19331120_minutes.pdf

152

A meeting of the Federal Reserve Board was held in Vaishington

°11 llonday, rovember 20, 133, at 2:30 P. m.

PRESENT: Mr. Black, GovernorMr. HamlinMr. KillerMr. JamesEr. Szymczak

Er. Merrill, SecretaryEr. Carpenter, Assistant SecretaryMr. Bethea, Assistant SecretaryEr. Martin, Assistant to the GovernorEr. Wyatt, General CounselEr. Paulger, Chief of the Division of

ExaminationsLi. Leonard, Federal Reserve ExaminerEr. Wingfield, Assistant Counsel

Governor Black presented a draft of letter, prepared in accor-d4Ilee with the action taken by the Board at its meeting on November 15,1933, to the board of directors of the Union Trust Company of Baltimore,

Lictrlarld' advising of approval by the Board of the institution's appli-cation for membership in the Federal Reserve System and for stock inthe

pederal Reserve Bank offl31'th in the letter. Governor Black referred to14lich

stated that, prior to admission'slle and cell for not less than

e4141ri°11111; not less than „500,000, maturing in not less than twenty years,411d beezinc

interest at a rateor debentures,

11)°IsditIllte to

Richmond, subject to the conditions set

condition numbered 33

to membership, such

par value capital notes

of not more than 5% per

bank shall is-

or debentures in

annum, which notes

under the terms of the subscription therefor, shall be

the rightst°

adMission of such°I'

debentures referred°r41

Reserve hoard.

of depositors and other creditors, and, prior

bank to membership, the form of the capital notes

to shall be submitted to and approved by the Fed-

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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Governor Black stated that Mr. Brewster, President of the Union

Trust Company, had called on him last Saturday, Eovember 18, 1933, and

Presented a form of debenture proposed to be issued by the trust company

in accordance with the condition of membership above referred to, but

thieh provides that the debentures would have a maturity of seven instead

twenty years, and that interest on the debentures would not be sub-

°Isclinated to the claims of depositors and other creditors, but would be

Ofl the same basis as such claims. The reason given by Ir. Brewster for

the shorter maturity of debentures, Governor Black said, vas that it

vic)/Ild be difficult to sell them if the longer maturity vere retained.

G"441riler Black also stated that the matter was taken up with the ind1vid-

1411 Ilezbers of the Board on Saturday, but that some of the members had

spgpressed the opinion that the proposed form should be considered at a

of the Board.

During the ensuing discussion, the question was raised as to

ItthetherThomas favored the issuance of the seven-year debentures,

a41d Szymczak stated that he had discussed the matter with Yr. Thomas

h°1'04'e he left Washi ngton, and that he had e:goressed approval of the

ilerter maturity.

At the conclusion of the discussion, uponmotion by Lir. Hamlin, the form of proposed debenturewas approved, Messrs. James and Szymczak voting "no".

The condition of membership numbered 33 wasEmended to provide that, prior to admission to member-ship, the Union Trust Company shall issue and sellfor not less than par value capital notes or debenturesIn an amount not less than 500,000, maturing in notless than seven years and bearing interest at a rateof not more than 5,; per annum, which notes or debentures,under the terms of the subscription therefor, shall be


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11/20/33••• Zpinio

subordinate to the rights of depositors and other

creditors, except as to interest on such debentures,and such debentures shall be in the form heretofore

submitted to and approved by the Federal Reserve

Board, of which a copy was attached to the letteras thus amended.

The amended letter to the board of directors ofthe Union Trust Company, advising of approval of the

company's application for membership in the Federal

Reserve System was then approved.

In connection with the above matter, there was presented the

f°110wing draft of letter to the "City Certificates Corporation", Balti-

Illore, Maryland.

."The Federal Reserve Board has had under consideration your ap-.V-ication for a voting permit under authority of Section 5144 ofhO Revised Statutes, as amended, entitling you to vote stock ofthe Union Trust Company of Liaryland owned or controlled by you andapproves the application, effective if and when the Union Trust

°InPany of Maryland becomes a nerber of the Federal Reserve Systemthrough the issuance of stock in the Federal Reserve Bank of Rich-111011d to that Trust Company and subject to the numbered conditionshereafter set forth:

"1. Prior to the issue of the voting permit, not less than 97Percent of the stock of the Union Trust Company of Maryland shallbe exchanged for stock in the City Certificates Corporation andtiTnzferred to that corporation.

,26 Prior to the issue of the voting permit, City CertificatesCorporation shall deliver to the Federal Reserve Agent at the Fed-eral Reserve Bank of Richmond, an agreement in the form heretoattached marked Exhibit A, duly executed by it.

f ihe Federal Reserve Agent should be furnished with evidence satis-(letorY to him that the transfer of stock referred to in (1) aboveheZs.been effected, lie should also be furnished with three certified

ef a resolution of your Board of Directors specificallyfrchorizing the execution of the agreement referred to in (2) above

three original counterparts of such agreement executed by the of-

"1%rs designated in such resolution.Ri Tihen the Federal Reserve Board has been advised by the Agent atvijilsimend that the conditions prescribed above have been complied

to his satisfaction, and that the Union Trust Company of Mary-land been admitted to membership in the Federal Reserve System,the

Board will ford to you the voting permit applied for."

Approved, together with a letter to the Federalreserve agent at Richmond requesting that he notify


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the Board by telegram as soon as the conditionsprescribed in the letter above referred to havebeen complied with to his satisfaction and stockin the Federal Reserve Bank of Richmond has beenissued to the Union Trust Company of Maryland,and stating that the agreement to be executed bythe City Certificates Corporation provides thatamong other things its management shall at alltires be satisfactory to the Bank Commissioner ofthe State of Maryland and to the Federal reserveagent, that the Board understands that the manage-ment of the corporation is to be the same as thatof the reorganized Union Trust Company, and thatin accordance with this understanding it is re-quested that the agent satisfy himself that anynecessary changes in the management of the Corpor-ation have been or will be made.

Hamlin stated that Senator Glass had called him on the

telephone this morning and had requested to be advised officially

11 the Board as to whether the Board was influenced by General John-

4°Ils Administrator of the National Recovery Administration, to omitfrox

he review of the month appearing in the November issue of the

Ped.ev-,- 11-1- Reserve Bulletin the usual review of business and credit con-

dition-1" Mr. Hamlin stated that he had informed Senator Glass that

he.11d submit the request to the Board.

In. connection with the above matter, Governor Black advisedthat

he had received a suggestion that it mould be appreciated if the

Feder al Reserve Board would allow statements in the Federal Reserve

8411et*Into be reviewed by an interpreting economist from the Central8tati

'e'acal Board before the Bulletin is published in order that con-

might be fully presented; that ho had discussed this with Mr.Goide

illveiser, Director of the Board's Livision of Research and Statis-tics.

ezd that Lire k;oldenweiser had stated that, because of the unusual


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11/2q/33-5-

and rapidly changing conditions, it was very difficult to prepare a

satisfactory review of credit and business conditions, and it was

for that reason that such a review was not included in the current

issue of the Bulletin. Governor Black also said that he had advised

111r. Goldenweiser that, until otherwise instructed by the Board, he

hould not depart from the practice now being followed in the prepar-

"i032 ard review of material for the Federal Reserve Bulletin.

Governor Black then stated that, in connection with the re-

clUest of Senator Glass, he would suggest that he be advised that the

Adz -2iulstrator of the National Recovery Administration had made no

814,'bgelltiOn to any member of the Board or its staff with regard to

*I" should be published in the November Bulletin.

The Secretary was requested to ad-

vise Senator Glass in accordance withGovernor Black's suggestion.

General

a_.'oordance with the statement made by him at the meeting of the

13°ard or October 12, 1933, and which had been initialed in the follow-

r rm by all of the appointive members of the Board except Mr.

Miller:

_ "The Federal Reserve Board has directed me to transmit toY°11 herewith copies of certain material as follows:

."Report submitted to the Secretary of the Treasury by Na-tional Bank Examiner Otis W. Beaton on February 25, 1933,entitled 'Confidential Report of Certain Bond Transactionsor the Federal Reserve Bank of Chicago; Continental IllinoisBank and Trust Company, Chicago; laSalle National Bank, La-

Salle, Illinois; First National Bank, Kenosha, Wisconsin,and Citizens State Bank, South Haven, Michigan', together

There was then presented a draft of letter to the Attorney

of the United States which had been prepared by Mr. Morrill


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"with forty-two folders containing exhibits referred to inMr. Beaton's report."Report dated February 28, 1933 (contained in loose leaf

binder) made to the Chief of the Division of Examinations,Federal Reserve Board, Washington, D. C., by Mr. C. E. Cagle,an examiner of the division of examinations of the FederalReserve Board, entitled 'Re: Investigation of Don A. Jones,former Assistant Deputy Governor in Charge of Fiscal AgencyDivision' relating to certain transactions in Government ob-ligations handled in the fiscal agency department of theFederal Reserve Bank of Chicago, together with all the ex-hibits referred to in this report."Supplemental report. by C. E. Cagle, examiner of the divi-

sion of examinations of the Federal Reserve Board, in regardto certain transactions in Government obligations affectingthe Citizens State Bank of South Haven, Michigan, togetherWith the exhibits referred to therein."Stenographic report of statements of C. R. McKay deputy

governor of the Federal Reserve Bank of Chicago, March 30,1933.

