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204 A meeting of the Federal Reserve Board was held in Washington on PlIday, September 2, 1932, at 10:10 a. m. PRESENT: Er. Ur. lifx. VI'. Er. Janes, Presiding Hamlin Miller Magee Pole Mr. T.orrill, Secretary Er. Wyatt, General Counsel Er. Siena, Federal Reserve Examiner. The Board considered and acted upon the following matters: Letter dated September 1, 1932, from the Assistant Secretary of the al Reserve dank of Yew York, and telegram of the sane date from the —an of the Federal Reserve Bank of San Francisco, both advising that at ruee of the boards of directors on the date stated no changes were 1114cle in the banks' existing schedules of rates of discount and purchase. Without objection, noted with approval. Telegraphic reply, approved by three members of the Board on 3ePterriber in accordance with the authority granted at the meeting on Alleuet --$ to a telegrari dated September 1, 1932, from the Chairman of the Ilecler 4-4 Reserve 3ank of San Francisco stating that the board of directors of the b allk on that date voted, subject to the approval of the Federal Reserve 80ara ) to adopt a rate of C) on loans under the third para7iraph of section 13 the Federal Reserve Act, as amended by the Act of July 21, 1932; the reply 4.11,..) that the Board approves the rate of e6, effective September 2, 1932. Approved. Letters to the Federal Reserve Agent at Chicago, approved by five lerrbe/..a of the Board on September 1, referring to Assistant Federal Reserve et You.nets letters of August 22, 1932, regarding the deficiencies for six laorths in the reserves of the Citizens Commercial and Savings 9/2/32 -2- Bank, Flint, Michigan, the Bank of Saginaw, Michigan., the Washington Savings Bank, Washington, Michigan, the First National Bank, Avoca, Michigan, the First National Bank, Hillsdale, Michigan, and the Millington National Bank, --6'icnt Michigan; the replies noting that the Assistant Federal Reserve 4€ellt's letters do not contain a recommendation as to the action which should be ta? 0311 by the Board in these cases, and stating that it is assumed that the Matter was thout rep14__ "6 considered by the executive committee of the bank and that it was inadvisable that the Board should take any action at this time. The requested that the agent confirm this understanding and stated that on th le assumption the Board will take no action at this time other than to Itc3rward copy of the Assistant Federal Reserve Agent's letter with regard tO 41- e deficient reserves of the national banks to the Comptroller of the " --J, but requested the agent to keep in close touch with each of the 144titution3 referred to and, when in the opinion of the executive committee or the Federal reserve bank action by the Federal Reserve Board is deemed Millactble) to submit a recommendation to the Board. Approved. The Secretary then stated that he had received a request from Strother, Administrative Assistant to the President, for copies of all ataternents published by the Board during 1928 and 1920 indicating the policy O ttitude of the Federal Reserve Board toward credit conditions. The 2eel'et'arY stated that the records of the Board disclose that statements were d4rinC that period in the Board's annual reports, and the Federal Reserve 131111etilla' in Press statements, in public addresses by certain members of the ' fla in testimony given by members at Congressional hearings. 206 9/2/32 -3 At the conclusion of the ensuing discussion, the Secretary was authorized to send Yr. Strother marked copies of the annual reports and Federal Reserve Bulletins for 1928 and 1929 and a copy of an official press statement of the Board released on August 8, 1929, all of the other material being omitted because it did not come within the scope of Yr. Strother's request. Mr. Hamlin then moved that there be included in the material furStrother the press statement given out by Governor Young on november 20, 1929, following the visit of the members of the Advisory Council at the White House. Ybtion lost, nr. Hamlin voting "aye". Reference was made to the discussion at the meeting on August 31, 1932 with regard to compliance by the Guaranty-Plaza Trust Company, St. 1-411is ,;iIssouri, with the third condition of membership contained in the Iloardte letter of August 19, 1932. The Secretary stated that the Federal Reserv_ Aat St. Louis had advised him that a further conference on the 1114tter or raising additional money with which to meet the charge-offs required bY theconditions, had been without result and that Ia.. F. B. von Windegger, Preid ent of the Guaranty BankL.. Trust Corgany, who had come to Washington 2 r0r th e Purpose, desired to appear before the Board with regard to the The Secretary also read a telegram just received from the President 4 St. Louis Clearing House Association expressing the hope that the the vi°111d take a liberal view of the situation involved in the natter of clae°1idation of the Plaza National Bank and the Guaranty Bank and Trust CotDez Y Of St. Louis to form the Guaranty-Plaza Trust Company. to, von. Winde3ger was then invited into the meeting and he reviewed the " .4 ormation of the members present the organization and history of 207 9/2/32 the Guaranty Bank and Trust Company and the Plaza National Bank. He stated that the question of the consolidation of these institutions had been suggested to his bank on four occasions, but that it was not until April of this year that a satisfactory plan was presented, which was discussed with the Federal Reserve Agent at St. Louis, and Mr. von Windesser quoted the Elent as saying that he thought it was the only thing to do in the circumstances. Be said s180 that the plan had been approved by the State banking authorities and the Chief National Bank Examiner. When the negotiations for the consolidation were under way, 'Tr. von 111144sCger stated, it was suggested by counsel that it be ascertained definite17 tram the Federal Reserve Bank of St. Louis that the membership of the (prlisolidated bank would continue. Upon communicating with the Assistant Federal R °serve Agent at St. Louis, hr. von