Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, October 2, 1934, Volume 21, Part 5

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3047
meeting of the _!;xecutive uommittee of the l'ederal Reserve
41z1-_
was held in
Washington on Tuesday, October 2, 1934, at 3:00 p.
PRESENT:

Mr. Thomas, -Vice Governor
Yr. Tames
Szymczak
Bethea, Assistant Secretary
Mr. Carpenter, Assistant Secretary

The Committee considered and acted upon the following matters:
1:eillorandum dated September 29, 1934, from Yr. Goldenweiser,
14ector of
the Division of Research and Statistics, stating that, at
t44"ing

or

the System Committee on Legislative Program on September

:
Z4)19344.
' the Committee "authorized the technical staff to obtain such
AID 48
might be
necessary for accompliAhing its work expeditiously";
th4t
it is s
aticipated at this time that the additional services required
1114 be 04e
o, two
junior assistants and two stenographers, bringing the
t°tq e4Pellses of
the Committee, including the salary ofr. Stark,
tillaie41- as
sistant to the committee, to an amount not to exceed ,-;2,000
1().11th; azd that
it is recommended that the action of the System ComO
kitteeLe
gislative Program be approved by the Board, with the under4141144g that
the expense involved will be prorated among the twelve
Iklerea
reserve banks in the msnner recently approved by the Board with
4:1'cit0

Dolt

the

tt0

salarY of Mr. Stark, who has been designated Secretary of
The memorandum also recommended, in accordance with the

J411 rrererred to above, the appointment of Mr. Martin Krost as a
tzt:
4aaistaa.t on a month-to-month basis, with salary at the rate of
4.1
toilth, and of
Mrs. Astrid L. Donaldson as a stenographer, with
411 411t the rate of 135 a month, both effective as of the dates upon
)14e14Mr.
zrost and Mrs. Donaldson eater upon the performance of their




3048
-2-

Approved.
(3

e

Telegram
to Yr. Walsh, Federal Reserve Agent at the Federal ReBank
or Dallas, reading as follows:

eon "Your letter September 8 re services of T. W. Royall. Board
hi ellre in opinion that national bank should be reimbursed for
b,s,„salarY and approves reimbursement at rate of salary received
as stated your letter."
Approved.
Telegrain to Mr. walsh, Federal Reserve Agent at the .bederal Reax of
Dallas, reading as follows:
by

"Y°ur letter September 8 re reimbursement for services rendered
I‘:e.rsh. While sympathetic with position taken by your directors,
Oa
laird
b
elieves it not in harmony with spirit of law for members of
peal
,nial advisory committee to act also as representative of
reserve bank. Therefore, any payment to member of committee
44-Lot be in
accordance with provisions of law in connection with
neceiees rendered as member of committee; i.e., reimbursement for
die14.8841rY expenses while engaged in business of committee or per
a4oe all°wance in lieu thereof. Services are not limited to attendroxiin
meetin cs of committee, but may include any services peras member
of committee."

-4L4lic

Approved.
Letter to
i4x. Case, Federal Reserve Agent at the Federal Reserve
xew
York,
reading as follows:
4:0tis
Jeotio,is to advise you that the Board will interpose no. obBiltrA,
'
4 40 the
absorption by The Marine Trust Company of Buffalo,
rilerc
;
4°) New
York, of the Bank of Snyder, Snyder, New York, through
thtlt
subject to
condition numbered 2 below, provided, of course,
leetac°11118e1 for the
Federal Reserve Bank is satisfied as to the
ault iaspect of
the transaction and that the merger will not reCokmp 4 411Y cha Age in the corporate existence of The Marine Trust
841d th °I
'Buffalo which will affect its status as a member bank,
4iti the
appropriate State authorities approve the merger.
°I' The T,,e comPtroller of the Currency has approved the application
'441'ille Trust Company of Buffalo to establish a branch at




3049

"SaYder, subject to the following conditions:

