Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, September 19, 1934, 4:30 PM, Volume 21, Part 5

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2856
A meeting of the Executive Committee of the
Federal Reserve
4krduus held in Washington on
Wednesday, September 19, 1934, at
4130 13. m.

PRESENT:

Mr. Thomas, Vice Governor
Lr. Hamlin
Mr. Szzimczak
Er. Iorri1l, Secretary
Lr. Bethea, Assistant Secretary
Mr. Carpenter, Assistant Secretary

The Conmittee
considered and acted upon the following matters:
Telegrams
dated September 19, 1934, from Mr. Curtiss, Chairor the
Federal Reserve Lank of Boston, Mr. Austin, Chairman of
the 4deral
Reserve Lank of Philadelphia, and Mr. Wood, Chairman of
the Federal
Reserve Bank of St. Louis, all advising that, at meetings
Or the
boards of directors
today, no changes uere made in the banks'
eli.4.1111g sc
hedules of rates of discount and purchase.
Without objection, noted with approval.
Letter dated September le,
1934, approved by four members of
the b°ard, to
Li'. Sailer, Deputy Governor of
or Ile
the Federal Reserve BPrk
17 York,
reading as follows:
stud "Referring
to your letter of August 24, pending a further
or dr
i of the
report of the 'Survey of Activities and Expense
te the ItTedical
Division and Other Welfare Activities' forwarded
14.th e Board
with Mr. Case's letter of July 9, the Board notes
reet 4PProval
the reduced salaries fixed by your Board of Di°I".,1 for the
physicians in the Medical Division as follows;
Dr. Mary Y. Crawford
6,700 per annum
Dr. Walden E. Yuns
4,360 per annum
Dr.
Belle
Thomas
3,900 per annum
e Board also
Per "The
notes
with
approval
the salary of ,:;804
scr er blhl fixed for
Dr. Warren B. Spurge (dentist), the succes'-uhe Charles H. Large, deceased.
salaries provided for the three physicians named above




2857
4.

9/19/34

-2-

It

amount to ,14,960, a reduction of ;:)700 from the salaries prepaid, such reduction being due to a curtailment of the
tlme they are in regular attendance at the bank. In this conand in connection with the Board's further considerat3ion of the survey of activities and expense of the Medical
ivision, it would appreciate your advising whether arrangexente can be made for a further reduction in the hours of
El. tendance
of the physicians so that not more than one physielml
. will be on duty at the bank at any one time, and still
laalntain a satisfactory Medical Division."

i

Approved.
Letter dated September 18, 1934, approved by four members of
the Board,
To Ur. Case, Federal Reserve Agent at the Federal Reserve
Batik Of
New York, reading as
follow,:
aeeeipt
Receipt is acknowledged of your letter of September 5,
1934, with which was
inclosed a copy of a letter dated Septem
b
oer 4 ln
p 4.1
:
2 -Lu34, addressed to you by Er. J. Stewart Baker,
Chairman
thevue Bank
the Manhattan Company with further reference to
TrustPositin of the stock hold by that bank in The County
o Company, White
Plains, New York.
or v_.The Board has givon consideration to your letter and that
Baker, and in accordance with your recommendation grants
tO
Aprilei Bank of the Manhattan Company an extension of time to
1935, in which to dispose of its holdings of stock of
Zia
is'
°untY Trust Company, White Plains, New York. The extension
collgallted with the expectation that the Bank of the Manhattan
steekly 74111 continue to exert sincere efforts to dispose of the
,ankof