"Memorandum from C. R. McKay to the Governor of the Fed-eral Reserve Board, dated March 31, 1933."Letter dated April 17, 1933, from James Simpson of Chi-

cago to the Secretary of the Federal Reserve Board in regardto certain subscriptions by Mr. Simpson for new issues ofGovernment obligations and the inclosure transmitted there-with."Report dated April 27, 1933, to the Chairman of the board

of directors of the Federal Reserve Bank of Chicago, by theAuditing Department of that bank, entitled 'Report of Analy-sis of Subscriptions to and Allotments of United States Trea-sury Rotes, United States Treasury Bonds, and United StatesCertificates of Indebtedness, offered during the years 1931and 1932, and Details and Events Leading Up to the Resigna-tion of D. A. Jones, former Assistant Deputy Governor inCharge of Fiscal Agency Operations'."Report dated May 22, 1933, by A. F. Shafer of his investi-

Ptiori of certain transactions affecting the First National'dank of PQM' Paw, Michigan, made under the direction of the.Clief National Bank Examiner of the Seventh Federal Reserve!hstrict, at the request of the division of examinations ofthe Federal Reserve Board, together with the exhibits re-ferred to therein.

'Report submitted June 19, 1933, by Robert K. Stuart, na-!dional bank examiner, of an investigation of certain transac-tions in the First National Bank of Ripon, Wisconsin, in con-nteetion with subscriptions for Government obligations, made

the request of the division of examinations of the FederalReserve Board, together with the exhibits attached thereto.


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"The information contained in the material transmitted here-

with relates to irregularities found during the investigation

of certain transactions involving subscriptions to new issues

of United States Government obligations which were handled inthe fiscal agency department of the Federal Reserve Bank ofChicano and in certain member banks of the Federal reserve sys-

tem, and is submitted to you for the consideration of your de-

partment."

Mr. Miller stated that he had not initialed the letter be-

he assumed that Mr. Woodin had some good reason fol- retaining

ill his office the first draft, and that he would prefer not to have

the matter disposed of until it could be ascertained whether Lr.

Odj knew of any reason for not transmitting the letter to the

Att°rfleY General.

Mr. Morrill reviewed the circumstances surrounding the first

(1111ft of letter to the Attorney General; referred to Mr. Wyatt's mem-

0 nd111m of March 31, 1933, advising that, in his opinion, the matter

mould be submitted to the Attorney General; and stated that 14r.

Hew,Assistant Secretary of the Treasury, had taken the matter up

With h tm, advising that the question

for handling by the Secretary of the

that a letter of the kind which

'flitted

he haa

ter to

before

B0"d.

had been referred to Mr. Hewes

Treasury, and that Dlr. Hewes

had been drafted should be sub-

to the Department of Justice. Mr. Morrill also stated that

"dsedMr. Hewes that he would show him the new draft of let-

the Attorney General when prepared, but that it was felt that

doing so the letter should be approved by the Federal Reserve

After discussion, upon motion by Mr. Hamlin,

the proposed letter was approved, Mr. Miller "not

voting".


_15911/20/33 -8-

Consideration was also given to a letter dated november 14,

1933, from Ur. Harrison, Governor of the Federal Reserve Bank of New

reading as follows, copies of the letter having been furnished to

411 aPpointive members of the Board:

"Referring to our letter of September 29, which I subsequentlyamplified orally at the request of your board, and your telegram ofOctober 10, our directors again have considered the matter of pur-

a8121C the property east of our present bank building, known as the...untauk property, and again have cone to the conclusion that, if

property still can be obtained on the terms previously negoti-ated, it will offer a most advantageous opportunity to acquire an1,rea which eventually should be part of our holdings. The reasons40r the purchase, which we earlier advanced, still are controllingin our opinion and, in addition, the increasing pos4bi1ity of fore-

V*°811re by the mortgage holders suggests that action should be;'94.'izen before the Property comes into stronger hands than those ofits

Present owners nna the cost of a foreclosure action, possibly,"4S been added to the present price.

1,Jc do not wish to enter into further negotiations regarding this.13roperty, however, until we are assured that we can conclude the:.,dransaction upon agreement as to our terms with the present owners.nIr directors wish to repeat, therefore, their earnest request that

re Federal Reserve Board give its approval to the proposal for thePurchase of the Montauk property, which was set forth in our letter01

September 29. If you do so approve, and if the property then isPurchased as contemplated, it would be our purpose to have plans

rin for an extension of the present bank building, to cover theirvlY acquired land, and to obtain estimates of the cost of

econ-

struction of such an addition. 'v:e already have made a preliminaryZtlorat ion of this question on the basis of the original plans for

s area, and the indications are that, at today's prices, theto.al

cost of building would be in the neighborhood of 0860,000.Before proceeding beyond the point of obtaining more accurate es-

1:Tes, of course, we should again consult your board.l f there is any further information concerning this proposalwhich you vJould like to have, we shall be glad to furnish it to you."

Upon motion by lix. Hamlin, the Secretary was re-quested to advise Governor Harrison that the Boardhas given further careful consideration to the requestof the directors of the Federal Reserve Bank of NewYork and interposes no objection to the purchase bythe bank of the so-called lontauk property at a costOf not to exceed 0356,250 (with adjustments for taxes,interest, insurance, current operating expenses andrentals), Ylr. Janes voting "no".


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There was then presented a memorandum dated November 11, 1933,

from Smead, Chief of the Division of hank Operations, suggesting

certain chan;es to be incorporated in the balance sheet form 34 to be

bY Federal reserve banks during 1934 in submitting daily reports

43sets and liabilities to the Board, the changes in the form relatingto

"e subscription which the Federal reserve banks are required to maketo +1,

-Ike stock of the Federal Deposit Insurance Corporation and to a number

it'°' which have been in use since the passage of recent legislation.

The proposed changes in the form were approved.

In connection with the above matter there VMS also presented a

Triemorandtun dated November 9, 1933,thet

at the request of the Federal Reserve Banks

401is the recent Governors' Conference

741th regard to, the possibility

NPartment of the franchiselast

half of 1932;l'a.Ph of

section 7

rective as of Julytrl-lcsa to the United

stated that franchise

Caev'eland, Chica7,0,

c) '2,011,418; that the

°r the Di vi si on of Bank

from 'Lir. Lorrill referring to the fact

of Cleveland and lanne-

discussed, but took no action

of obtaining a refund from the Treasury

taxes paid by Federal reserve banks for the

the Banking Act of 1933 having amended the first

of the Federal Reserve

1, 1932, the provision

States by Federal

para-

Act to eliminate therefrom, ef-

for the payment of franchise

reserve banks. The memorandum

taxes were paid by the Federal Reserve Banks of

and ranneapolis for the year 1932 in the total amount

Treasury Department had advised Mr. Snead, Chief

Operations, that refunds representing the fran-

ta)ces Paid by the Federal reserve banks referred to for the last

c'e 199-- could be made by the Treasury Department only after an


16111/20/33

-10-

4PPropriation by Congress; and that it is felt, therefore, that the Fed-

eral Reserve Board should decide whether it will ash the Treasury be-

to request an appropriation for the purpose of reimbursing the

Federal reserve banks. Lir. 1:4)rrill stated that the matter had been dis-

eu"ed by the merbers of the Board's staff and that it was felt that, as

4 Matterof policy, the question should not be raised with the Treasury

4Partment at this time. Mr. Wyatt stated that he understood that the

l'eaeral Reserve Bank of Chicago had submitted a request to the Treasury

1DePartment for the refund of the tax paid by it. A discussion ensued

vihich the opinion was expressed by some of the members of the

0O ITI that the Federal Reserve Board should support any request of the

odera1 reserve banks involved for the refund of franchise taxes paid by

them for the last half of

At the conclusion of the discussion, Mr. Hillermoved that the opinion as expressed be adopted asthe position of the Board in the matter.

Carried.

The Loard then considered and acted upon the follawing matters:

Reply on riovember 16, 1933, approved by five members of the'thz)ard, to a letter dated rovember 13 from Mr. Strater, Secretary- of the?eaeral Reserim

Bank. of Cleveland; the reply reading as follows:

14 In accordance with the request contained in your letter ofb°1rember 13, 1933, the Federal Reserve Board approves for yourrZ.Vc, effective November 10, 1933, a minimum authorized buying

e ef one-half of one percent for purchases of bankers accep--waceG .11

Approved.

Letter dated 1:ovember 16, 1933, from Mr. Sproul, Secretary ofthe i?eu

eral Reserve Lank of ew York, and telegrams dated November 15,


16211/20/33 -11-

1933, from Er. Curtiss, Chairman of the Federal Reserve Bank of Boston,

a4a November 16, 1933, from la.. Newton, Chairman of the Federal Reserve

411k of San Francisco, all advising that, at meetings of the boards of

directors on the dates stated, no changes were made in the bank's exist-

ing schedules of rates of discount and purchase.

