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(3 '01 A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Wednesday, September 9, 1931, at 11:30 a. in. PRESENT: Governor Meyer Mr. Hamlin Mr. Tames Hr. Magee Mr. Pole Mr. McClelland, Assistant Secretary. The minutes of the meeting of the Federal Reserve Board with the Open Irszket Policy Conference held on August 11th and the minutes of the meetings of t4e Federal Reserve Board held on August 11th, 12th and 13th were approved. The minutes of the meetings of the Executive Committee of the Federal Reserve Board held on August 14th, 18th, 19th and 20th were approved, and, 4011 motion, the actions recorded therein were ratified. At this point Mr. Pole left the room and the meeting continued as a ItleElting of the Executive Committee of the Board. The Assistant Secretary then presented the following matters which were cIllsidered and acted upon by the Committee: Telegram dated September 8th from the Chairman of the Federal Reserve 44k of Dallas, advising that at the meeting of his board of directors on that date no Change was made in the bank's existing schedule of rates of 4iscount and purchase. Without objection, noted with approval. Report of Committee on Salaries and Expenditures on list submitted by tile Federal Reserve Bank of Dallas of employees who were granted leaves of ehence with pay, on account of illness during the month of August, where the t°tal of such absences since January 1, 1931, has exceeded thirty days; the 13(1Ell'clta Committee recommending approval of the salary payments involved. Approved. M/31 -2Letter dated September 4th from the Governor of the Federal Reserve Bank cTNew York, advising that :Er. Case, Chairman and Federal Reserve Agent, has beeamaking steady and satisfactory progress in recovery from his recent ill/ '`18, although his doctors feel he should not return to the office before the elld of the year, and that the board of directors has, therefore, voted to Itecontlend to the federal Reserve Board that Mr. Case's leave of absence with PaY be extended from September 8, 1931, to Tanuary 1, 1932. After discussion,upon_motion, it was voted to approve for Yr. Case an additional leave of absence with full pay in accordance with the recommendation of the directors of the New York Bank. Letter dated September 2nd from the Federal Reserve Agent at St. Louis, .sing that at the meeting of the board of directors on August 5th Deputy 4°Irernor Attebery was authorized to confer with Mr. W. P. Kincheloe, Managing biZector of the Louisville Branch, and endeavor to obtain from him his resig4ttion as Lianager of the Louisville Branch, the resignation to be effective at t4e earliest date that could be agreed upon; that Mr. Kincheloe's resignation, eir ective October 13, 1931, has now been received, and at the meeting of the b41:414. of directors of the bank on September 2nd his resignation was accepted, salary to be Paid in full to and including December 31, 1931. During the ''alssion which followed, the question was raised as to whether the salary DEttn, ..-Lent authorized by the directors of the St. Louis Bank would establish an 44clesirable precedent for the future. At the conclusion of the discussion, upon motion, it was voted, because of the unusual circumstances under which the action of the St. Louis directors was taken, to interpose no objection to the payment of Mr. Kincheloe's salary for the balance of the year. ) 4:(13 9/9/31 -3Memorandum from Counsel dated August 24th with regard to the question 1141eed throu3h the Federal Reserve Bark of Richmond whether deposits of Panama C4118-1 Zone funds in certain national banks of the District of Columbia should be considered as deposits of public moneys by the United States in designated depositaries which are exempt from reserve requirements under the provisions °I 'the Liberty Bond Acts; Counsel advising that, after careful consideration of tile information available on this point, he has reached the conclusion that 84ch deposits may not properly be so considered, but must be regarded as subject.to the usual reserve requirements, and he submitted draft of letter to tile Deputy Governor of the Federal Reserve Bank of Richmond advising that the tlePosits referred to are subject to reserves. After discussion, upon motion, it was voted to defer transmittal of the proposed letter and to request the Board's Counsel to explain the reasons for the ruling set forth therein to the two national banks in Washington which. raised the question, reporting to the Board their reaction to the ruling. Latter informally noted with approval by the Executive Committee, 118111e1Y, memorandum dated September 3rd from the Assistant Secretary reporting 4 telephone conversation with the Federal Reserve Agent at Cleveland in which the latter advised that because of certain unsatisfactory banking conditions 1110hio it had been agreed with the State Superintendent that it would be better to delay exa- ination of certain banks in that State, particularly in 1'43141gs-town, Alliance and Akron, which were scheduled for the immediate future and 11111hich the Federal reserve examiners were to participate; the Federal Reserve 4eetit having inquired as to what the attitude of