Approved.
Letter dated
September 18, 1934, approved by four members of
the 13_
.ard, to
Mr. Williams,
aerve Batik
Federal Reserve Agent at the Federal Reof
Cleveland, reading as follows:
7, lp:IAleceiPt is acknouledred of Er. Evans' letter of September
1934--'' *lioh has
reference to the Board's letter of July
advising of an
extension of time to September 1, 1934,
,11 which
'The Marengo Banking Company', Marengo,
numbered
Ohio,may
with the
provisions
of
of the
membership
condition
dkte 0,f3,?vides
1r
that the bank should, within three months
amount
4t8 admission,
reduce all excessive loans to
s

o0,2

wIliT




2858
94-9/34

-3-

"within the limits prescribed by the lams of the State of Ohio.
It has been noted that all of the bank's loans have been reduced
to amounts within legal limits except the line of C. B. Smith,
that the report of examination made by an examiner for the State
Banking Department does not list this loan as being legally excessive although it is the feeling of your office that it is
excessive, that the cashier of the bank feels that the loan can
b? adjusted within a reasonable time and that it is the sugges:
blcn of your office that the bank be granted an additional
-uhlrty or sixty days within which it may comply with condition
numbered 17.
."In view of all the circumstances, the Board grants an exBon of time to November 1, 1934, within which The Marengo
allicing Company may comply- with the provisions of condition of
!
n
embership numbered 17, and it is requested that you advise the
bank
accordingly."
Approved.
Letter dated September 18, 1934, approved by four members of
the

Board, to Lis.
L. J+ Fiegel, Vice President and Cashier of "The
Pirst
National Bank of Rochester", Rochester, Ninnesota, reading as
follows:

"This refers to the resolution adopted on November 27,
11
,933, by the
board of directors of your bank signifying the
;47fTk's desire to
surrender its right to exercise trust powers
4J-ohlhave been
granted to it by the Federal Reserve Board.
/loch 'The Board understands that The First Rational
Bank of
ester has been
discharged or otherwise properly relieved in
eordanoe with the law of all of its duties as fiduciary. The
c:ard, t
herefore, has issued a formal certificate to your bnrcv
:
05
=hat
it is no longer authorized to exercise any of
th
y powers covered by the provisions of section 11(k)
Reserve Act, as amended. This certificate is

r

that,
this connection, your attention is called to the fact
serve "der the provisions of section 11(k) of the Federal Reby the
'
12'
t as amended, when such a certificate has been issued
shall
() zederal
Reserve Board to a national bank, such bank (1)
or th
.
11° longer be subject to the provisions of section 11(k)
Reser- l'ederal Reserve Act or the
regulations of the Federal
have "ge Board
made pursuant thereto, (2) shall be entitled to
with Turned to it any
securities which it may have deposited
Privat e State or similar authorities for the protection of
e or
court trusts, and (3) shall not exercise any of the




2859
9/19/34
II

powers covered by section 11(k) of the Federal Reserve Act except with the permission of the Federal Reserve Board."
Approved.
Letter dated September 18, 1934, approved by four members of

the Boards to Mr. Logan, General
Counsel of the Federal Reserve Bank
Or

New York,
reading as follows:
"This refers to your letter of July 23, 1934 transmitting
coPies of statements of charges for services rendered by Messrs.
Davis, Polk, Wardwell, Gareinererd Reed in connection with the
actions brought against the Federal Reserve Bank of New York by
Bickford's, Inc., and by Morris Finkelstein, involving certain
questions arising out of the closing of the Bank of the United
4tes. You state that the payment of the charges as submitted
"as been
authorized by the Board of Directors of the Federal Rerrve Bank of New York. It is understood that the
Bickford suit
i:t4ts been
finally disposed of and that the complaint in the
'..t,ilifelstein action has been dismissed by the court with the pos1°Ility that an amended complaint may be filed. It is
also
1.derstood that unless there are further proceedings in the
;103clalkelstein
case no further charges will be made by Messrs.
Polk, Wardwell, Gardiner and Reed for services or expenses
st connection
with the litigation in question. With this underthe Federal Reserve Board approves the payment by the
Reserve Bank of New York of the amount of $8,675.01 to
saulars. Davis, Polk, Wardwell,
Gardiner and Reed, for services
described
in
their
statements transmitted with
Your
IlfrZas
Approved.