Without objection, noted with approval.

Memorandum dated November 14, 1933, from Yr. Paulger, Chief of

the Division of Exmninations, referring to the need for additional space

&lithe Shoreham Building for the division, and recommending that the

1()tIrd eathorize him to negotiate for the rental of an additional 781

sIllare feet of space, more or less, on the sixth floor of the Shoreham

131111(11. 4g, on the same basis as the lease covering the space now occupied

°4 that floor mith the exception that the rental shall be at a rate notto ez

eeed t2.50 per square foot; the recommendation having been approved

tembers of the Board on November 18, 1933.

Approved.

141, Paulger stated that, in accordance with the authority granted

the Board, he had discussed mith the owners of the Shoreham Building

question of the leasing by the Board of additional space in that

by

the

1411.344and that Mr. Robert L. McKeever, Vice President of the Shore-

414

117estment Company, had advised that, in addition to the 781 feet

" 4Pace

Aro%Under consideration,

tely 2,900 square feet

4.egotiation mith the company,ttr, of

there is available on the sixth floor ap-

of space which adjoins the space now under

and most of which is occupied by the legal

McCawley and Shinn; that the legal firm is desirous of


16311/20/33

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N75-11g its offices to the twelfth floor of the building; that the 2,900

1311.11are feet of space, which is suited to meet the Board's needs, would

be available to the Board; and that Mr. McKeever would like to receive

a definite ansmer from the Board as to its space requirements inasmuch

43 aflutter of inquiries are being received from other parties with re-

g" t° available apace in the building. Er. Paulger also said that he

lika' advised lir. LcKeever that he was not in a position to make a recom-

la ion to the Board that it acquire additional space at this time as

he (lid not know that the requirements of the Board would be, but that he

1144 requested Er. McKeever to hold the matter open for at least thirty

to - 1/.4ich Er. McKeever had replied that he would like to have the

130erd reach a definite decision an the matter and that(t decision by the Board in the near future the space

°the rparties.

attention of the

N4toe, -In, order

ill the

Shoreham Building.

in the

would be

absence of

rented to

Mr. Paulger added that the matter was being brought to the

Board at this time in view of its increasing need for

James

qUire,ments of theto

Ilegotiate

ehtire space

that it may know what additional space is available

stated that he felt that,

Board for space, it would

a lease with the owners of the

in view of the growing re-

be reasonable for the Board

Shoreham Building for the

referred to even though it is not immediately required.

A discussion ensued, at the conclusion ofwhich Jr. Morrill and Mr. Paulger were requestedto consider the matter further and submit a reportto the Board.

1Zemoranchun dated November 13, 1933, from Mr, Goldenweiser,


11/20/33-13-

Director of the Division of Research and Statistics, recommending the

164

aPPointment of Mrs. Ruth V. Jones as a stenographer in the division,

"1 salary at the rate of j,560 per annum, effective December 1, 1933;

the recommendation having been approved by five members of the Board on

ember is, 1933.

Approved.

Lemorandum dated November 17, 1933, from Mr. Goldenmeiser, Di-

rector of the Division of Research and Statistics, recommending the

teMPora-rY aPpointment until December 3, 1933, of Mrs. Margaret T. Howell

" draf+-aman in the division, with salary at the rate of 0135 per month,

"'etive as of the date upon which she enters upon the performance ofher

'les; the roc°, ndation having been approved by five members ofthe _

Board on iovember 16, 1933.

Approved.

'demo randum dated November 17, 1933, from Er. Paulger, Chief ofthe Divizion of

Examinations, requesting the appointment of ass MarionLI Goahorn as a

clerk in the division, mith salary at the rate of $1,440

13°1' effective as of the date upon which she enters upon the per-

'''C)111A1100 oP her duties.

Approved.

Renewal bonds in the amounts ofliovett

25,000 and 75,000, executed on

er 1' 1933, by Ir. F. L. Curtiss as Federal Reserve Agent at theal

Reserve Bank of Boston.

Ped.er

Approved.

l'eleCram dated November 18, 1933, to Mr. -Alliams, Federal Reserve


165

11/20/33 -14-

Itezt at Cleveland, epproved by five members of the Board, replying to

letters dated November 9 from Mr. Williams and November 14 from Mr.

Iiletehers Assistant Federal Reserve Agent at Cleveland, requesting the

4PP0Intment of Er. Ray L. Poland as an examiner in the Federal reserve

department of the bank, with salary at the rate of 03,000 per

klialu The reply stated that the Board approves the appointment referred

to With salary at the rate stated.

Approved.

Telegraphic reply on November 18, 1933, approved by five members

of the Board, to a letter dated November 15 from Er. Hoxton, Federal Re-

114"e Agent at Richmond, requesting the appointment of Mr. Joseph L.

&te - as an assistant examiner in the Federal reserve agent's department

or the Federal Reserve Bank of Richmond, with salary at the rate of

42'1°C) Per annum, and stating that Er. Suiter is indebted to certain

bitalca in Rocky Mount, North Carolina. The reply stated that the Board ap-Prove

6 the appointment referred to with salary at the rate stated, with

the laiderstanding that Yr. Suitor will liquidate his indebtedness to banks

11()eicY licunt as promptly as possible.

Approved.

Te legrgm dated November 18, 1933, to Mr. Stevens, Federal Reserve4tett at

Chicagc, approved by five members of the Board, replying to aletter

dated November 14 from Assistant Federal Reserve Agent Young with

regard to the temporary appointment of Mr. H. C. Crays as an

taailcot

1\lithe

exkniter411 the Federal reserve agent's department of the Federal Reserve

Chicago, with salary at the rate of $4,500 per annum, effective


166

11/20/33-15-

SePtember h, 1933; the letter stating that Lr. Crays is indebted in

the amount of 5,000 to the First-citizens Bank & Trust Company, Green-

aatle, Indiara, a nonmember institution; that the indebtedness was in-

etIrred for the purpose of purchasin stock in the Citizens State Bank of

lamsport, Indiana; and that Lr. Crays reports that he is negotiating

ect thitime for the sale of the stock, which will liquidate at least

of the debt, and that the balance will be arranged for on a

171°1-IthlY basis, The reply stated that the Board approves the temporary

413P0 ittment referred to with salary at the rate stated, with the under-

.i:111141-11. that Lr. urays vil1 liquidate his indebtedness to the Greencastle

bWk as soon as feasible.

Approved.

Telegraphic reply on November 18, 1933, approved by five members

the board, to a letter dated November 14 from Er. McClure, Federal

Reserve Agent at Kansas City, requesting the approval of the appointrent

J. L. McCarthy as an eY.aminer in the Federal reserve agent's de-

17)"lent of the Federal Reserve Bank of Kansas Cit. with salary at thel'Ate of

per annum, and stating that Yr. McCarthy is indebted in

the °I°1111t of .)250 to tuo national banks in Kansas City, and that the in-

is being reduced by regular monthly reductions. The reply

etated that thethe rtxte stated::: approves the appointment referred to with salary at

the understanding that Lr. McCarthy will continuetheV.

'TY'atio reduction of his indebtedness to the banks in Kansas City.

Approved.

ilePlY on Lovember 17, 1933, approved by five members of the


167

11/20/33-16-

4ard' to a letter dated October 16 from Mr. ::alsh, Federal Reserve

,Ant at Dallas; the reply reading as follows:

"Reference is made to your letter of October 16 in regard tothe employment of a trust examiner at each Federal reserve bank andParticularly the qualifications of such an examiner and the scopeof his duties."AssuDing that the person who may be under consideration for se-

lection as a trust examiner is familiar with the principles of ac-!°untanoy and auditinr,, it is believed that in order to accomplish"le best results in trust examination work he should have the qual-ifications set out in your letter. Cf course, the number of menP°8sessin1; all these qualifications is somewhat limited, and in thecircumstances it might be found necessary to forego the requirementOf broad experience gained as an executive in a trust department andto select an individual with sound legal training and broad experl-enee in examining trust departments, or it might be necessary toselect a man who has not had a great deal of experience in trust ex-

work. In such a case, however, it mould be essential to”lect one who not only possesses the qualifications as to legal.Q"kground and experience in operation of a trust department, but!,'IGO evidences by training, experience and otherwise an aptitude forxaTnation work.

c Tihe entire scope of the duties of a trust examiner, of course,annot be sharply defined, but it is the view of the Board that whenexarnination is made of a State bank applying for membership in

tie Ystem -which has a trust department, there should be an exarina-t:ori of that department by a qualified trust examiner, and that theolst department of every State member bank should be examined peri-trleallY. As to national banks, the responsibility of examining thet,,1-1t departments lies, of course, primarily with the Comptroller ofirl e Currency, but in some cases trust departments of national bankstj, l'equire special attention and it may be found mutually advan-e:ue°us to have your trust examiner cooperate with the national bank:1111illor8. In addition, there may be cases of national banks apply-

or Permits to exercise trust powers in order that they may beto take over trust business previously handled by State institu-

tr,nss and in such instances you should arrange for examinations of1111;st departments of the State institutions by your trust examiner,

e.” the necessary examinations have been made by other competentIt'flIners whose reports are entirely satisfactory..1341.61ce from the question of responsibility for making examinations"e first instance, the trust examiner should be charged mith the

411,Y of reviewing carefully the reports of examination of both Statete,,Lational banks which have trust powers and of familiarizing him-tr I , with the quality of management and methods of operation of such1„ sl; -Portdepartments. He should also draft for your consideration such

anu recommendations as should be made by you to the Federal


16811/20/33

-17-

"Reserve Board in connection with trust natters. If, after theseduties are performed efficiently, the trust examiner has any sparetime, he should be able to render valuable assistance in other workof your office, particularly that relating to affiliates and thehandling of applications for voting permits. On the whole, it wouldseen that a properly qualified trust examiner could be so useful inthe Federal Reserve Agent's department in all of the more importantPhases of examination work that his time would be occupied fully."