1. The
establishment and operation of a branch at Snyder,

New York, by The Marine Trust Company of
Buffalo, shall
be approved by the
approDriate State authorities; and
2. n 4
'-r-Lor to the establishment of the branch at Snyder, New
York, and the absorption of the Bank of Snyder, Snyder,
New York, incident thereto, the Bank of Snyder Shall, if
it has not
already done so, charge off or otherwise
eliminate estimated losses of
6,400, doubtful assets
aCgregating a6,251 and securities depreciation
of .:20,320,
all as shown in the report of eImmination of the Bank of
Snyder as of May 2, 1934, made by an examiner for the New
York State
Banking Department, and any other known losses,
and depreciation in
securities.
alltaln:hc Board has granted and transmitted in the usual
manner,
to e----LtY for the
issuance of the necessary limited voting permit
or Therlable Marine Midland
Corporation to vote the stock owned by it
'
l!arine Trust Company of Buffalo to effect the proposed merger."
Approved.
Letter to L.
Ilederal Reserve Agent at the .iederal
rite t
Of
Cleveland, reading as follows:
TNst"Reference is made to the report of
examination of 'Phe Toledo
raexite- ,,,.
C°111
,PallY') Toledo, Ohio, as of Larch 23, 1934, and the supplesubmitted in connection therewith.
s"11
transmittinc the report, Er. Fletcher advised that losses
e
t
this Irtlated had
been chared out or amply covered by reserves. In
ciati(:
c ,4;
lection, the Board feels that estimated losses and deprethe ---, .Listed
for elimination have not been properly eliminated by
tal entt111. up of reserves which are included with the bark's capitlaed—counts in its
published statements. Such reserves should be
Pl'eci
her in making charge-offs of the estimated losses and deeJad ci:
-L°11 listed
for elimination or treated as valuation reserves
ej:Llleted from
the respective asset accounts, showing only the
14 thA-114t2 or the gross amount of such assets less the reserves,
the c;
DlIblished statements. Any reserves for losses included with
tiohe 11.!'tal accounts,
therefore, should represent merely alloca!
()4t1:
4 2 34rPlus and/or undivided profits to cover possible or
“)z. coz!lat
losses; or, in other words, represent true 'reserves
'
61116e4cies.'
1.10,9
nhas been noted that investments of trust funds included
''4) certificates of participation in mortgage loans and




3050
10/2/34
-4hat Only
ticipation 4 per cent interest is paid on the certificates of parwhile 6 per cent interest is charged on the ,underlying
:
a t6:,
agss.•The Board would like to be advised if the interest
au accruing to the bank is permitted, either by valid agreeto-7,
appropriate court authority. The Board would also like
ths
'
e advised if the mortgages, as would appear from comments in
0_, .1port of
examination, have been purchased from the bank.
ZI:dealinc
violates the fundamental principles of trusteeship,
is
sc doing a bank may incur heavy legal liability, especially
con
:
,his true when
the bank profits by the transaction. In this
via-s—?ction the Statement of ,rinciples of Trust Institutions which
follincorporated in the Bankers Code of Fair Competition has the
J-owing
comments:
i3 a fundamental
principle that a trustee should not have
j7Y
personal financial interest, direct or indirect, in the
.rust i
nvestments, bought for or sold to the trusts of which
it
is trustee, and that it should not purchase for
itself any
inlrities or other property from any of its trusts. Accorao-g-LY) it follows
that a trust institution should not buy for
tr .16111 to its estates or trusts any securities or other properiY -- which it, or its affiliate,
has any personal financial
4tereet
) and should not purchase for itself, or its affiliate,
Y securities or
other Property from its estates or trusts.'

ber "It has
been noted also that a trust, designated as trust numfroms::
:
7entY-nine, was created in November, 1924, by the transfer
that !'r hsakin,%. department of dormant individual accounts and
ti.04
, u has been the practice to transfer, from time to time, addiaccounts to this
the
trust. On the date of the examination,
a
,nt accounts
aRai4
carried in this manner totaled ,98,469,
/thich the trust department held investments with a book
value ,
rihathe°'• 4104,390, and a market value of
A8,845. Deposit accounts,
r
'4c1 the active or dormant, are, of course, liabilities of the bank
kethorl assets or the
trust are the property of the bank. The
carrying such accounts is unsatisfactory inasmuch as the
the
is not .41own on the bank's books and published statements,
kti;;;°1111t cf such deposits is not taken into consideration in com!
laY4i!2serves, and no consideration is given to any loss which
-cherei:
0-6 in the assets of the trust. It will be appreciated,
"colibrh-r'e, if You will reouest the bank to transfer these dormant
Ze/it;
17,3 and the
etat:ers they assets or the trusts back to the banking departmay be properly shown on the bank's books and
ballk.;e4t2' and advise the Board as to the action taken by the

Approved.
tetter dated October
1, 1934, approved by three members of the




3051
10/2/34
-5Ik'ard) to Mr.
Newton, Federal

eserve Agent at the Federal P,eserve

111111c °I' Atlanta, with
regard to the matters commented on in the re13°11 °I' exataination of
"The Birmingham Trust and Savings Company",
kr4illighani) Alabama, as of
February 12, 1934.
Approved.
Letter 4-vo L'Ir.
Stevens, Federal ileserve Agent at the Federal
Bellk or Chicago, reading as follows:
itm "Reference is made to your letter of September 7, 1934,
'"ing the application of 'The Knisely National Bank of Buttia
Butler) Indiana, for permission to exercise limited
--11e4arY powers.
"Ill accordance with the recommendation of your
to
executive
-ulittee) in
which the Comptroller or the Currency concurs, the
will defer action on the pending application until an exambY
national bank examiner has been completed and a rethe Ciel'eor is available, at which time it will be glad to have
y further recommendation you may wish to mnke
14
th:Tiati:fesr
to th"It has been noted from your letter and other data submitted
or t
;
e
11 B°ard relative to the pending application that the amount
st
business available from the predecessor bank is very
43411 elid •
a voilm,
it appears to be auestionable if the bank could develop
44d,
-"4e of riduciary business sufficient to justify the expense
ilielat-esponsibility incident to the operation of a trust departyou • It 13
succested, however, that if it is possible to do so
to
Your trust examiner visit the applicant bank at or prior
as ru7l tinle it is examined by a national bank examiner to develop
cAlaii;:;" inabrmation as Possible relative to the experience and
Prop.:,
°
,ati°ns or the proposed trust officer, members of the
1410
6- u- trust
committee, and legal counsel, to supplement the
rormaZ.statements in that regard, and to furnish any other inBoara ;.°11 which in his opinion would be of assistance to the
bY th,-a collsidering the application subsequent to an examination
cliseu;Iltional examiner. At the same time your examiner should
sibiii.with the
bank's board or directors the duties and respontho
les incident to
the exercise of trust functions, with the
to wit;in raina that after due consideration, they may decide
'Idraw their
application."
Approved.

