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1928
A meeting of the Board of Governors of the Federal Reserve
SYstem was held in Washington on Thursday, October 22, 1936, at
11:00 a.m.
PRESENT:
Mr. Eccles, Chairman
Mr. Broderick
Mr. Szymczak
Mr. Bethea, Assistant Secretary
Mr. Carpenter, Assistant Secretary
Mr. Clayton, Assistant to the Chairman
Consideration was given to each of the matters hereinafter referred to and the action stated with respect thereto was taken by the
Board
Telegrams dated October 21, 1936, to Mr. Austin, Chairman of
the Federal Reserve Bank of Philadelphia, Mr. Walden, First Vice
?resident of the Federal Reserve Bank of Richmond, and Mr. Dillard,
nePutY Chairman of the Federal Reserve Bank of St. Louis, stating
that the Board approves the establishment without change by the
l eepective banks today of the rates of discount and purchase in their
'
eXisting schedules.
Approved unanimously.
Letter to Mr. Harrison, President of the Federal Reserve Bank
Of
New
York, reading as follows:
"This refers to your letter of October 15 with respect
to the appointment of Mr. Jere V. D. Stryker as Assistant
title
Federal Reserve Agent and to his continuing to hold the
of chief of the Records and Analysis Division of the Bank
Examinations Department.
"You are correct in your understanding that the Board's
the
letter to you of September 50 was not intended to change
t,
appointmen
Stryker's
Mr.
of
approval
terms of the Board's
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10/22/36
_2-
"as contained in its letter of September 29 to Mr. Gidney,
so as to require Mr. Stryker to give up his title as Chief
of the Records and Analysis Division of the Bank Examinations
Department, which is not an official position."
Approved unanimously.
Letter to Mr. Moore, Federal Reserve Agent at the Federal Reserve Bank of San Francisco, reading as follows:
"This refers to your letter of October 8, 1936, forwarding the bond executed on October 7, 1936, by Mr. H. A.
Sonne as Alternate Assistant Federal Reserve Agent at the
Federal Reserve Bank of San Francisco. As you know, the
Board ap,7roved this bond on October 15, 1936.
"It is noted that, before the bond referred to in your
letter of September 28, 1936, was transmitted to the Board,
consideration was given to the Board's requirement that the
bond bear the date as of which it was actually executed, but
that, in view of the circumstances involved, it was felt
that the proper method to provide coverage for Mr. Sonne was
to antedate the bond to September 1, 1936.
"In this connection, you are advised that the Board has
taken the position that, while the bonds prescribed by it
for execution by Federal Reserve Agents and Assistant Federal
Reserve Agents do not become effective until they have been
approved by the Board, upon such approval, they become retroactive to the date upon which the principal involved took
office. Accordingly, the protection provided by the bond
Which Mr. Sonne executed on October 7, 1936, as Alternate
Assistant Federal Reserve Agent is retroactive to September
1, 1936, the date upon which it is understood he took office
in such capacity; but it is suggested that, if it has not
already been done, the amount necessary to pay the premium
on the bond from September 1, 1936, to October 7, 1936, be
forwarded to the bonding company, with the request that it
confirm the understanding that the bond also covers his
activities as Alternate Assistant Federal Reserve Agent during
that period."
Approved unanimously.
Letter to Mr. Dillistin, Assistant Federal Reserve Agent at the
l'ederal Reserve Bank of New York, reading as follows:
"Reference is made to your letter of October 8, 1936,
and accompanying correspondence, in regard to the capital
sufficiency of the 'Tompkins County Trust Company',
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10/22/36
_3-
"Ithaca, New York, for the operation of its branch at
Trumansburg, New York.
"It is noted that the retirement, on August 26, 1936,
of $100,000 of the trust company's outstanding 'A' debentures held by the Reconstruction Finance Corporation, reduced its capital (exclusive of $100,000 of 1B' debentures
held locally) to $460,0001 or $40,000 less than the amount
required for the establishment of out-of-town branches.
It is also noted that the trust company is considering a
revision of its capital which it hopes to have completed
at or about the end of this year, and which it is assumed
will correct the existing capital deficiency. In this
connection, it appears that the trust company has ample
funds available in its surplus, undivided profits and reserve accounts to enable it to increase its capital to
at least the required minimum amount of $500,000 through
the medium of a stock dividend, even though no outside
financing is contemplated.
"In view of the circumstances the Board will take no
action at this time toward requiring an increase in the
institution's capital, but will expect it to proceed as
Promptly as possible to effect an adjustment thereof
which will meet the legal requirements. It is understood,
of course, that you will keep the Board advised of any
developments in this connection."
Approved unanimously.
Letter dated October 21, 1936, to Mr. B. E. Claypool, Cashier,
Merchants National Bank, Montgomery, West Virginia, reading as follows:
"This refers to your letter of October 5, 1936, inquiring further whether Mr. William Buchanan and Mr. H. D. Judy,
Assistant Cashiers of your bank, are executive officers
thereof within the meaning of section 22(g) of the Federal
Reserve Act and the Board's Regulation 0.
"While you have stated that the by-laws of your bank
do not provide for an Assistant Cashier and have furnished
the Board with excerpts from the by-laws of your bank with
respect to the Cashier and Tellers, you have not submitted
any additional facts with regard to the nature of the duties
performed by such Assistant Cashiers. The definition of
an 'executive officer' contained in the Board's Regulation 0
refers specifically to certain officers and also includes
t* * * every other officer of a member bank who participates
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"in the management of the bank or any branch thereof, regardless of whether he has an official title or whether
his title contains a designation of assistant, and regardless of whether he is serving without salary or other compensation * * *'. The question whether a particular person
is an executive officer within the meaning of the general
provisions of the definition just quoted depends upon all
of the facts in the particular case showing the nature of
the duties performed by the person involved, and the Board
does not feel that it is in a position to advise you definitely with regard to the two gentlemen mentioned in your
letter on the basis of the information you have furnished.