Letter dated
Septerber 18, 1934, approved by four members of
tha 4ar
Ur. G. L. Hickey, Secretary-Treasurer of the Wyoming
13ankers A
ssociation, Warsaw, New York, reading as follows:
the,IIReceiPt is acknowledged of your letter of
September 5 and
Coutt'4313Y* inclosed
therewith of a resolution of the Wyoming
ratseY 13ankers Azsociation favoring a reduction in interest
to thellaidcn time deposits. This resolution has been brought
4ttention of the Federal Reserve Board.
°Pursuaat
Reserve
to the provisions of section 19 of the Federal
194. 'Acts as
arended by section 11(b) of the Banking Act of
said after
raking a careful survey of banking practices




2860
9/19/34

-5..

"throughout the country, the Board fixed a limit of 35 upon the
interest that may be paid by member banks of the Federal reserve system on time and savings deposits. However, there is
nothing in the Board's regulations or in the considerations
that led to its action that would prevent any bank or group
of
banks in any particular section from fixing lower rates. On
the contrary, it
was contemplated by the Board that, in fixing
?nlY a maximum rate, banks would be free to take such action
2.n. their own
discretion, and many banks throughout the country
have done so as a matter
of sound banking practice.
"Recently the Board reviewed the situation throughout the
country with respect to interest rates on time deposits and
:sifter carefully
considering the matter it does not feel that
?.t would
be justified in lowering the maximum. Accordingly,
;:t has notified the Federal reserve banks that no change will
;ue .
slade in the regulation
at the present time and, as previous±Y indicated,
the action of the Board leaves member banks of the
?deral reserve system generally in a
position to exercise their
awn discretion
and sound judgment as to the desirability of re°.
. 14118 in interest rates to meet the peculiar situations of
"01r particular localities."

J

Approved.
Letter dated September 18, 1934,
approved by four members of
the Boa
I'd' to Mr.
Case, Federal Reserve Agent at the Federal Reserve
Batic
of New
York, reading as follows:
1
"
934 Receipt is acknowledged of your letter of September 4,
,7! and the
'4.r. Gustav inclosed copies of your letter of July 30, 1934,
P. Heller and of Ur. Heller's letter to you of
Ofe 8arne date regarding his application under the provisions
as section
32 of the Banking Act of 1933 for a permit
to serve
as diretor of
The Dover Trust Company, Dover, New Jersey, and
4
of L. F. Rothschild & Co.,
Newark Branch, Newark,
Nerk
e Ilangervi Jersey.
that "
1,Th
4-6 ,dcard has noted Mr. Holler's
statement to the effect
brit,';'s functions as
manager
of
the
Newark
Branch do not
er
into Contact with the
company's
activities
as a deal/rliss
mILIch as the
Newark Branch does almost exclusively a cmto th" uusinoss. The Board has also noted his statements as
comp:, 31111111 extent of the dealings between
the bank and the
to 1.;'Y' as well
as his explanation of his reasons for desiring
vith ,4111 as a director of the bank.
r111owe
Hover, the Board agrees
adyazi
'
u in believing
that the additional facts and arguments
eeneC1 bY
tion.wit°n from Heller are insufficient to lead to a different
that previously reached by the Board in conneoh his
application.




2861

vi9/34

-6-

"As you know, the position taken by the Board in its letter to the applicant, dated July 23, 1934, a copy of which
was
forwarded to you, was the same as that taken with respect to
Other applications in which similar circumstances were present,
and was adopted in order to give effect to
the purposes which
the Board believes
Congress had in mind in enacting section 32,
namely, to
terminate relationships of the types described therein between
member banks and dealers in securities, apparently
because it
was thought that such relationships might have a
tendency to
influence the credit and investment policies of
r.flember banks in a manner which Congress did not
consider compatible with
the public interest. In view of the policy thus declared by Congress, the Board feels that, except
in unusual
eases.which are not
within the class contemplated by the statut?, it should not
issue permits authorizing relationships
ich are within
the prohibitions of the section."
Approved.
Letter dated September 18, 1934, approved by four
members of
the Board,
to Ir. Case, Federal
Reserve Agent at the Federal Reserve
tEtnk _vz New
York, reading as follows:
"Consideration
has been given to the information submitted
with Lr.
Dillistin's letter of August 21, 1934, in connection
the request of
hr. Harold C. Richard for a ruling as to
the
11116 aPPlicability
of
section 32 of the Banking Act of 1933 to
2:!.serviee as
director of Ynnufacturers Trust Company and as
veljVery:lc,t7tk0: Varec Investment Corporation, Ltd., both
his letter to you dated June 14,
1934, a copy of which
closed, Mr. Richard states:
this :In regard
to the Varec Investment Corporation Ltd.,
n u ls 100/. owned
by iv immediate family and is merely
;"olding corporation, has never
issued or underwritten
ETtUrities and does nothing except
invest its own money.'
price It appears,
further, that the total purchase and sales
ilac 4
securities purchased and sold
by the corporation durtotal e Years
1929 to 1933 inclusive, in terms of percentage of
assets, were as
follows:
Year
Purchases
Sales
.0-1929
68.6
46.8
6.25
6.71
2.25
1.87
1932
0.79
0.61
1933
0.50
5.78
-tu