tetter

to Iiir.
O'Connor, Comptroller or the Currency, reading as




3052
-6-

"In accordance with your
recoIrmendation, the Federal :
,
.eserve
oearcl aPProves a reduction in the common capital stock of 'The
to7/118end lational Bank', Townsend, Lassachusetts, from
Q10°,000
ca 45)000, pursuant to a plan
which provides that the bank's
_Ptel shall be
increased by 275,000 of preferred stock to be
a- to the
Reconstruction Finance Corporation and/or others,
1)1,0 that the released capital,
together with the bank's undivided
13 rits and such portion
of its surplus as may be necessary, shall
Used to
reduce the book values of lower grade securities to
present
market values, all as set forth in your memorandum of
iptedoer 17, 1934.
"This approval supersedes the Board's approval of
1, 1934,
(4- the
.
°ricinal pinn of capital reduction."

Z

Approved.
Letter t
- 0 L'Ir. O'Connor, Comptroller of the Currency, readin
toiaole:

as

toar "In accordance
with your recommendation, the Federal eserve
wiltd aPProves a
reduction in the common capital stock of 'The
650 °A Ilatiwial Bank', Wilton, New Hampshire, from ,100,000 to
, Pursuant to a plan which provides for the use of the
released
least
(1 capital
Capital in eliminating a corresponding amount of the
de
lo8s,,„
assets in the bank, including the estimated
videZ8 and all depreciation in lower grade securities, and proalSO for the Payment of the David whiting
loan of 5,0°0
it _r
o to the
reduction in common capital stock, all as set forth
Y Ur
memorandum of September 17,1934."
Approved.
to

Letter to
La.. O'Connor, Comptroller of the Currency, reading as

193e1 "1
,!?!elPt is acknowledged of your memorandum of September: 26,
sto4 "4.6h reference to the proposed
reduction in common capital
,
01' 'The National Bank of Coxsackie', Coxsackie, New
York,
to th 4.00,000 to
;,50,000, and sale of 450,000 of preferred stock
the Be ilaconstrucion Finance Corporation, which was approved by
°ard on
Slily 31, 1934.
(lerae 011 advise that
the Reconstruction Finance Corporation has
alga
to Purchase only
.:25,000 of preferred stock of this bank,
eaDitTillnlend that the bank be permitted to reduce its common
erilenc14- 48 °riCinally proposed but that the plan as a_yproved be
to
, to
Permit that theamount of preferred stock to be sold
the "econstruction Finance Corporation be re, uced from .50,000




3053
10/2/34
-7"to

25,000.
"Inasmuch as the released capital, together with a portion of
e_ bank t s undivided profits, is to be used to eliminate all es- .
ted losses and depreciation in investment
securities as class).fled
193 bY the examiner in his report of examination as
of August 1,
ti 4 and the adjusted capital structure
will
be
adeouate
in relas,°4 to the
deposit liability, and since a comparison of the
irteMents of condition as of February 27, 1934,
and August 1,
th343 discloses an improvement in the
bank's general condition,
in accordance with your recommendation, amends its
etn.°113 approval to provide for the sale of :A5,000 of preferred
eti'instead
l
of 050,000 as originally planned, with the underd ing
that the other provisions of the plan as set forth in
-.
wit's memorandum
oi July 18, 1934, remain unchanged."
th

Approved.
Letter to Lr. O'Connor, Comptroller of the Currency, reading as
follows:

rec "14 accordance
with Acting Comptroller of the Currency walt's
endation, the Federal Reserve Board approves a
the
reduction in
AnaCnZon capital stock of 'The
First ITational Bank of Anadarko',
Oklahoma, from cl50,000 to 30,000, pursuant to a plan
c'$20—
'Provides that the
bank's capital shall be increased by
0014(100 of preferred stock to be sold to the
Reconstruction Finance
4 and that the released capital shall be used to eliminate
to
abiefactorY assets in the
amount of approximately 48,659 and
allangment the
bank's surplus account by approximately c)1,341,
"set forth
in Er. .Zwalt's memorandum of August 6, 1934.
it caa considering the plan
under which the proposed reduction
eriti4'"al is to be effected, it has been noted that your examiner
'pelt cized the
bank's management as incompetent, indolent, and
1133 d
ishonest and cited certain transactionswhich involved
that je crtminal
violations of law. It is understood, however,
tIon ,70 Manacement problem in this bank is receiving the
attenke4t
YoUr office,
and that a report has been made to the Departviol
Xtistice
with respect to the transactions involving possible
,
O
law."

poasZ

Approved.
Letter
'
t 1%17

to Lir.