Approved, together with a letter dated 1:ovember17, 1933, to all other Federal reserve agents, in-closing a copy of the reply to Er. Walsh's letter.

Reply on ilovember 17, 1933, approved by five members of the

Bo4rA'3 to a letter dated November 1 from Yr. Peyton, Federal Reserve

kenta. Minneapolis; the reply reading as follows:

. "Receipt is acknowledged of your letter of 1-,ovember 1, 1533, ad-Iasi/1E that your new trust examiner had reported for duty and wasapAlt to start work in connection with the trust departments ofState

member banks. You state that it is your understanding that,!:ecerdi4,7, to the original plan, the trust examiners for the Federalt°serve banks are to cooperate with the national bank examiners in13'1e examination of the trust departments of national banks, and thatteic're approaching the Chief National Bank Examiner of your districtti01 racke definite plans for the coordination of the two forces ind_!.examination of such trust departments, you would like to have''lnite instructions from the Board to proceed along that line.H-

4n this connection, the Board has written to another Federal Re-Serve Agent as follows:'The entire scope of the duties of a trust examiner, of course,

cannot be sharply defined, but it is the view of the Board thatl'Alen an examination is made of a State bank applying for member-sill") in the system which has a trust department, there should bean examination of that department by a qualified trust examiner,and that the trust department of every State member bank shouldbe examined periodically. As to national banks, the responsibil-ity of examining the trust departments lies, of course, primarily711th the Comptroller of the Currency, but in some cases trust de-partments of national banks may require special attention and itillaY be found mutually advantageous to have your trust examiner co-Operate with the national bank examiners. In addition, there maybe cases of national banks applying for permits to exercise trustPowers in order that they may be able to take over trust businessPreviously handled by State institutions, and in such instancesYou. should arrange for examinations of the trust departments of-..41e State institutions by your trust examiner, unless the neces-'4rY examinations have been made by other competent examiners

74hese reports are entirely satisfactory.'


169

11/20/33-18-

"Ihe Board has noted your suggestion that it might be desirableto advise the Comptroller of the Currency as to the contemplatedactivities of the trust e:caminers for the reserve banks, and to re-quest him to advise the Chief National Bank Examiner in your districtof the proposed plans. 'he Comptroller of the Currency has been in-formed fully as to the plans for the employment of special trustexMiners at each Federal Reserve Bank."

Approved.

Reply on 1:ovember 17, 1933, approved by five members of the130Eir,,

to a letter dated November 9 from Mr. Case, Federal Reserve Agent

14117 York; the reply reading as follows:

a "The Federal Reserve Board has received your letter of November1033, referring to indebtedness of officers and employees in your

Z di-rectors '

and to outside business affiliations of officers and di-the Federal Reserve Bank of New York.

.L 'it is noted from the report submitted by Ir. Harold F. ChapinIlat he is indebted in the amount of ç4,800, secured by a mortgagehis home, to the Guardian National Bank of Commerce of Detroit,

I'lehir._;an. Inasmuch as the national bank is in receivership, it is!scluned that steps will be taken to liquidate the indebtedness or

0 transfer it to some other institution, and it is suggested that,-1' the latter course is followed, Er. Chapin arrange if possible tohave it transferred to an institution which is not, member bank or, %bsidiary or affiliate thereof.In connection with outside business affiliations of officers and

?ployees of your Lank, the Board on June 4, 1930, interposed no ob-ction to Mr. Gidney serving as a member of the Board of EducationOf Ridgewood, New Jersey. The Board's records do not indicate, how-Or, that the service of Messrs. Gilbart and Dillistin as a memberOf the Planning Commission of the Village of Garden City, Long Island,d as member and treasurer of the Passaic County Mosquito Extermina-tor Commission, respectively, has been referred to the Federal Re-

42117o Board for determination of the question whether the positions143e Political or public offices within the meaning of the Board'sviI°11Ation of December 23, 1915, and it will be appreciated if youit. 1 advise the Board fully with regard to the nature of the positions

order that it may pass on the matter.zriilsriarii also noted that Messrs. Robert R. Apgar, Chief of the Ad-

ion Department, Raymond F. Cutler, Special Representativeciet!l_e Lank Relations Department, and i1lian A. Ernst, Coin Shippingo„lar4. in the Cash Department, are officers or directors of buildingwiti oan associations. The Board feels that these affiliations are2111 the scope of its letter of April 29, 1933, and that considera-v*4 should be given by the employees involved to their terminationZLIsl.°°n as possible, and it is requested that you advise of the ac-taken by them in this connoction.


170

11/20/33-19-

"Your letter further states that the employees of your bank arepermitted to engage in outside business activities only with theapproval of the Governor of the bank; that such applications aregranted only when it is clear that the outside work will be doneoutside of business hours and will not prevent the employee fromC-V1ng full time and attention to his work at the bank; and thatConsideration is given also to the character of the outside busi-I-loco concern and the nature of the work mhich the employee proposest? do, and permission is not granted if there appears to be any in-d?.eation or danger that the employee's connection with your bank11.11ght be used or referred to in any may for the purpose of benefit-

the outside concern. Accordingly, it appears that the outside.alsiness activities of the other employees listed in the statementInclosed with your letter do not interfere in any may with their:1:'1ice to your bank or involve any financial or other relations'1oh might prove embarrassing to the Federal Reserve Bank of New

York. I,

Approved.

Letters dated November 16, 1933, approved by five members of the

13°a'rcl' to the boards of directors of the following named State banking

11''3titut10ns, each letter stating that, subject to the conditions pre-

elsil'ecl in the letter, the Board approves the institution's application

l'cfl'Iliberzhip in the Federal Reserve System and for the number of shares

()tPederal reserve bank stock to which the institution will be entitled1113°4 the basis

of its capital and surplus as of the date upon which itsrnerabe

'3114 becomes effective:

Applicant Bank Federal_ Reserve Bank

State Bank of Ontario", Ontario,4 Irew York.Bay City Bank & Trust Company", BayCity, Texas,

New York

Dallas

Approved.

Letters dated November 18, 1933, approved by five members ofBoar', k,o the boards of directors of the following named State bank-it t.

ltutions, each letter statin that, subject to the conditions


171

11/20/33

Prescribed in in the letter, the Board approves the institution's applica-

tio:a for membership in the Federal Reserve System and for the number of

1141s°3 of Federal reserve bnillr stock to which the institution will be

"titled upon the basis of its capital and surplus as of the date upon

Itlich its membership becomes effective:

Applicant Bank

"Me Peoples Bank & Trust Company",r Coshocton, Ohio.u n,'-ne Planters Bank & Trust Company",

Thomaston, Alabama.IIHarlan County Bank", Alma, Nebraska.

Approved.

Letter to the board of directors of the "Ear Harbor Banking and

Federal Reserve Bank

Cleveland

AtlantaKansas City

Ir11.7t „,C--vanT, Bar Harbor, Maine, statinr__; that, subject to the condi-

Prescribed in the letter, the Board approves the institution's ap-1)lieat'lon for membership in the Federal Reserve System and for the numberOf sh

4"8 of stock of the Federal Reserve Bank of Boston to which the in-4titut.

1011 Will be entitled upon the basis of its capital and surplus asOf the

-ate upon which its membership becomes effective.

Telegmm to Mr. Curtiss,

Approved.