It is suggested that, upon the occasion of the next examination of your bank, you discuss this matter with the examiner
and if after such discussion there appears to be any question
as to whether or not the Assistant Cashiers you referred to
come within the definition contained in the Board's Regulation 0 the examiner can develop complete details regarding
the nature of their duties and submit the matter to the
Comptroller of the Currency for further consideration by
the Board if necessary."
Approved unanimously.
Letter to Mr. McRae, Assistant Federal Reserve Agent at the
?ederal Reserve Bank cf Boston, reading as follows:
"It is noted that the B.M.C. Durfee Trust Company of
Fall River, Massachusetts, submitted a Schedule '0' in connection with its June 30, 1936, call report listing for the
first time a number of affiliates, and that there is attached to the schedule a memorandum from the Federal Reserve
Bank of Boston stating that the trust company does not
recognize that the organizations listed are affiliates,
does not have their statements on file, and will withdraw
from the Federal Reserve System rather than publish their
reports. It is noted further that the bank reported no
loans or advances to any of its affiliates in column 5 of
Schedule '0'; that it did not show the capital account of
the affiliates in column 2; and that it did not report anything in columns 3, 4, 6 and 7, which call for the amounts
of the bank's investments in the capital stock and obligations of the affiliates, the amount of loans to officers,
directors, employees or other representatives of the affiliates for the benefit thereof, and the amount of loans to
Others on capital stock or other obligations of the affiliates.
It is understood that the companies listed in Schedule '0'
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"are affiliates of the bank by reason of the fact that a
majority of their directors are directors of the bank, and
that under the terms of the Board's waiver it was not
necessary for the B.M.C. Durfee Trust Company to submit
and publish reports of its affiliates as of June 30.
"It is assumed that the bank realizes that the term
'affiliate' as pertaining to member banks is defined by
statute and is familiar with the law and the regulations
of the Board with respect to the submission and publication of reports of affiliates. In view, however, of the
incompleteness of Schedule +0' as submitted by the bank
for June 30, 1936, it is suggested that the bank be advised
that in submitting future reports it should fill in the information called for in each of the columns of Schedule '0'
except that it need not show in column 2 the capital account
figures of any affiliate, a report of which on Form 220 is
waived under the instructions contained in Form 220b.
Please also advise the bank that if capital account figures
of an affiliate, a report of which is to be made on Form
220, are not available to the bank as of the date of the
call for condition reports, it will be satisfactory if
figures for any recent date are shown. In such cases the
date to which the figures relate should be indicated.
"It is assumed that you will bring promptly to the
Board's attention any failure on the pert of the bank to
submit and publish reports of its affiliates as required
under the law and the Board's regulations."
Approved unanimously.
Letter to Mr. Sargent, Vice President of the Federal Reserve
of San Francisco, reading as fllows:
"This refers to Mr. SonnWsletter of October 7, 1936,
inclosing a copy of a letter of September 2, 1936, from
Anglo National Corporation, San Francisco, California, together with a copy of his reply thereto, relating to the
interpretation of the following phrase contained in subsection (b) of section 5144 of the Revised Statutes of the
United States which is quoted in the Appendix to Regulation P at page 10:
t* * * per cent= of the aggregate par
value of all bank stocks controlled by such holding company affiliate * * *'
"Specifically, Anglo National Corporation incliired
Whether such phrase means the aggregate oar value of all the
outstmnding shares of the various banks controlled by a
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10/22/36
-6-
"holding company affiliate or merely the aggregate par
value of the shares in controlled banks actually owned by
such holding company affiliate.
"It is noted that Mr. Sonne advised Anglo National
Corporation that, in the opinion of your counsel, such
phrase does not apply to the aggregate par value of all
the outstanding shares of the banks controlled by a holding company affiliate but only to the par value of shares
of stock of controlled banks actually owned or otherwise
controlled by such holding company affiliate.,
"While apparently such correspondence concerned only
the interpretation of the above quoted statutory phrase as
applied to stocks of a holding company affiliate's subsidiary ('controlled') banks, the advice given to Anglo
National Corporation may be construed to mean that such
Phrase does not apply to stock which a holding company affiliate controls of a bank which is not one of its subsidiary banks. Accordingly, attention is celled to the
fact that such phrase refers to all bank stocks controlled
by the holding company affiliate, thus including stocks
Which it controls of banks which are not subsidiaries as
well as stocks which it controls of banks which are subsidiaries. In order to avoid any possible misunderstanding,
it may be desirable to bring this to the attention of Anglo
National Corporation."
Approved unanimously.
Memorandum dated October 7, 1956, from Mr. Vest, Assistant
°eneral Counsel, recommending that there be published in the November
issue of the Federal Reserve Bulletin a compilation, in the form attached to the memorandum, of Federal and State laws relating to
4anch banking within the United States which had been prepared in the
°ffice of the Board's General Counsel with the assistance of counsel to
the
various Federal reserve banks.
The memorandum stated that the
igest would supersede a similar compilation which was published in the
Federal Reserve Bulletin for April 1930 and brought up to date in the
Federal Reserve Bulletin for July 1952.
Approved unanimously.
Thereupon the meeting adjourned.
Assistant Secretary.
@FedFRASER