I:.

2862
9/19/34.
"In the circumstances, it would appear that the corporation
is similar in its purposes and activities to the corporation referred to in the Board's letter of December 22, 1933 (X-7739),
and the Board sees no reason to differ with your conclusion that
section 32 of the Banking Act of 1933 should not be regarded as
aPPlicable to Mr. Richard's service as director of Manufacturers
Trust Company and as officer and director of Varec Investment
Corporation,
Ltd."
Approved.
Letter dated September 18, 1934, approved by four members of
the Board, to I.
Case, Federal Reserve Agent at the Federal Reserve
BalIck of
New York, reading as follows:
"There are inclosed the original and copies of a Clayton
4:et permit granted to la-. Edward T. Rooney,
,
Englishtown, New
to serve at the same time as director and officer of
ters"rs
he First National Bank of Englishtown,
Englishtown, New Jersey,
d as a
director
of
the
Freehold
Trust
Company, Freehold, New
Jersey,
for transmittal by you to Mr. Rooney and the two banks,
4 copy for your files. On May 22, 1934, the Board concurred
Your opinion that the permit should not be granted in
view
ve4
information then in hand and the application has been reaZeidered In the light of information subsequently furnished
1934!he
recommendation contained in your letter of August 14,

r

"In considering this application it was noted that the
?
oi rst National Bank of Englishtown appeared to be in poor conexamined as of March 20, 1934. If estimated losses,
76ful assets
and securities depreciation had been charged to
nZP'tal accounts, the
net sound capital remaining would have
;;;°,111ated to only
4.6 of deposits. Preferred stock sold locally
.b4 to the
Reconstruction Finance Corporation has brought the
buj
l of sound
capital funds to approximately 12% of deposits,
irirl,the condition of the bank's
investment and loan accounts
-4-otes 4,,he need of constant and careful attention.
30,r 'The
Freehold Trust Company was reorganized in 1932 when
zix °II all
deposits was made available and after a period of
Of enthe
ef the remainder was made available at the first
1934 -°" 311°31th. The bank was examined by the F.D.I.C. on June 5,
vhich and had only
c:;63,000 in deposits subject to restriction
oolatiaw
"to have been made available July 1, 1934. For your
Aalds efltial informtion, the report indicated net sound capital
Piliallenunting to only 8% of deposits. The Reconstruction
Prete
;
'°rPerati
has agreed to purchase 350,000 par value
red took, but the sale has not been completed. Assets