York,

Case, iederal Reserve Agent at the Federal Reserve

reading as follows:

laleta"
tilfereace is made to
2.:r. Dillistin's letters of September 17,
- and April 25, 1934, and to your letter of August 7, 1934,




3054
10/2/34
-8b
"relative
to the application of Union County Trust Company, Elizae
New Jersey, for permission to vote the stock which it owns
c
ontrols of The First National Bank of Cranford, Cranford, New
08
j2Y, for the voluntary liquidation of that bank as an incident
t "s absorption
by Union County Trust Company and the operation
4 the latter of
a branch at the present office of The First Na°nal Bank or
Cranford.
."The report
of examination of Union County Trust Company as of
11 30) 1934, made by an examiner for the Federal Deposit Insurt: C°rPoration, indicated that the bank had a total capital strucde 8 c)f 1,5?6,400, in addition to which directors, subordinated
eairsits
amounted to „:300,000. The report showed losses in loans
n°ther assets of ;1,761,500, net depreciation in securities of
ri;j
!
1 6
'
8°07 and doubtful assets of :-;422,300. On the basis of these
'" and after considering the subordinated deposits of directors
del:7' Part or
the capital structure, the bank would have a capital
Were
:930,900. If doubtful assets amounting to 422,300
tio "educted, the
capital deficit would be ',A,353,200. In addidep' the report showed the bank had „;3,167,600 of slow assets and
Per sits °I
' C2,308,500. Cash and securities amounted to only 28
cent of
total deposits.
_ "The
repo
on3f
, examination of Union Coty
of
County Trust Company as
ctober
made by an examiner for the Federal Deposit
colijrTice Corporation, showed a capital deficit of ;906,000, after
Part-':rinC the directors' subordinated deposits of .J300,000 as a
the aZtl tiltle4a1:
0
11Ar
.uoture and not deducting doubtful assets in

:

tioria7hs latest
available report of examination of The First Nabalik
Bank of Cranford as of August 2, 1934, made by a national
8seurri ainer, showed losses of A.10,200 and net depreciation in
C48,000, as compared with a total book capital strucdoubti,-1 -436,600, or capital deficit of :21,600, not
deuctingoh
er 11I\TJ- assets of
:75,800. ;Ls a protection to depositors the
Gove
ti°nal Bank Examiner at New York was holding 450,000 of
stoeki-1-11t bonds pledged by Union County Trust Company (the chief
to Th (4der) as a condition precedent to the granting or a license
holta
:PIrst
National Bank of uranford to reopen after the banking
)aet 1)1.1r• Considering this
guaranty, it appears that there is a
Ilatiolisotion of ,122,600 to the deposits of ,768,400 in The First
Balik of Cranford, after eliminating all losses, net de8
,
"
- °11 and all assets classified as doubtful. Cash and marketamounted to 75 per cent of total deposits in the
c)11&11
IN bank.
174e i
th la% Dillistints letter of ,:eptember 17, 1934, there
O
IJniL(3,,ed a coPy of a letter to you from R. S. Douglas, Treasurer
4tated -7,`1°11ntY Trust Company, dated August 24, 1934, in which it was
tube
hat the
bank had consummated changes
an
in its capital struci7.
her
Q4
'
8
'
88A,, euY the capital is now represented by the following three
-Q of
stock:




3055
-9"Preferred stock TAt
Preferred stock 'B'
Common stock

l,000,000
450,000
300,000

thislk/
tuglae' letter also contained a request for the issuance, at
com, ime, of a general permit in order that Union County Trust
meZellY maY vote its stock and thereby make possible the consumcertain plans which the board of directors of The First
"nal Bank of Cranford have under consideration.
'Inasmuch as the latest available examination reports or the
1ject banks
and the information rurnished in L. Douglas' letter
tiollUgust 24, 1934 indicate that the depositors of The First NaBank 0r Cranford are in a better position now than they
oe were deposit liabilities assumed by the trust company,
Itohe Co
mptroller's office has not indicated its approval of
the
posi;r?P°sad plan of Union County Trust company to assume the debilities and the assets of The First National Bank of
130;"1.°I'd and operate a branch in Cranford, the Board is not disvo,
ed t°
it a limited permit to Union County 1:rust Company to
orl sto„
Stock
- owned or controlled by it in The First rational Bank
to nn4r°rd for the pur-Jose of consummating the plans above referred
or
more
specifically detailed in L:r. Whittemore's letter to you
4111 9) 1934,
the
:
The Board's ANCIGAR telegram of January 6, 1034, authorizing
coAt,?stlanee of a limited permit to Union County Trust Company,
qined the
following language:
'You should advise applicant and each of its subsidla
n1,7 member
banks that on the basis of information availZILes the Federal Reserve Board feels that as a condition
Precedent to
the granting of a general voting permit, aptot t and its subsidiary member banks will be required
strengthen their respective capital structures
and--ueriallY
los
to1,
carge off or otherwise eliminate such estimated
the
:
:
e and such estimated depreciation in securities, other
ree„-,,:141°ea in the four highest grades as classified by a
ga,;r4zed investment service orc;anization regularly enMa;-- in the business of rating and grading securities, as
”1„aPpear fram current examinations of such banks.'
1 1". Douglas' letter it is apparent that he considers that
the:
co °111 ;
are 8t1on3
which have been effected by the banks in this group
13receVicient to comply with the i3oard's requirements as conditions
aet roent to the
issuance of general voting permits. From the facts
has Made
Isth above it does
not appear that union county Trust Company
eZtellt ti„oorrections
rehabilitated its capital structure to such
and
that
eral
the Board wouldfeel justified in issuins to it a cent
flai/1 1.%!;11 Permit. In this connection, you are requested to ascer'etaiir-- union County Trust Company, and advise the Board, the
the ITE:ii Y the corrections which have been made and the amounts of
-"us classes of criticized assets which are still carried