Federal Reserve Agent at Boston, reading

0, ',I,Deard hereby amends condition numbered twenty-one of its lettert-'0 november 1, 1933, to Board of Directors of Merrill Trust Company,1,411.r!ad as follows QUOIE The special Act of the Legislature underntlen the new bank is to be incorporated shall be in form and sub-

8ee o to counsel for the Federal Reserve Bank of Boston11;; ubstantially the same as a proposed act to incorporate The

t4 rill Trust Company, Bangor, llaine, to which reference was madenera Trust Company,

Phillips Ketchum to the Governor of the Federal Re-

fur Ye Bank of Boston under date of October 20, 1933, and there shall

nished an opinion of the Supreme Court of the State of Maine,


172

11/20/33 -21-

satisfactory to such counsel, in which it is held that such actis valid and not in contravention of the Constitution of the Stateof Lain° UNQUOTE On basis of information contained in Clark's let-ter dated November 18, 1933, and in inclosures therewith, it wouldappear that action heretofore taken for purpose of placing Lierrillsecurities Corporation in formal liquidation constitutes substantialcompliance with the part of condition numbered twenty-five, as setf°rth in Board's letter of I,ovember 1, 1933, which pertains to Ler-rill Securities Corporation, and may be accepted as satisfying re-quirements in respect thereto, subject to understanding that LerrillSecurities Corporation will be dissolved forthwith. In respect to

Corporatlon, Board hereby waives the requirement set forth incondition numbered twenty-five that such corporation be placed,tormally in liquidation or receivership prior to admission of TheLierri] I Trust Company to membership in the System, and in lieu there-of. the Board imposes the condition that Union Corporation enter into!I.Creement similar to that required of Llaine Real Estate Title Company

1F113c= letter of November 8, 1933, to Board of Directors of L:er-Company, in regard to liquidation of Liaine Real Estate

°111PanY, and that The 1:.errill Trust Company undertake that the agree-by Union Corporation will be faithfully carried out and agree

at, in all of its published statements of condition, it will show

Z?Parately its investment in stock of its subsidiary, Union Corpora-' as investment in stock of affiliated company holding other

real estate."

Approved.

Letter dated November 15, 1933, to the Federal reserve agents

t111 Federal reserve banks, approved by five 'ambers of the Board,

4(1(15-11F, as follows:

, "In reviewing applications for membership in the Federal Reserve

ToteMO it has been noted that in many instances officers and em-

:ethyees of the applicant bank appear to be inadequately bonded, and07 in some instances certain officers and employees are not cov-ban by any bond. The Board feels that as a matter of conservativebctning Practice adequate surety bonds should be carried by all01,"434 In certain letters to the Federal Reserve Agents advisingha aPProval of applications for membership, therefore, the Board1)03 called attention to the lack, or apparent inadequacy, of thethilalds, and has suggested that the Federal Reserve Ac,ents requestsia b°4rds of directors of the applicant banks to give careful con-

ion to the advisability of having bonds in adequate amount0,,,,:fided for all officers and employees having access to the banl:se

securities, or records of account.ou are requested to give careful consideration to the adequacy(3f t •he c,onds carried by banks applying for membership, and to make


1_73

11/20/33 -22-

"appropriate recommendation to the directors of an applicant bankwhenever it seems necessary. In the future, therefore, no commentof this nature will be made in the letters to the Federal ReserveAgents advising of approval of applications for membership. Inthis connection, it is assumed that the Federal Reserve Agentswill give the same consideration to the adequacy of bonds carriedby banks already admitted to membership and will make similar rec-°1Mendation then deemed necessary."

Approved.

Letter dated November 15, 1933, to the Federal reserve agents

4t 811 'Federal reserve banks, approved by five members of the Board,

'''s4dirlE as follows:

"In reviewing applications for menbership in the Federal Reserve8rstera submitted to the Federal Reserve Board, it has been noted'It1:1; in many instances the applicant bank pays interest on certainPUblic accounts. As you know, section 19 of the Federal Reserve'let, as amended by the Banking Act of 1933, prohibits a member bank,-, cePt as stated therein, from paying interest on deposits which,:r6 Payable on demand. Accordingly, if the public accounts above.referred to are demand deposits and do not come within the excep-101°11 to section 19, the payment of interest thereon by a State,411k after it becomes a member of the Federal Reserve System moulde

U1lawfu1.In certain letters to the Federal Reserve Agents advising of

7TProval of applications for membership, the Board has called at--cention to this situation and has requested the Agent to bring they tter to the attention of the management of the applicant bank.1.°11 are requested to take similar action in all such cases arising

Your district. In the future, therefore, no comment of this,re will be made in the letters to the Federal Reserve Agents ad-

Of approval of applications for membership."

Approved.

Telegram dated November

Ac,ent at Chicago,

t° the application of "The State SavingsE1.113 for pe -cs

el'41 Reserve System.

114/141 requirement of six months'

approved

15, 1933, to Mr. Stevens, Federal Re-

by five members of the Board, referring

Bank of Warren", Warren, 1.1ichi-

ion to withdraw innediately from membership in the Fed-

The telegram stated that the Board waives the

notice of intention to withdraw and


174

th0 currency,

raeraorctria

inthe

lieetiellt, from

11/20/33 -23-

thc't, accordingly, upon surrender of the Federal reserve bank stock is-

1-10c1 to the State Savings Dank, the Federal Reserve Bank of Chicago is

":110rized to cancel such stock and make a refund thereon.

Approved.

Letter dated November 16, 1933, to Lir. Case, Federal Reserve

4°1-1"t at New York, approved by five menbers of the Board, readinz asfollows:

, "Receipt is acknowledged of 1:r. Dillistin's letter of November'3! in vilich he reported that the receiver of the Broad Street Na-(1,2nal Bank, Red Bank, New Jersey, who was appointed on April 15,1

3, has not made application for cancelation of the Federal re-serve bank stock issued to that bank. It is noted that the re-ejlIrer has not made application because of a possible reorCaniza-Ofl of the bank, vhich is under consideration.

In these circumstances and in view of 11r. Dillistin's recem-

rllation, the Board will not at this time require the cancelationti 'he Federal reserve bank stock issued to the Broad Street Ns.-e ()nal Bank, Red Bank, New Jersey. However, if an application foriroelation of such stock is not received from the receiver withinh re() months from date of this letter and the bank in the meantimerctz not been restored to solvency, it is requested that a furtheroportand recommendation be submitted to the Board."

Approved.

Letter dated November 18, 1933, to Lir. O'(onnor, Comptroller of

approved by five memb rs of the Board, replying to his

Of October 24 recomnendiqg approval by the Board of a reduc-

capital of "The Liddletown

369, 300 to

IPP1'()Ite l3 the proposedreduction under the plan submitted,

)174itt°11s set forth in the reply. The reply stated also that it is

°I3cerved that on the basis of the last report of examination of thebItlik, which was made as of August 29, 1933, the corrections to be

National Ban2, laddletown, Con-

)123,100. The reply stated that the Board

subject to the


p"..•t4

t

the

11/20/33-24-

erfected under the proposed plan of rehabilitation will not be suffici-

elit to eliminate all estimated losses and depreciation on securities or

Provide for possible losses in doubtful assets, and that it is assumed

that the Comptroller's office will require further corrections to be made

48 soon as it is feasible to do so.

Approved.

Letter dated November 16, 1933, to Lr. O'Connor, Comptroller of

Currency, approved by five members of the Board, reading as follows:

,e "Receipt is acknowledged of Deputy Comptroller Gouh's letter of'ovember 13, 1933, with reference to a change in the proposed plan!I recapitalization of 'The Jefferson County National Bank of Water-

'flatertoqn New York, which was approved by the Board November'2 1933.

u ris understood that the revised plan does not involve any

Cont • atige in the amount of the reduction in common capital stock, but

emPlates an increase of , 100,000 in the amount of preferred• °?k to be sold, and will strengthen the institution accordingly.

ls, therefore, not necessary for the Board to pass upon the re-th• 8.1(!d Plan, and this letter is to confirm :a.. Gough's assumption

the Board's approval of the original plan will continue in of-as recards the revision."

Approved.

Relay on November 16, 1933, app roved by five members of the4111.cl, to a

menorandum dated August 14 from O'Connor, Comptroller'40

Currency; the reply reading as follows:

1

eference is de to your memorandum of August 14, 1933, recom-1-1147i.:cl

madeof a reduction in capital of 'The Colonial-American1.°nal Bank of Roanoke', Virginia, from Ra,000,000 to t;500,000.

4314, It aPpears that the plan only proposes to reduce the capital andcer ss and out of the funds released by such reduction to eliminatethe -1/1 assets, and does not propose to introduce any new funds into

`'irapr,aPital structure. The accomplishment of such plan does not00 ve the fundamental condition of the bank, but does releaseauff!°°0 of stoekholders' liability, and since there would be leftdepolti:tjatelpital and surplus to provide a satisfactory ratio to

question involved is whether or not the condition of


176

11/20/33 -25-

the bank is such as to warrant the release of the 000,000 stock-holders' liability, a considerable portion of which appears to becollectible, as evidenced by the large estimated net worth of antmlier of the directors and correspondingly large ownership ofstock in the bank.

"It is noted that under the plan it is proposed to eliminateaPProximately twice the amount of assets which more classified asdoubtful and estimated losses by the National bank examiner, asahown by the report of examination of July 5, 1933, but it is alsonoted that there will still be several features subject to material. riticism. These features include the unduly large investment in04xking house, furniture and fixtures, other real estate, and State!nd City Investment Company bonds which represent another banking,touse and are regarded as potential other real estate, the aggregate°f which will anount to approximately 146 per cent of the capital

Znd surplus after the proposed reduction; and the large borrowings_? the officers, directors, employees and their interests, a con-derable portion of which is classified as slow, doubtful or loss.

tore. Board is in sympathy with the desire on the part of the direc-

b it° show more accurately the value of the assets of the bank,is -n view of the criticised features of the situation, the Boardth Ilot prepared to approve the proposed reduction in capital under6 Plan submitted."