2863
9/19/34

-8-

tl

classed as slaw will exceed the total of capital funds after
the increase through the sale of preferred stock.
"The Board took into consideration the improvements effected
and in process of completion with respect to the condition of
both banks, and the fact that the management of each appears to
be alive to the situation and sincerely endeavoring to improve
its condition. It was also noted that Mr. Rooney's service as
director of the Freehold Trust Company and as director and inactive vice president of the First National Bank of Englishtomn
began in 1932,
after the reorganization of the Freehold Trust
Company and after the acquisition of the undesirablo assets
that have been the cause of the difficulties of both banks, and
,hat his services are considered especially valuable to both
u!Inks because his business contacts give him direct information
lth respect to agricultural credits in the territory served by
both hanks. In the circumstances, and in viowof your recomm.?ndation, the
Board concurs in your opinion that the permit
Should be granted but, because of the condition of the banks
Involved and the fact that the interlocking relationship may
cause the
condition of the State bank to reflect unfavorably
4,
.
13on the national bank, the Board suggests that you endeavor,
cooperation with the appropriate supervising authorities, to
assist in the
completion of plans now on foot and to bring about
;liZlo!'e
satisfactory condition in the two institutions. Men you
th.liat Your recommendation as a result of your annual review of
prl
os Permit, the Board requests that you report fully as to the
Of ffe8s made in bringing about an improvement in the condition
,Lese banks."
Approved.
the

Letter dated September 18, 1934, approved by four members of

Boar

'
d t° LL', Case, Federal Reserve Agent at the Federal Reserve
New

York, reading as follows:

rel
"Reference is made to your letter of August 29, 1934,
Boanve to the
steps which you have taken pursuant to the
cerrl 3 request contained in its letter of July 31, 1934, concertain criticized matters noted in considering the
Jersey.
°11 4et application of Ladison L. Toms, Morristown, New
st,
approvoa inew of the
facts recited in your letter, the Board
8 the
procedure suggested by you."
Approved.
Letters




dated September 18, 1934, approved by four members

2864
9/19/34

-9-

of the Board,
to the respective Federal reserve agents, stating that
the

Board has given consideration to the following applications for

Permits under the Clayton Act, and that, upon the basis of the infortion before it, feels that the issuance of the permits applied
f°r would be incompatible with the public interest.

Each letter

Ills° requested the agent to communicate to the applicant the Board's
tion in the matter, and to advise the Board promptly as to
whether the
applicant desires to submit any additional data, and,
if tot,
as to that steps he proposes to take in order to comply with

the

Pr
ovisions of the Clayton Act:
1
2" 0* A. Schlapfer, for permission to serve at the same time
8 an officer of the Montclair Trust Company, Montclair, New
,
ersoY, as a director of The First National Bank of Cedar Grove,
.edar Grove,
New Jersey, and as a director of The Caldwell
ilational Bank, Caldwell, New Jersey.

3

l!r.
'all4 C. Irvine, for permission to serve at the same time
,
8 a director and
officer of the First National Bank in Taren: Tarentum,
Pennsylvania, and as a director of The Citizens
1°Ilal Bank of Evans City, Evans City, Pennsylvania.

Z

14r. Thn
tim
-Inas C. Boushall, for permission to serve at the same
as a director of The Morris Plan Bank of Washington, Wash41,gvra. D. C., as
a director and officer of The Morris Plan Bank
11.
,ginia, Richmond, Virginia, and as a director of The Morris
cank of
Wilmington, Wilmington, North Carolina.

Lr. n

"

4-* Graham,
for permission to serve at the same time as
co °fficer
and director of the First National Bank and Trust
toltr11)," °f Racine, Racine, Msconsin, as an officer and direcric„:" the West Racine Bank, Racine, Wisconsin, and as an of%Isce
lt=r of the State Bank of Union Grove, Union

1—
1,,dire
i_ccetor
Y,




for permission to serve at the same time as a
1117=er
s, of the First National Bank of Woodstock,
as a director of the State Borlr of HuntHoy,

2865
9/19/34

-10-

C. Jamieson, for permission to serve at the same time
.as an officer of The First National Bank of Madison, Madison,
disconsin, and as a director of the Bank of Poynette, Poynette,
Wisconsin.
Approved.
Letters dated September 18, 1934, approved by four members
of the