the Board would be to the 1)08tPoroament of the examinations. In his memorandum the Assistant Secretary st4 ted that he had advised the Federal Reserve Agent that he felt sure the A 9/9/31 -4- Board would want him to work in close cooperation with the State Superintendent and would regard the efforts which they were making to save the various banking situations as more desirable than technical examinations under existing conthat the Federal Reserve Agent and the State Superintendent were more tarliliar with conditions in the district and that he felt confident the Board Would be glad to have them exercise their best judgment as to the time when eZenlinations of member banks located in the various affected centers should be Inade. Formally noted with approval. Letter dated August 28, 1931, from the Federal Reserve Agent at St. Louis, 84bMitting the renewed application of the Mercantile-Commerce National Bank in Louis for a reduction in its reserve requirements from 105 to 7;; of demand clePosits. In this connection, consideration was also given to a memorandum dated 4111aust 31st from the Assistant Secretary, advising that while on its merits there W°111d seem to be no reason why the application should not be granted, there is a Cksstion of policy involved as to whether reduced reserves should be granted to :the aPPlicant bank, which, under action recently taken by the Board must, as soon 48 conditions permit, discontinue general banking operations at its present 1°e"ion if its stock is to be held by the Mercantile-Commerce Bank and Trust C°1 1Pany of St. Louis. After some discussion, upon motion, it was voted to defer action on the matter pending a full meeting of the Board. Memorandum from Counsel dated September 2nd on letter dated August 25th rl'°ra the President of the First Federal Foreign Banking Corporation, requesting 41311r°val of a reduction in capital stock from .2,500,000 to C2,000,000, to be ectsd thxouh a reduction in the par value of outstanding shares; the 1 (-ft.i 9/9/31 k) -5- reduction having been voted in order to eliminate estimated losses and depreciation in the assets of the corporation disclosed in the recent examination. la his memorandum Counsel also called attention to a letter received from Er. Georges St. Tean, formally protesting, for reasons contained in his letter, against approval of the proposed reduction, and Counsel suggested that in order that the Board may have full information on this matter, a copy of Er. St. 3'ean's letter be sent to the First Federal Foreign Banking Corporation with a request for a statement of the corporation's Position with reference to the questions raised. Upon motion, draft of letter to the First Federal Foreign Banking Corporation, submitted by Counsel in accordance with his suggestion, and asking also for information regarding the number of individual shareholders of the corporation, the number who voted for the proposed reduction in stock, and for copies of any opinions of counsel which may have been submitted to the corporation on the questions raised by 1.r. St. Tean, was approved and ordered transmitted. The Governor then reported that in a telephone conversation with the Governor of the Federal Reserve Bank of New York he was advised that the question of renewal of the so-called first and second credits to the Hungarian atlonal Bank, in which the Federal reserve banks participated in the amounts ,>2,000,000 and :A3,000,000, respectively, and which will expire on .8ePtembor 18, 1931, will be considered at the meeting of the board of directors 01* the New York Bank tomorrow. The Governor stated that he understands that tile credits will be curtailed about 20,1; upon renewal. Upon motion, it was voted to authorize the Executive Officer of the Board to approve renewal of the two credits for such period as may be determined by the directors of the Federal Reserve Bank of New York, subject to the same general terms and conditions as governed the original credits. ' 306 9/9/31 -6The Governor then referred to a letter addressed to him by the President of the United States with regard to the possibility of working out Plans for the release of at least some part of the deposits which are now frozen in closed banks. The Governor stated that he understands New 'York bankers are giving consideration to the natter and that he expects to discuss the question with the Comptroller of the Currency, and to transmit a copy of the President's letter to the Chairman of each Federal Reserve bank with a request for advice as to what steps are being taken, or may be under consideration, in the various Federal Reserve districts. It.. ( 21.1TP OF STAEDILTG Dated, September 9th Recommending action on application for fiduciary powers as set forth in. the Auxiliary Linute Book of this date. Recommendation approved. The meeting adjourned at 12:30 p.m. .Assistant Secretary. A pproved: (Executive C omrattee) AUXILIARY MINUTES (September 9, 1931) Report of Standing Committee dated September 9th, recommending action on ePPlication for fiduciary powers by the following bank: 13ELD. DISTRICT D. 7. IOWA: The National Bank and Trust Company, Chariton. (3268) Assistant Secretary.
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