841




3056

1w2/34
-10;:4 the books of
Union County Trust Company and The First Dational

ein! of Cranford, as well as linden Trust Company, another sub01 TT 4
twirMatiOnla2
unty Trust Company. Upon receipt of this inthe
will Give further consideration to the applicafor the purpose of determining conditions under which a limited
Perrait may be issued at this time authorizing the holding
sub4""Y affiliate to vote the stock owned or controlled by it of its
istiliSldlarys
member banks for the election of directors and transactof a routine nature at the next annual meetings of the
reholders of
the respective banks.
doe "From all of the correspondence in connection with this case it
/lee
:11°t appear that the holding company affiliate contemplates the
ora4sitY of voting the stock of either The First 1,7ational Bank of
such °I'd or Linden Trust Company for any other special purposes. If
thereofIlecessit should arise, please advise the Board of the details
ilece
in order that appropriate consideration may be given to the
ssarY limited permits.
res "Please advise the applicants of the Board's position with
Peet to the
foregoing matters."

Approved.
LleMorandum dated September 28, 1934, from Llr. Goldenweiser,
krector of
the
Division of 'Research and Statistics, stating that he had
NeiNed a
letter from
:•1" Leo T. Crowley, Chairman of the Federal DeDoait
Insurance

Corporation) requesting that he be furnished with a camset of
the volumes containing the report of the :ystem Committee
cli}3ratich,
Group and
Chain Banking; that, while a complete set of the
l'olitaez is
not
availa.ble, there could be sent to Er. Crowley a set which
N4141
contain two
volumes in which Some of the exhibits would be incomlet

134te; '44 that
it is recommended that such set be sent for the use of
kr
'Crovirley
and other
executives of the Corporation.
Approved.

1)klika

Te1e6rEra

to the Federal reserve agents at all Federal reserve

readille as
follows:
4111
resPonse to a number of questions which have arisen in




3057
10/2/34
-11"e°44sct'
lon with section 7(a) of T),egulation T, the Board has issued
the
fcalowing interpT'etationS:
"1. The account that may be designated as an old account
is the
account as it stood at the opening of business on October
1) 1934, with such changes as could have been permitted in such
8.,ccount under section 7(a) of the regulation if the account had
been
designated as an old account at the beginning of business
on October 1,
1934.
"2. The creditor may designate such account as an old
ccoUnt at any time prior to I]ovember 15, 1934, and may permit
Zansactions in the account pending
such desicnation; but there
not be included
in any account designated as an old account
transaction which could not have been made in the account
t it had been designated as an old account at the beginning of
slotexIdzi October 1, 1934, and any transaction which cannot be
must be made in or transferred to a new account.
After
an account has been designated as an old account
the r
re
ire
egulation permits the withdrawal of cash or securities only
the account is an unrestricted account on October 15 and if
"e withdrawal does
not make the account a restricted account.
4. If, between the opening of business on Oc-,ober 1, 1934
th- the time of the designation of such account as an old account,
ace
cre has been any withdrallalof money or securities from the
1,_°11ht, such account cannot be designated as an old account un07, s it
is an unrestricted account on October lb or on the date
and/or designation, whichever is the later, or unless the cash
the/or securities withdrawn from the account are replaced before
coount is designated as an old account.
If, between the opening of business on October 1, 1934,
;the +4-.le of the designation of such account as an old account,
euute has been any additional purchase of securities in the acpure:t °r anY substitution consisting of a sale and replacement
Which results in an increase in the adjusted debit
:!8 of the account, the securities purchased and any debit
ror-as the cost thereof cannot be included in the account designated
cad account but may be transferred to a new account.
:" Even though transactions have been made in an account
subs
184c-Tlent to .::eptember 30, 1934, the creditor may for convenor
designate the account exactly as it existed at the beginning
on October 1, 1934, as an old account and may transter
a 48;"--4 transactions made subsequent to September 30, 1934, to
o 87 account, to which also may be transferred any money and/
€140eeellrities lawfully withdrawn from the old account in accordwith section
7(a) of the Regulation."