Approved.

Letter dated November 17, 1933, to IL.r. O'Connor, Comptroller of

the Currency,approved by four members of the Board, replying to his

iliela°rEindtun Of November 7 recommending approval by the Board of a reduc-tioa of 25,000 in the common capital stock of "The First National BankOf

Centralia", Centralia, Yissouri. The reply stated that the Board ap-

".1 the(:)11311tions

proposed reduction under the plan submitted, subject to the

sot forth in the reply.

Approved.

Letterdated November 17, 1933, to L. O'Connor, Comptroller of

the etIrrency,approved by five merbers of the Board, replying to his

nlortic), 71(1111 of November 7 recomrending approval by the Board of a reduc-

- In the 0-°11mon capital stock of "The Goodhue County National Bank of

s'k tt ,s-) ' -clod

lannesota, from $200,000 to $100,000. The reply


177

ciarren

11/20/33 -26-

81:8;bsd that the Board approves the proposed reduction under the plan

*bt4)d, subject to the conditions set forth in the reply.

Approved.

Letter dated November 16, 1933, to Er. O'Connor, Comptroller of

the currency, approved by five members of the Board, replying to his

lliellicandura of October 25 recommending approval by the Board of a reduc-tion ,

ii;25,000 in the common capital stock of "The First National Bank

Of Palls City", Falls City, Nebraska. The reply stated that the Board

84141°7643 the proposed reduction under the plan submitted, subject to the

orlditions set forth in the reply.

Approved.

Letter dated November 18, 1933, to Er. O'Connor, Comptroller ofthe currency,

lertoraildapproved by five members of the Board, replying to his

of October 24 recommending approval by the Board of a reduc-

in. the cornmon

0rflaha, Nebraska, from

Qttrcl approves the

to the conditions

13°e•rd hao noted theOf

the plan of rehabilitati on

rlzrther corrections to be madere"ible to do so.

capital stock of "The First National Bank of Omaha",

,;1,250,000 to 4250,000. The reply stated that the

propo ed reduction under the plan submitted, subject

set forth in the reply.

Comptroller's comments

The reply stated also that the

nith respect to the inadequacy

and that it assumes that he van require

in the bank's condition as soon as it is

Approved.

Letterdated November 13, 1933, to L. O'Connor, Comptroller of

eY' approved by five members of the Board, replying to his


178

mekorazd,„, of

11/20/33 -27-

11tellic3randum of October 24 recommending approval by the Board of a reduc-

ti n, •-" in the common capital stock of "The Farmers National Bank of Salina",

Salina, Kansas, from ,.';200,000 to 3100,000. The reply stated that the

44rd aPProves the proposed reduction under the plan submitted, subjecttO 6he

conditions set forth in the reply.

Approved.

Letter dated November 17, 1933, to iir. O'Connor, Comptroller ofthe cu_'renoy, approved by four members of the Board, replying to his

*51aorana--um ott November 6 recommending approval by the Board of a reduc-

oft I 011

g5,000 in the common capital stock of "The Liberty National BankOf

WeathOrfor di!

:Teatherford, Oklahoma. The reply stated that the Board

c'1313r°7es the pmposed reduction under the plan submitted, subject to the

eorlditions set forth in the reply.

Approved.

Letter dated November 16, 1933, to Li.. O'Connor, Comptroller ofthe currency,

aPproved by five members of the Board, replying to his

November 8 recommending approval by the Board of a reduc-

ti°4 in the ---on capital stock of "The Texarkana National Bank', Tex-

CLI'kE11143 Texas, from 500,000 to 250,000. The reply stated that the

(341"(1 aPproves the proposed reduction under the plan submitted, subjectt° the

10a5 set forth in the reply.

Approved.

Letter dated November 17, 1933, to 1.1r. O'Connor, Comptroller ofhe ellr

1%)ralirclencY' approved by four members of the Board, replying to his

1111 of November 3 recommending approval by the Board of a reduction


11/20/33-28-

inthe comaon capital stock of the "First National Trust and Savings

Ballic of Fullerton", Fullerton, California, from 250,000 t U125,000.

The reply stated that the Board approves the proposed reduction under

the

179

Plan submitted, subject to the conditions set forth in the reply.

Approved.

Letter dated hovember 16, 1933, to the "United States Yational

Corporation" Portland, Oregon,

ezd reading as follows:

"The lioard approves your application dated August 14, 1933, fora Voting permit under authority of Section 5144 of the Revised,Stat-utes, as amended, entitling you to vote the stock which you controlof the following banks:

approved by five members of the Board,

United States National Bank of Salem,United States National Bank of Mchinnville,Tile First National Bank of St. Helens,Clark County National Bank of Vancouver,

Salem, Oregon,I.:ciannville, Oregon,St. Aelons, Oregon,Vancouver, Washing-

ton.

v. "Tho voting permit applied for is here inclosed, but the Board( 11(3s to call to your attention the following facts. From thea;'2.a. submitted in your application the Board is not certain that you

:214! 111.(9161: o7 violating Section 2 of an Act of Congress approved hay\44 Stat. 628), which provides that with certain exceptions

b°11,13ere applicable, no corporation 'engaged in the banking, loan,t11.1 -lng and loan, brokerage, factora7,e, insurance, indemnity, oriAllSt business', shall use the words 'United States' as a portion ofloo .corporate name. Inasmuch as your need for the voting permit isIni leved to be urTent the Board mill not defer the issue of the per-

Pending the determination of this question, but your attention1): ?ailed to the statutory prohibition so that if you are engaged in

t:n- ess °I' a type specified in the statute, you will either cease

jel - age in such business or will alter your corporate name to

sent the mords 'United States'. A copy of this letter is being

1.7,1,tt to the Federal Reserve Agent at San Francisco with specific'1-erence to this paragraph."

Approved, together with a letter dated Lovember16, 1933, to the Federal Reserve Agent at San Franciscoin accordance therewith.

Reply on November 16, 1:33, approved by five members of the


18011/20/33

-29-

441'cl, to a letter dated October 12 from Li-. Peyton, Federal Reserve

'ent at Linneapolis; the reply reading as follows:

"Receipt is acknowledged of your letter of October 12, 1933,asking two questions with respect to the application filed by North-west Bancorporation for a voting permit under authority of Section5144 of the Revised Statutes, as amended. Your letter indicatesthat the Lorthwest Bancorporation considers its application datedSeptember 21, 1933, and heretofore filed with the Board, as an ap-Plieation for a temporary voting permit only and that it contemplatesconverting this application into an application for a permanent vet-111F.; Permit. It appears to the Board's counsel that the applicationdated September 21, 1933, is an application for a permanent votingPermit, although deficient in certain respects, and that the appli-e i°n may be considered the basis for granting a full permit, pro-lylded the applicant files with the Board the additional data requiredL'oTItake it complete.h. You first ask whether the applicant need furnish, as part of Ex-1,3-bits L and N, agreements on the part of certain 'affiliates' which"av: been 'divorced' from the applicant.

A4 an illustration of the divorce of an 'affiliate' you cite, inthe second paragraph of your letter, the case of the Whalan State'ank, which, at the date of the application, is said to have beenff?-liated with the applicant by reason of the fact that a majorityOf lts directors were members of the board of the Scanlan-Habberstadtank and Trust Company of Lanesboro, Minnesota, a 'non-member state3:411134 affiliated with the northwest Lancorporation'. You state that

ilee September 22, 1933, one of the directors referred to has re-from the board of the „halan State Lank and that such bank is

tic), longer an 'affiliate' of the applicant. You do not indicate thatScanlan-liabberstad Bank and Trust Company was a subsidiary of

ta."8 aPplicant, but from other information in the Board's files, it

JPears to have occupied that status on June 30, 1933. It is assumedat it continued to occupy that status at the time of the applica-41°n and that the 'iihalan State Bank was at that time affiliated with3upsidiary of the applicant as defined in the Board's Regulation

1,7 If such was the case at the date of the application and if the-3-an State Bank is no loner either a subsidiary of the applicant

°I.:,affiliated with the applicant or with any of its subsidiaries, it-Y. not be necessary for the Lorthwest Bancorporation to submit

cur' Exhibit L, an agreement, and under Exhibit N, a consent, exe-

hjs,e:%r d by the .1-Ialan State Bank, but the additional data submitted as

lonfintda.PP n licatio on file should state that the affiliation

is not clear from the question submitted to you by the appli-

the *ether it is asking to be relieved of the burden of obtainingor‘ lt reement and consent referred to, not only from an affiliated,Jarlzation 7,hich since the date of the application has been'Lv°reede from the applicant in the manner illustrated, but also


181_

11/20/33

H.in the case of an institution TLich is affiliated with the appli-cant only by what you term 'accidental affiliation'. As used theterm appears to include an institution which, because of interlock-ing directorates or for some other reason, is 'deemed to be affili-ated' with the applicant or with some subsidiary of the applicantwithin the meaning of Regulation P. It should be borne in mindthat if such an institution is affiliated as defined in RegulationP with the applicant or any subsidiary of the applicant it must exe-cute the agreement and consent required under Exhibits L and IT eventhough it may be said to be affiliated by accident only or to haveric)t inf); to do with the business of the applicant or its group.