Windesger said that he was assured that the application would go through and would meet the approval of the FedReserve Board. On that assurance the negotiations were continued, and it Was not until August 23, 1932, when the Board's letter of August 19, 1932, 174s received, that the banks were advised of the conditions imposed by the 11°4(1 'Prior to which time the contemplated consolidation had become known publi tohe c, leaving the banks, Mr. von Windesger said, with no other 'Ilternative StEcted that than to complete the consolidation. lir. von Windegger further the consolidation is to be effected tomorrow, September 3, and it 18 the de sire of the bank to have its admission to membership in the Fed- eraa Re8erve System completed at that time. He also said that his directors l'es1 that after having secured a commitment from the Federal Reserve Agent at 2.t. Louis, it is unfair to them. to enforce the conditions of membership "which the directors were not advised until August 23, 1932; that this is 6771 f 9/2/32 C.; -5- not the time to start to clean up the situation in the two banks; and that they ,.... uu not see any necessity for the contribution of further money to pro- the depositors. Er. von Vindegger also stated that he feels very etl'ongly that the consolidated bank should be opened as a member of the Federal Reserve System. It was then explained that while the Board is sympathetic and cles res to be helpful in the situation, the conditions imposed were based 143°11 ita general policy with respect to criticized matters. ollt that, on Mr. Pole pointed the basis of the last examinations, the Plaza National Bank is c°ntributing to the consolidated institution net assets in the amount of U75 000 after charging and depreciation, while the off all known losses entire capital account of the Guaranty Bank and Trust Company had been wiped cUt 10,, depreciation in investments. L. von WindeL;ger then referred to the recommendation of the Federal Rese , Agent at St. Louis which had been made orally, that the bank be ilren until November 1, 1932, to comply, with the third condition of member344 requiring the charge-off of depreciation in invesLments, and asked that thl e°11r8e be adopted so that Lir. von 'Andegger could have more time to 1"1188 the natter further with his board of directors. 4 general discussion followed during which it was suggested that the directora ) instead of making a cash contribution in the amount of approximatelY uu which would enable the consolidated bank to comply with all of the collaitions the bank imposed by the Board, might execute a guaranty to remove from any depreciation remaining in the investment account at a later date. It Was also sua;ested that, in the event admission to membership is eom --Pletod at the time the consolidated bank is opened for business, the 209 9/2/32 -6- new institution could maintain a nonmember clearing account with the Federal Reserve Bank of St. Louis until a decision is reached upon the compliance by the bank with the conditions of membership. Further discussion followed with regard to a guaranty by the directors &1412% von Windegger requested that the Board furnish him with a statement 17h ich he might present to his board of directors. IJr. von Windegger then some further discussion the send the following telegram at St. Louis and to furnish left the meeting, and after Secretary was authorized to to the Federal Reserve Agent T.Ir. von -,/indegger with a copy: "Re membership of Guaranty-Plaza Trust Company, St. Louis, cn.basis of ,,200,000 capital and .;50,000 surplus, Board will walve cash contribution to provide for depreciation in undefaulted bonds classified below four highest grades, if before Mlnission to membership directors guarantee to make good the net amount all loss and depreciation on such bonds at end of six months from admission to membership. Board has therefore Flended condition number 3 set forth in letter of August 19, 1932, to Guaranty-Plaza Trust Conpany, St. Louis, by adding at 17nd thereof the following: Quote Provided that depreciation in n ds classified below the four highest grades but upon which 2 there has been no default need not be charged off or a reserve 12rc'fided therefor prior to admission to membership if directors Of consolidated institution whose financial responsibility is satisfactory to the Federal Reserve Agent at St. Louis execute 111c1 place in the custody of the Federal Reserve Agent, Prior to ) 4 44111kt3 admission to membership, an agreement in form satisfactory . 0 the counsel of the Federal Reserve Bank of St. Louis guarantee"k the bank against loss on such bonds and undertaking to pay the bialqk at the end of six months from the date of admission to MBMershiP the net amount of (1) all losses actually incurred on , !Ich bonds and (2) all depreciation on such bonds appearing as a -L'eeUlt of o an appraisement thereof at the end of such six months easis of the market valumat that time, provided, however, thb aitthe maximum amount which the directors shall be required to TT Y may be limited by the terms of such agreement to .79,000 11-qtlote.n ' Reports of Standing Committee dated August 31and September 1, 1932, l'eecrir nd. ---inC approval of the following changes in stock at Federal reserve : bctIlk 210 9/2/32 -7Shares ca.tion for ADDITIONAL Stock: District No. 2. C itizens and Farmers Trust Company, Adans, (Increase in surplus) 15 15 A. lications for SURRENDER of Stock: 2,1 1It ..ct No. 1. ----- 1TillerS-Til7V717Rational Bank, Athol, ilass. (Decrease in surplus) Strafford National Bank, Dover, New Hampshire. (Decrease in surplus) rational Bank, Coal Creek, Tennessee. (Decrease in surplus) 15 75 60 ....•••••••••••• 7 7 60 42 102 apples National Bank 6,L Trust Co., Sullivan, Ind. (Insolvent) 120 120 Zirst National Bank Eldora, Iowa. (Insolvent) t National Bank: Indianola, Iowa. (Insolvent) e PIUMelaw National Bank, Enumclaw, Washinton. 6r4I.Alos, by First National Bank of Enumclaw) 43 Total 48 352 Approved. Thereupon the meeting adjourned. Megibm.:414 -6-1 413Prevea: • Cha.irrian, Executive Committee. - Secretary.
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