Z

7

Approved.
11411,a) t(
lter dated October 1, 1934, approved by three members of the
AUstin, Federal Reserve Agent at the Federal Reserve Bank




3058
10/2/34
-12•""adelphia, reading as follows:
"This refers
to Li.. Hill's letter dated September 7, 1934,
recard to the auestion whether the Girard Trust Company,
tjjladelphia,
ankinP
gennsylvania, may treat amounts due to and from
prlvate b
firms as amounts due to and from banks in cornreserves
reouired to be maintained by such member bank
the
17
)
;
1
the Federal Reserve Bank of Philadelphia pursuant to the
c)visiclhe of section 19 of the Federal Reserve Act.
ruled"Ae stated in Ia..
Hill's letter, the Board has heretofore
that
Private bankers are not banks within the meaning of
s
te!°11.
ici
13 Of the Federal Reserve Act which provides for the exwas-4°4 0f clearinE privileges to banks. The above ruling, which
PUb
Sept
liehed at page 693 of the Federal Reserve Bulletin for
ped '
er, 1917, was based upon the fact that section 1 of the
to
Reserve Act provides that the word 'bank' shall be held
eze,:2'ude 'State bank, banking association, and trust company',
a„'IJ4 where
other types of banks are specifically referred to,
"u
s
bawcthat uch terms are not ordinarily used to indicate private
ers.
th"The Board
is of the opinion that the word 'banks' as used
ih
0th pel,Phrase 'the net difference of amounts due to and from
mellk8
' in section 19 of the Federal Reserve Act does not
Ude 1-, 4
4'r-Lvate
bankers or private banking firms.
rm
Accordingly,
ZUlts due
to and from private bankers or private banking firms
be
considered as amounts due to and from other banks in
reserves under section 19 or the .ederal Reserve Act."
Approved.
Letter dated
October 1, 1934, approved by three members of the

to

the

ecretary or the l'reasury, reading as follows:

Eldure"This refers to La'. Opper's memorandum of September 11, 1934,
A11 11,
88ed to LI.r.
Eorrill and inclosins a copy of a letter dated
1934, addressed to the Secretary of the Treasury by
4e ha
!
--'arY of the Interior, in which the latter advises that
Veae;-140 a
uthority to dispose or the site to be purchased by the
'ieserve Board from the,overnment and can see no reason
!,c1111 3,.P ning in executing with the Secretary of the Treasury
qlectej1
deed to such property. He advises further, however,
1101114-,
lt shoUld be determined that the Secretary of the Interior
4a to ti-,XecUte
such a deed in order to avoid any possible question
the
of the conveyance, he will be glad to do so.
the
are
advised that, after consideration of this matter in
4cler
°I' the letter from the Secretary of the Interior, the
*Qra t '' eserve board prefers to have, in addition to the deed
he Seel'eta;y of the _Teasury, a quit claim deed also from




3059
1W2/34
-13"DePartm
pea_
ent of the Interior with respect to the property which the
Bi !al Reserve Board will purchase in accordance with Governor
th4e4.'s letter of August
193A-, addressed to the Secretary of
vullTreaeurY; and it will be appreciated if such quit claim deed
be
executed and transmitted to the Board when the deed from
the
of the Treasury is furnished to the Board. In view
°rtSeeretarY
or xhe Provisions of the
Lxecutive Order of the President 2:o. 6160
plAh.111
,
16 10, 1933, and of the Act of Congress approved I:_arch 2, 1034,
sho 49) 73d Congress, it would appear that such quit claim
deed
executed by the I:ational Park oervice thrcugh the agency
or thd
be
e director
of such oervice."
Approved.
Letter dated
October 1, 196L.',, approved by three members of the
Ulaude 0. Pike, L:ditor of The Jhicago Daily Ilews _amanac,
reading as follows:
that ;7!
.
118 refers to your letter of L;epteml?er 4, 1934, requesting
ev sion be
i
r
re
made of the tabulation inclosed therewith in
gerd
1933. to the branch banking situation in the various
states in
eoMpla re ply You are advised that the Federal Reserve Board has
bEtlik-i---4 no summary of
the state laws on the subject of branch
13111)1:% which is available for general distribution since that
6 ce311;:-e
,
(
41, °I1 Page 455 of the July 1932 Federal Reserve Bulletin,
atatZ
Which is
inclosed for your further information. The
171.-th'ent inclosed
with your letter is in agreement,
howevr,liab it is beinformation from unofficial sources and
be s
ubstantially correct.
ciatar,r,L2!szuch, however, as the Board's information is b.a?ed on
it is'''44liered from
various sources and is in no sense oi-zicial,
141.0 l'.61.cIllested that
the Board be not given as the source of :
any
°I. the 7, °11 on this subject that may be included
in the next issue
`"licaco Daily News Almanac and Year
Book."
Approved.
Letter
to
N.1.017a.
•

dated October 1, 1934, approved by three members of the
'.zuY P.

