to L. Hoxton, Federal Reserve .gent at the Federal Reserve Bank Rie4111°4d, inclosing the lollowin- Clayton L.ct permit; suggestim: that agent advise the applicant that it is with the expectation that he 411Dr°ve his attendance at directors' meetings of the banks involved 111 the --PDJAcation that the permit has been granted; and requesting that, th aL'ent submits his recommendation as a result of his annual re" er 4e Permit, he report fully as to the applicant's attendance at eetcrs' Meetings: Th t1e“s D. Campbell, for permission to serve at the same a3 a director and officer of The First National Bank of Barton, 1.:aryland, as a director of The Citizens air”t i:a.tiona 0111- of ,;e sternoort, „esternport, Maryland, and as ,a - Me First National Bank of 2iedmont, 1-iedmont, host Virs*-111Approved. Letter dated October 10, 1964, approved by four meithers of the to 'La tioxton, Federal eserve Agent at the Federal Reserve Bank ' aelamom ", reading as follows: Lo:The Board has reconsidered the ap:lication of Tasker raisei nde32 73 Baltimore .-3treet, Cumberland, ilaryland, Lor per2 -a under the Provisions of the Clayton ct to serve at the Coereille --e a s Lirecbor and officer of The Second National Bank of the ,-411134, Cumberland, Maryland, as uirector and officer of tor 1berland' ,avinGs Bank, Cumberland, Maryland, and as direccial,C ofticer of The Lowndes savings Bank and ?rust Coral)anYs set rorth3lprg, -Jest Virginia, and in view of the circumstances -Irin , -411 the letter signed by the directors of the Cumberland the eri 8a11%, dated September 11, 193, has granted a permit to ber 3iI)-4cant, effective, however, only until the close of liecmelaYto' -L934. There are inclosed the original and copies of the to T"et Penult granted to flr. Lawndes for transmittal by you and the three banks, and a copy for your files. ?I that Ileithel,4;reViewing this case, it is the :Board's opinion :Lc;riecl-1„4-1*. Lo17 dated letter 4"erah wY the ades' letter or September 15, 1934 nor the directors of the Cumberland Savings Bank, 11' ) 11, 1934, has justified the nature and extentapplicant of the --e credit facilities of , the three banks by the 3156 10/11/64 -17"his family and his interests. It was largely upon such use (?1 the banks' credit that the Board's unfavorable action upon Lowndes' application was based and it should be understood that the Board's ,action in .7. 1.anting the limited _permit has been .'or the Purpose of preventing any possible embarrassment to the ,C.1:1.mberland Savings Bank (and the other banks concerned) which result from a seveT.ance or Loundes' official connec-cions with some of the banks at this period of the year. 4., "The Board requests that you brin-_; to hr. Lowndest atten,v1°4 the limited status of the permit and inform him that it rslas been ,:ranted with the expectation that he will bring his 7?1*710es with the banks concerned into conformity with the prolslons of the Clayton Act at the expiration of the permit. "Please keep the Board informed of the action taken in this matter." Approved. toara ti oi Letter dated October 10, 19'64, approved by four members of the t° Mr. Newton, federal eeerve Agent at the Federal Reserve Bank --va, reading as follows: salci -"Reference is maae to the applications of Mr. W. F. aaith 0- P. Daniel for permission under the provisions of the -JeaYton Act to serve at the same time as directors and/or offibj s or irst Bilk in Bristol and Union Trust Bank, 'h or Bristol, Tennessee. th„,. 4, "In the consideration of these applications it was noted the Union Trust Bank is not under the supervision or the haP sTment of Banking of the State of Tennessee and that it tuti-° d eposits. It was noted also, however, that this insti1, : 01 °4 Liakes loans secured by stock and bond collateral. As tical'44°w, if the Union Trust Bank is not a 'bank, banking associaalicl or trust company' within the meaningof Lhe Clayton Act [..-ran.illakes such loans, the Board would be without authority to 01 Peruits to Mr. Smith and ..r. Daniel for the continuance 11..treir services at the same time with that company and a beak, and it would therefore be necessary for them to , seitec ulleir relations with either the national bank or the , tio4402rust Bank in order to comply with the provisions of „-;ecquest` )L- or the Clayton Act. In the circumstances, you are reto determine definitely whether the Union Trust Bank is it a bankinc association or trust company' and whether I4 tle„,:uallY does make loans secured by stock or bond collateral. tio4-- eirent you find that it is not a 'bank, banking, associatrust comPany, 'within the meaning or the Clayton _let "et it makes such loan, it is suested that you inform Stu th and ijr. Daniel o.c the Provisions of Section 8;.. 