"Your second question relates to the possibility of eliminatingduplicatior of the exhibits heretofore filed by the applicant.12.11is would seem entirely proper since, as suggested above, the ap-Plioation filed is a deficient application for a permanent votingP7rait and since the missing data is furnished as a part of the ap-PJ-iation heretofore filed and in order to complete the same.,It is important that none of the information submitted in con-

with an application be compiled as of a date so remote from1; 0, date or dates as to wbich other information has been compiled

the Board does not obtain a fair picture of the situation whichis asked to consider. The statements heretofore submitted as

II of the application are compiled as of August 31, 1933.811 the cases of the application of the Northwest Bancorporation, theb°ard is of the opinion that if the information still to be furnished19y,the applicant is compiled as of a date not later than October 31,

it may properly be submitted as an amendment of the applica-:• on already filed, thus eliminating the necessity of duplicatingZ! exhibits furnished. If such information is compiled as of a-La ce ,8:fter October 31, 1933, it will be necessary for the applicant

nau statements under Exhibit II or to indicate changesA_ have been made in the statements in Exhibit H subsequent toL%st 31, 1933.

e understand that the applicant is now assembling the addition-of • rf°r]mtion necessary to complete its application. This should,

?urse, be filed with the Board as soon as possible. The Board'scal• -'1nrrness to consider the applic6ion already filed, if and whenforj!pired data is submitted, is dependent upon the additional in-tho'10/1 being furnished so promptly that the Board may considerthe "Plication within a reasonable time after the date as to whichto d'e'ata originally furnished was compiled. It is not necessary nowmay 84;nate the lenrth of time which, in view of an circumstances,J then be

said to be reasonable."

" the 13

Approved.

TeleCraphie reply on November 17, 1933, approved by five members

°ard, to a telegram dated Lovember 14 from Yr. Newton, Federal


I

11/20/33

Reserve tent at

-31-

San Francisco; the reply reading as follows:

uRetel Lovamber 14. On facts heretofore submitted by attorneysfor Atlas Corporation, hoard has ruled that Atlas Corporation andPacific Eastern Corporation are holding company affiliates of Ameri-can Trust Company within statutory definition and in order thatAmerican Company may vote its stock of American arust Company Atlasarid Pacific as well, as American Company must each obtain votirr; per-Init. Applicants may incorporate by reference exhibits identicalwith those contained in another application previously or concur-rent]y filed."

Approved.

Reply on Lovember 15, 1933, approved by five members of the

, to a letter dated Uovember 2 from Honorable Thomas Hewes, Assis-tr

Secretary of the Treasury, referring to the Board's letter of Sep-teraber 27, 1933, to the then Under Secretary of the Treasury concerning

ee1-41111 inecmplete Federal reserve notes of the Federal Reserve Bank of

kill4eaPolic, of the00 denomination, which had disappeared from the

of aa-ravin and Printing and had been honored by the Federal Re-

"I've l'a/lks of ilew York and Minneapolis; Mr. Hewes' letter stating thatte

°111Y manner in which the Bureau of Engraving and Printing could satis-

it13 liability for the redemption of the notes would be to place an

erit on the employees of the section from which the sheet of notes

i41)Pecxed; that many of the employees can ill afford to pay such an as-4e4nent and the Treasury Department is reluctant to impose such a penalty-X

lit employees; that under the circumstances referred to in the

letter it would appear that the presenting Federal reserve banks might

Nerly be held responsible for the notes; but that the Department will

Is°1Y 11.pon the Board's judgment in the matter, and if it is still felttlictt the Bureau should be held responsible for the notes, the Treasury


18311/20/33 -32-

4Partment will take steps to have the amount involved collected from

€tloloyees in the manner outlined above, for the relief of the Federal

rlie banks concerned. The reply read as follows:

"Your letter of November 2, relating to incomplete Federal Re-serve notes of the Federal Reserve Bank of ldnneapolis, of the ,100denomination, with counterfeit seals and serial numbers, has beencarefully considered by the Board. In view of the statements con-Lalned in your letter the Board will suggest to the Federal ReserveElnks that in the circumstances they absorb the loss on these notes.

TI.le Board feels, however, that any liability in connection with the21reulation of incomplete notes should be assumed by the TreasuryuePartment and hopes that the Treasury mill carry out the intentionexpressed in Assistant Secretary Dewey's letter of July 7, 1925, of:T151/1,s relief from Congress for incomplete Federal Reserve notes:11ch get into circulation and are subsequently presented for re-

uemPtion.”

Approved.

Letter dated November 16, 1935, to the Federal reserve agents atR11

4ederal reserve banks, approved by five reLibers of the Board, inclos-

ae°10Y of the following ruling by the Board relating to the payment

°I lilt A "-s-

4_by member banks on deposits of postal savings funds, and re-

gle2tillg that each agent brim- the ruling to the attention of all memberbojaka

111 4

his district which he may have reason to believe have an interest4.1-1

e matter:

"PAYLENT OF INTEREST ON DEPOSITS OF POSTAL SAVINGS FUNDS.

Initt:The Federal Reserve Board has received a number of inquiriesfull" respect to the question whether deposits of postal savings84,11 , subject to the provisions of the regulations of the Postalpoa ll[;e System governing the deposit of such funds in banks, are de-vi.jts en rhich interest may be paid by member banks under the pro-

of Section 19 of the Federal Reserve Act.t;ra order of the Postmaster General, dated August 30, 1933, para-syj 1 of Section 15 of the regulations of the Postal Savings

em on this subject was amended so as to read as follows:funds deposited prior to July 1, 1933, in depository banks

°r the l'ostal Savings System shall be treated as time deposits,


11/20/33

"to remain on deposit in such banks for one calendar month fromJuly 1, 1033. All funds deposited after July 1, 1033, in suchbanks shall likewise be treated as time deposits, for the periodincluding the calendar month next following the date of deposit.At the expiration of such periods and in the event that withdrawalis not made of the deposit at the end of such calendar periods bythe Board of Trustees of the Postal Savings System, then suchfunds shall be considered as having been redeposited for the suc-

ceeding calendar month; and likewise redeposited for each andevery calendar month thereafter until withdrawal is made. AllPostal-savings funds held by any qualified depository bank inexcess of the security value of its collateral shall be promptlydisposed of in accordance with the provision of Section 17 of theBanking Regulations.'The Federal Reserve Board understands that, under the provisions

of 41.,regulations amended as above quoted, the withdrawal of postal .

aaliangs funds from banks was authorized only on the first day of anycalendar month and funds not withdrawn on such day were considered

Z1 having been redeposited for another full calendar month; and alsof.11t no such funds were authorized to be withdraw' except on the11s8t day of any calendar month even though no interest was paid on

'uch deposits. It is the view of the Federal Reserve Board that de-1!"?-t5 withdrmable only under these conditions may properly be clas-'1fled, during the period in vhich the regulations in the form as

;Z:(14csIttly181%3(;)

1933, were in effect, as time deposits on which

iteClation q. id in accordance with the provisions of the Board's

.1t is understood that the paragraph of the regulations of the.0°!tal Savings System above quoted was further amended by order of4"8 Postmaster General lie. 4420, under date of October 24, 1933, so8 to read as follows:

'In compliance with rulings of the Federal Reserve Board con-cerning time deposits, and to secure uniformity of procedureamong all depository banks of the Postal Savings System, the?alendar year is divided into specific periods of not less thanthD,rty days each, with the beginning and termination dates ofsuch periods shorn, as follows:

FromJane 1

ToJan. 31

I;o. of_days. From ToJuly 31

Mo. of days31 July 1 31

rob. 1 Mar. 2 *30 or 31 Aug. 1 Aug. 31 31Lar. 3 Apr. 1 30 Sept.1 Sept. 30 30Apr. 2 Lay 1 30 Oct. 1 Oct. 31 31IdaY 2 May 31 30 1:,ov. 1 1:cov. 30 30June 1 June 30 30 Dec. 1 Dec. 31 31

*30 or 31 days, according to whether or not year is Leap Year.