Greenwald, Los Angeles, California, reading as

t° th"Thi3 refers to
o yo
your letter of September 1, 1934, in regard
0 -e
m,
° ve4y
of a proposed loan to the Boulevard -Plaza
Angeles, California, under section 13b of the Federal




3060
-14"Reserve Act.
"Frontthe information submitted, it is understood that the
„
-.1n3allY is engar;ed in the business of subdividing and developing
0
-;'1 estate for
home sites. It appears that substantially all
del,rie
., loan applied for would be used to pay off existing inaa;!auiless and a small portion thereof would be used 'to provide
tonal working capital with which to resume commercial operait.
:
48) including additional employment for sale of lots for buildis-2,1
,
1rposes, in conjunction with the new housing program'. It
th "uszstood that the company's application has been denied on
eZ,gr°und that the loan is not for the purpose of providing the
vallY with working capital, as required by law.
Boa "As indicated in the statement printed as a preface to the
powrd'e Regulation S, the Federal Reserve Board has left the broad
1313%:Jallted by Congress to the Federal reserve banks in section
tho,:r."-Y Unimpaired and has prescribed no restrictions beyond
de,7 14 the law
itself; and, accordingly, it has not attempted to
the words
'workinc: capital'. However, a Federal reserve
laast
°bseTire the requirements made by the statute in granting
the.JT0,kations under this law. Congress has seen fit to require
Made under this section shall be for the purpose of
/nay ;‘,suine working capital and, therefore, a Federal reserve bank
conim:°t lawfully
make an advance to an established industrial or
with-rcial business
unless it is for the purpose of providins it
w°1114inC, capital,
batik:11111e the Federal Reserve Board feels that Federal reserve
deteinarily are in a better position than is the Board to
collsille questions of this kind, it has, in view of your request,
by th
'"lered the question whether the loan which has been requested
Boarde Zoulevard Plaza Company, on the basis of the facts as the
pe:4 17114der t3nds
them, is for the purpose of providing such cam3
the p ith 'working capital' within the meaning of section 13b of
411 oreral
Reserve Act. In view of the fact that substantially
the loaa
Ilesa
is for the purpose of refunding an existing indebted4o 1,L'Ll in view of the other facts of the case, the Board finds
Of sa
;
1804 to differ with the conclusion of the Federal Reserve Bank
the euzFrancisco that such loan is not for the purpose
of providing
4,
13
tanY with working capital.
,13proanl, is the considered policy of the Federal reserve banks to
quedtions of this kina arising under section 13b of the
,
3c)kird haResarve Act with a liberal viewpoint and the Federal Reserve
n1t 3 ast!
lso given this question a sympathetic consideration;
"11,cwal;
o:"."-licated, it is unable to reach the conclusion, in the
14,07147"ances of the case, that the loan is for the purpose of
jaillig the
company with 'working capital'. The question is not
eciel., resPeot to which either the Federal Reserve Board or the
14
reserve banks have authority to exercise discretion and,
eW C/f the
requirement which Jongress has prescribed in the




3061
10/2/34
-15"
:
11 8 '
7 I am sure you will appreciate the position which it has been
—G88arY for the reserve bank to take in the matter."
Approved.
Letter to Er. Austin, Federal
Reserve Agent at the Federal Rec
f Philadelphia, inclosing the following Clayton Act permit;
el gestirig that,
When transmitting the permit to the applicant, the
Nellt advise him
that it is with the expectation that he will satis-

serve

l'Itet°rilY

attend directors' meetings of the Eadera bank that the permit

b'been
cranted; and requesting that, when the agent submits his recameliciEtti°11 as a
result of his annual review of the permit, he report
1\111 €18 to the a
pp

cant's attendance at directors' meetings:
,
as'
a igf-L a.
Fenninger, for Permission to serve at the same time
ana dlrector of
The Eadera National Bank, :,:adera, Pennsylvania,
ph„ae an ofricer of
the Provident Trust Company of Philadelphia,
4J-adelphia,
pennsylvania.
Approved.

Lett
er dated October 1, 1934, approved by four members of the
to 1:r. /-clures, Federal Reserve Agent at the Federal Reserve
kzlit or
tO4ra,

''8113as City,
reading as follows:
eonsi"
a°4 3.111Y 23, 1934, the Board advised you that it had given
Llissation to the application of Er.
H. R. Riley, Plattsburg,
to
" for permission under the provisions of the Clayton Act
liati-onal
-.6 at the same time as director and officer of The First
44d 01.1
.2.4
'nk of Plattsburg, Plattsburg, Eissouri, and as director
the bn,'"er of the Bank of Osborn, Osborn, Eissouri, and, upon
the b;
-4.8 of the information before it, held that the issuance of
inte
it applied for would be incompatible with the public
large,'" T11'-,
--d Board's action upon the
application was based
11Pon the switching of loans between the two banks and the
ertent of the uses Ithich have been made of the credit
,' c't The Iiirst NatiOnal Bank of Plattsburg and the Bank
;Jahlts.°7 as shown in the current reports of examination of these
addi llbaecuently, in accordance with ,ection V(g) of Regulation
---(311a1 facts and arguments not appearing in his application