Board, to the respective Federal reserve agents, inclosing

the following
Clayton Act permits; suggesting in each case that the
48ellt advise the
applicant that the permit has been granted -with the
e-Pectation that his attendance at directors' meetings -will be
imand requesting that the agent, .when he submits his recom11"44tion as the result of his
ennual review of the permit, report
full_
concerning
the applicant's attendance at directors' meetings:
11r. Clarence L.
Fisher, for permission to serve at the same
2nnle 0.8 a director and officer of The Lyons Falls National Bank,
°Ils Palls, New York, and as a director of The Black River Naulonal Bank of
Lomille, Lomille, New York.
,
dir H. r
. Gould, for permission to serve at the same time as a
17,;1!”tor and officer of The Lyons Falls
National Bank, Lyons
Tr '
48, New York,
as a director and officer of the Les County
?illet Company,
Lomille, hely York, and as a director of the
'st Citizens
Bank and Trust Company, Utica, NeyrYork.
14r a
ti14
0.-sorge R.
Griffith, for permission to serve at the same
a director of The Peoples
National Bank and Trust ComT-1:14Y ?t Irvington, Irvington, New Jersey, and as a director of
Plrst
National Bank of Cedar Grove, Cedar Grove, New Jersey.
• S. v. a dir
.
1-(amage, for permission to serve at the same time as
oil c:'et,or and
officer of The First National Bank of Oil City,
ing eltYs Pe
nnsylvania, and as a director of The Citizens Bank°raPanY, Oil City, Pennsylvania.
lir. Lout, A
as a di ‘)
Johnson, for permission to serve at the same time
burg, ivrector of
The Union National Bank of Clarksburg, Clarks11111)aitv:
13t Virginia, and as a director and officer of the Com,,avings and Loan Company,
Clarksburg, West Virginia.
EdwarA
u. Baker, for permission to serve at the same time




2866
9119/34

-11--

as a director and officer of The St. Charles National Bank,
St. Charles, Illinois, and as a director of the State Bank of
St. Charles, St. Charles, Illinois.
Approved.
Letters dated September 18, 1934, approved by four members
Of

the Board, to
applicants for permits under the Clayton Act, advis-

iI1C Of approval of their applications as follows:
Horace A. Yoses, for permission to serve at the sane time
!
18 a director and officer of the West Springfield Trust
Company,
st Springfield, L'assachusetts, and as a director of The Third
Aational Bank and Trust Company of Springfield,
Springfield,
Lias
sachusetts.
14:1.

• iheOdOreW.

Dawes, for permission to serve at the same time
a director of The First
National Bsrk of Blairstown, Blairsb°7414, New Jersey, and as an officer of The Caldwell
National
'Dank, Caldwell, New
Jersey.

r

'R.
Einstein, for permission to serve at the sane time
w'c a director
!
and officer of The Merchants National Bank of
At!t,n4ing, Kittanning, Pennsylvania, and as a director of The
Q.ong
County Trust Company, Kittanning, Pennsylvania.
4. jou_
dir
Omwake, for permission to serve at the same time as a
ecetor of the
Cincinnati branch of the Federal Reserve Bank
Ilat.levoland, Cincinnati, Ohio, as a director of The Second
1 Bank of Cincinnati, Cincinnati,
torlOf
Ohio, and as a direc.
The Norwood
Ohl°.
-Hyde Park Bank & Trust Company, Norwood,

i

1 Carroll,
a ;4 rib.
".
for permission to serve at the sane time as
8t
the First National Bank of Woodstock, Woodstock,
and as a director of the West McHenry State
Bank,
Illinois.
as a .
11rY C.
111. dIrectorMurphy, for permission to serve at the same time
and officer of The Upper Avenue Bank, Chicago,
and as a director and officer
Balatclaels,
of the First National
Of
Woodstock, Woodstock, Illinois.
Lir` -Arthur ID
as a A.;
Janes, for permission to serve at the same time
cormaZractor and officer
of the First National Bank and Trust
ficel;-Y of Racine,
Racine,
'Wisconsin, and as a director and ofof the
iiorth Side Bank, Racine, Wisconsin.




Approved.

2867
9/19
There vas
was then presented the following application for a
in stock of a Federal reserve bank:
licatian for ORIGINAL Stock:

Shares

411.,?ity NiTgilal Bank,
‘,.1.1 City,
Pennsylvania

390

390

Approved.

Thereupon the meeting adjourned.

01/LAS
Secret
App

0

ed,2




Vice Governor.

y•