3157 10/11/34 "It was noted rram the statement of condition of the LInion Trust Bank as of ',larch 5, 19, submitted with the aPplications, that this institution has 'Bonds Guaranteed' .:100,700 and 'Collateral -rust Bonds' -, of i;21,000. ,hue the Board does not have detailed iniormation with respect (z) the character ol the business conducted by this concern, .13Pears possible that the provisions of Section 32 of the 7 .41drIL: Act of 1 933 are applicable in these cases. ThereOr, th Board reruests that you rake such investigation is necessary to determine the status of Lir. smith and L. nii With respect to the provisions of 8ection 32. If you tsInd that their services with the national bank and the Union :1:1:-;t Bank come within the Provisions of Section 82, you are que3ted to inform them of the requirements of that section 74ci l ill the event they are not Precluded from serving the two I ,trolstitutions under the prohibitions of Section 8_ of the Clay"et, as to the procedure in 1.:aking formal apillications ,vr a ''.ection 32 permit. v 'It It is suggested that it may be desirable for you to ! for your bank pass uPon the questions involved lai. ,6lieSe cases, in which event, his opinion shouhl be subto the Board for its consideration. a.0131."Inaamuch as further consideration (pi_ the Clayton ct Delad cations of dmith and flr. Daniel is being deferred receipt of the information requested, it will be apelated if you will inform the Board as promptly as possible YoUr findin3.3 in these yatters." Z L.pproved. Letters tOE,ct, dated October 10, 1934, approved uy lour members of the t° alIlleant3 .0)711 for permits under the Clayton _let, advising of t:heir applications as follows: -1)a'l e'rtt U. Dow, Sr., or Permission to serve at the same cobi s a airector and officer or The i'irst National Bank of Cobleskill, I:ew York, and as a director of The 1.at1ona1 Bank or Liddleburgh, iliddleburgh, New York. • 1.10T7n A tirae 4 -'&11U Dixon, for permission to serve at the sni director and officer of The Citizens ::ational Bank ofr?cateraport, „esteraport, I.:arylan.J., and as a director an 1Q11d er °f The Iiirst natiorr'l Bank of Barton, Barton, ...ary C)* a3 a aa , , 1-uugnln, i for permission to serve at the same time re etor and officer of The kirst National Bank of Barton, 3.158 10/11/34 -19Barton, Maryland, and as a director or The Citizens National Bank or ':iesternport, hesternport, Maryland. lar. Albert D. Graham, for permission to serve at the same time a8 a director and officer of The First National Bank of Balti" 81 Baltimore, Laryland, and as a director and officer of 4ae Bank of Sparrows Point, Sparrows Point, Maryland. lir* Walter Hopkins, ror permission to serve at the same time director of The First National Bank of Baltimore, Balti! °re, MarYland, and as a director of the Bank of Sparrows Point, oParrows Point, Laryland. "a Itre George 'A)ems Willinms, for permission to serve at the same 33. ; /ITa.as a director of The First National Bank of Baltimore, 01.4-tulwre, Maryland, and as a director and officer of the Bank 'Parrows Point, Sparrows Point, Laryland. ass rcher C. Holloway, for permission to serve at the same time Rill director and officer of The Jammercial National Bank of .Snow * 1110w Hill, Maryland, and as a director and officer of The Bank of Newark, Newark, Maryland. Mr s. dir Ryan, for permission to serve at the same time as a vtractor and officer of The National Bank of Herndon, Lerndon, b, glnia, and as a directoT. or The Peoples National Bank of Lees, Leesburg, Virginia. Ur. ler.A 'u o, Dickson, for permission to serve at the same time as (11• ,4-rector of ihe Merchants National Bank of Indianapolis, IndianapI4X, Indiana, and as a director of ihe Indiana .1'rust Company, lanapolis, Indiana. !Liz, 48 P. Frenzel, 0-r., for permission to serve at the sane time aizt director and officer of The Merchants National Dank of Inor m1113°118, Indianapolis, Indiana, and as a director and officer ".e Indiana Trust Company, Indianapolis, Indiana. • x_ M. Mendenhall, for permission to serve at the sane time ae ulrector and officer of the Brightwood State Bank, IndianapoIrldln 4diana, and as an employee of The Merchants National BAnk of -4113°11j, Indianapolis, Indiana. ' • G, 4 di' 48aia Weaver, for permission to serve at the same time as ejad fector of The First National Bank of Wortham, Wortham, Texas, leh,''s a director of The First National Bank of Richland, RichTexas. Itr. Al a, di;441ell Anderson, for permission to serve at the saMe time as or and officer or The Capital National Bank of Sacramento, 3159 lohl/„Lx -20- Sacramento,, California, as a cii:ctor of the A.rst :ational Earlk or Chico, Chico, California, and as a director and officer of the Baw?_' of io Vista, Rio Vista, Califorl(,ia. Approved. ?here Was then presented:the follerrin'; Rilication for a chanEe 111 stock Of a liederai re;_serve bank: 114lienf. )7)1z.t or 011IG-M;l:L Stock: Shares 11. :i national Bank oi San •an Antopio, Te;:as 360 360 4proved. Thereupon the meeting adjourned. Assistant 3ecreLr:T. 7ice ,027.11Cr.
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