osbt




3062
10/2/34
-16"alld
accomm
the,
_anying forms were submitted for the consideration of
Board.
."Baaed upon the additional facts and arguments presented
th'
4. 1:1 accordance with your
recommendation, the Board has approved
0
apPlieation of Lr. Riley and there are inclosed the original
e4d 0Pies of a
ulayton Act permit covering his service as director
mia °fficer of The First National Bank of Plattsburg, Plattsburg,
e°1111) and as director and officer of the Bank of Osborn, Osborn,
Ealds°,141) for transmittal by ,you to La.. 1-tiley and the two banks,
yo„: COPY for your files. The Board suggests that when you submit
tii-L reco
mmendation as a result of your annual review of this perYOU
report fully as to whether there have been any further
betktelsras of the operating practices and credit policies of the
lor which
Ls.. Riley may be responsible."
Approved.
Letter dated October 1, 1934, approved by three members of the
()11rtl) t
*lalsh) federal Reserve Agent at the /federal Reserve
or
:
41
Bank

"lat he

39 illeloaing the following Clayton Act permit and requesting

advise the
applicant of the Board's position in the matter of
4ttelacialIce at d
irectors, meetings, and that, when the agent submits
414
l'ecoraraeZdation as a result of his annual review of the permit, he

413011 tlaiy, as to

the applicant's attendance at directors' meetings

44c1 48 to the
to

mariner in which he has discharged his duties as a direc-

Of

u First
14% 17.

National Bank of Post City:
,
(donnell,
for permission to serve at the se time
ctor and officer of Ihe First National
Bank
th
rth Texas, and as a director of The First
---4L.m of Post City, Post City, Texas.
Approved.

'
letter8 dated October 1, 1934, approved by four members ar the
4). to ra,

tota,

4,q1.3.4e

Walsh, Federal Reserve Agent at the Federal Reserve Bank
inel1

the following Clayton Act permits, suggesting in

Et86 that the agent advise the applicant that it is with the




3063
10/2/34
-17eqeetation that
he will satisfactorily attend directors' meetings that
Perzit has
been granted, and requesting that, when the agent submits
recorunendation as a result of his annual review of the permit, he
r6Port f
ullY as to the
applicant's attendance at directors' meetings:
14r.
as:r S. Blankinship, for permission to serve at the same time
viy; i-rector and
officer of The First National Bank of JacksonJacksonville,
Texas, and as a director of the First State
Overton, Texas.
Ihr. G. p
kArange, for permission to serve at the same time as
4 dir
%ad "tor and officer of
The First State Bank, Riesel, Texas,
rartas a director of
The Farmers and Lerchants National Bank of
' Mart, Texas.
Approved.
Letters dated
October 1, 1934, approved by four members of the
aPplicants for permits under the Clayton Act, advising of
41 Of th
-eir applications as follows:
14%
;;
(
tT A. Curtis, for permission to serve at the same time as
°f The Long Island National Bank of Hicksville, Hicksilieks.v.•`"ew York, and as a director of the Bank of Hicksville,
ale, New
York.
wil
a dir
.liam Duffy, for
ville
permission to serve at the same time as
„ctor
ouliu officer of The Long
Island National Bank of Hicks'"eksville, New York, and as a director of the Bank of
ville, Hicksville,
New York.
1,Ir. s
tUle:!,.1/81 S. Underhill, Jr., for permission to serve at the same
ekair7 a d irector of
The Long Island National Bank of Hicksville,
New Z
/Ic:
c and as a director of the Bank of Hicksville,
New
Mx% clar

a di,,!IIT3 T. Bryan, for permission to serve at the same time
A114,04 -.'„,c or and
officer of the First National Bank at Albion,
llatio4111448Ylvania, and as a director and officer of The Girard
Bank, Girard, Pennsylvania.
x
direet

s !?!;1frY, for permission to serve at the same time as a
anL,
officer of The Guarantee State Bank, rangum, Oklahoma,




3064
-18as a director and officer of The First
National Bank of
-"41erst) Amherst, Texas.
141". Walter
Canter, for permission to serve at the same time as
0Yee of The
ell1Pl
First National Bank of St. Joseph, St. Joseph,
,4•Lsa
TA -4-1,
`4
and as an employee of the First Trust Company, St.
-w8ePh, tlissouri.
Mr.
for permission to serve at the sane time as
of
j0
IL°Ificer
of The First National Bank of St. Joseph, St. Joseph,
xo a°1111-3 and as an employee of the First Trust Company, St.
seph,
Missouri.
Mr.
"Rbrey, for permission to serve at the same time as
4(14
4-rector
of The First National Bank of Denver, Denver, Coloeqz°2 alld as a director and officer of The
International Trust
PanY, Denver,
Colorado.

1!

Approved.
14 atockThere was then presented the following application for a change
°4 a Federal
reserve bank:
11
1311striet 1,-;.4901*
ORIGINAL Stock:
IYIZst
National Bank at Manistique,
44i8t1qUs, Michigan




Shares

36

36

Approved.

Thereupon the meeting adjourned.

Assistant Secretary.

Vice Governor.