411 funds deposited prior to July 1, 1933, in depository banksof the Postal Savings System shall be treated as tiro deposits,


185

11/20/33"'Ott7 A

"'

remain on deposit in such banks for the specified periodbeginning July 1, 1933. All funds deposited after July 1, 1933,in such banks shall likewise be treated as time deposits fromthe date of the deposit to and including the date of terminationof the specific period next following the period in which thedeposit is made, unless such deposit shall have been made on thefirst day of a period - in other words, the initial time periodfor deposits made subsequent to July 1, 1933, will be the periodfrom and including the date of the deposit to the expiration ofthe next succeeding specified period, unless such deposit shallhave been made on the first day of a period in which case theinitial time period will be the period from and including thedate of the deposit to and including the date of termination ofthe period in which the deposit is made. At the expiration ofsuch periods and in the event that withdrawal is not made of thedeposit by the Board of Trustees of the Postal Savings System,then such funds shall be considered as having been redepositedfor the succeeding specified period; and likewise redepositedfor each and every specified period until withdrawal is made.In accordance with the foregoing, postal-savings funds on depositIn qualified banks, the fixed time period having expired, may beWithdrawn by the Board of Trustees of the Postal Savings Systemor relinquished voluntarily by depository banks only on theflret day of a succeeding specified period: Provided, that allUnsecured postal-savings funds held by any qualified bank tothe credit of the Board of Trustees shall be subject to the pro-illsions of Section 17 of these regulations.'

e„ It is the view of the Federal Reserve Board, after careful con-of the regulations of the Postal Savings System as amended

ctober 24, 1933, that deposits withdrawable only at the times and

roter the conditions stated in the regulations as thus amended mayc: classified as time deposits on which interest may be paid in ac-noljlallce with the provisions of the Board's Regulation Q, except as

in the last paragraph hereof.tel Ihe Federal Reserve Board advised all Federal reserve banks in avisegram dated J1.11113 21, 1933 (Trans. 10. 1826) that, since the pro-

° s regarding regarding payment of interest on deposits are incorporatedze 'eotion 19 of the Federal Reserve 'let, definitions contained inte;t?on 11 of the Board's Regulation D should be considered in de-re lu-ranC, what are time deposits pending the issuance of further1141

ler1ati0n5 relating to the payment of interest on deposits and that

ez!! tank,s might continue to pay interest on time deposits in ac-

Ilaljnce with their usual practice or existinT, bona fide contractsto 1431 the hoard should issue regulations on the subject; and it is

noted that, under the provisions of Section 13 of RegulationAct'eposits of postal savings funds in banks under the terms of theer,„,°f June 25, 1910 as amended constitute time deposits. The Fed-0117- Reserve Board's Regulation Q relating to the payment of interestdePosits was adopted and made effective on August 29, 1933; and,


186

4/20/33 -35-

as above stated, the regulations of the Postal Savings System,governing the deposits of postal savings funds in banks, wereamended by order of the Postmaster General dated August 30, 1933,so that deposits subject to the conditions thereof were tine de-Posits. In the circumstances, the Federal Reserve Board offersno objection to the payment by member banks of interest on postal

?"inSs funds accruing during the period from June 16, 1933, untilAugust 30, 1033; except that no member bank, which during suchperiod may have lawfully terminated its agreement mith the Postallungs System to pay interest on deposits of postal savings funds

Payable on demand, may pay interest on such deposits payable ondemand which accrued after the effective date of the termination ofSuch agreement.s "It is to be observed that the regulations of the Postal SavingsYtem, as anended on October 24, 1933, contain the provision that'11 unsecured postal savings funds held by any qualified bank to

1:le credit of the Board of Trustees shall be subject to the provi-sl°ns of Section 17 of the regulations, which provides that anEt.r11°u21t in a qualified bank in excess of the maximum balance author-zed for such bank shall at once be returned in accordance with the

Ps!'ocedure prescribed therein to the Board of Trustees. A provisionAll.rillar in effect was included in the regulations as amended on11111 11st 30, 1933. It would appear that an amount in excess of thetrlmun balance authorized for any qualified bank is not subject to

"nditions with respect to withdrawal to which other depositsPostal savings funds are subject under the amended regulations.

2.1?h excess amounts, therefore, do not conform to the requirements:1-th respect to time deposits and must be considered deposits pay-

er on demand upon which no interest may lawfully be paid by a

ber bank."

Approved, together with a letter dated rovember18, 1033, to honorable C. L. Ellenberger, ThirdAssistant Postmaster General, approved by five mem-bers of the Board, referring to his letter of Septem-ber 12, 1033, and the Board's reply of September 21with regard to the above subject, and inclosin,: forhis information a copy of the hoard's ruling.

Reply on i.ovember 16, 1933, approved by five members of the

ilezer: a letter dated October 2 from Governor Eartin of the Federal

bank of St. Louis; the reply reading as follows:

Of Trus refers to your letter of October 2, 1933, inclosing a copy41 letter from Er. Charles R. Greal, Cashier of the First liation-

nk, Buffalo, Kentucky, and a copy of your reply.'re Creal calls attention to the fact that his bank is in con-Peti •tIon with three State banks which are paying 4 interest on


187

11/20/33-36-

"time deposits and asks whether a remedy cannot be provided in viewof the competitive advantage which will be given to those banksafter the effective date of the provisions of the Board's Regula-tion Q limiting the mount of interest which member banks may pay(3fl time deposits. Mr. Creal points out that these State banks willProbably wish to qualify for Federal Deposit Insurance and asksWhether the limitation on interest rates can be made applicable tothem as a condition of membership in the Temporary Federal DepositInsurance Fund.

"Of course, as you know, many restrictive provisions of the Foci-

Statutes which were designed to prevnt unsound or unwise prac-tices by national banks and State member banks of the Federal Re-serve System have been objected to on the ground that they placedthose banks at a competitive disadvantage with nonmenber State banks.. In the present instance, however, it would appear that the pro-

of the 'Code of Fair Competition for Bankers', approved;ctober 3, 1933, will remedy the condition to which Mr. Creal refers..DEragraph (2) of Article VIII of that Code (published in the FederalIteserye Bulletin for October, 1933, beginning with page 610) provides:

'(2) Interest.-- Subject to the rules and regulations of theIedercl Reserve Board with respect to maximum rates of interestt° be paid on time and savings deposits and the method of calcula-tion thereof, as prescribed in the Banking Act of 1933, all banksWithin groups or districts hereinbefore referred to (except in-vestment banking houses accepting deposits, which houses are sub-ject to the Code of Fair Competition for Investment Bankers)shall maintain the same maximum rates of interest and the samerrlethod of calculation thereof upon deposits of like character,but this shall not be construed to require any bank to pay suchIllaximum rates if it does not so desire. The Banking Act of 1933(sec. 11-B) provides that no bank which is a member of the Fed-ere.). Reserve .;.ystom may pay interest on demand deposits; therules and regulations provided by clearing-house associations orther groups shall contain a stipulation that no interest is toue paid by any bank (except investment banking houses acceptingjc?11°41its, which houses are subject to the Code of Fair Competi-lon for Investment Bankers) within such group, whether memberor nonmember of the Federal Reserve System, on demand deposits,Plsovided that nothing in these rules and regulations shall be incontravention of the permissive provisions of section 11-B of thenking Act of 1933.'ihe Board is not in a position to advise you as to the policy

a4.3° the Federal Deposit Insurance Corporation will adopt with re-bi':tc:d. to the payment of interest on deposits by its member banks,har, 'he portion of Li Creal's letter which relates to this matter

`) been referred to that Corporation."

Approved, together with a letter dated lovember16, 1933, also approved by five members of the Board,to the Federal Deposit Insurance Corporation in ac-cordance with the letter to Governor Martin.


-188

11/20/33-37-

Reply on I:ovamber 16, 1933, approved by five members of the

;(341.01, to a letter dated September 22 from 1.:r. J. P. "Allis, President

t The First National Bank, Guntersville, Alabama; the reply readingav)

follows:

.n eference is made to your letter of September 22, 1933, inWhich you request that the maximum rate of interest which may bead by a member bank on time deposits under the provisions of the

,.'ederal Reserve Board's Regulation Q be not made effective as toYou bank until January 1, 1934.

Under the provisions of Section 19 of the Federal Reserve Act!1.8 amended by the Bankinr,; Act of 1933, the Federal Reserve Board18 sPecifically required to limit by regulation the rate of inter-'43t 'Nhich may be paid by member banks on time deposits. The Fed-

eral Reserve Board, pursuant to this provision of law, gave verycareful consideration to the question what maximum rate of inter-!1st on time deposits should be fixed and when such maximum rate ofIlntereet should becono effective. Its Regulation Q was approved on

29, 1933, and fixed a maximum rate of interest of 3 percent13jr annum compounded semi-annually on time deposits to become effec-tive,°n November 1, 1933. lember banks were thus given ample oppor-,11iI;Y to adjust relationships with their customers with respect tor

:

e rate of interest which would lawfully be payable by them on timet P°81ts after October 31. It would not be possible for the Board•Ilake an exception to the Provisions of the regulation in favor

melqber banks and the Board regrets, therefore, it is'Luable to comply with your request in this matter."

Approved.

Letter dated lovember 17, 1933, to Governor Geery of the Federal

I've Bank. of Minneapolis, approved by five members of the Board, read-

(1.8 follow"

th,Iteference is made to :Jr. Dunlop's letter of October 17, 1933,iresEed to the Chief of the Board's Division of Bank Operations,tiloeinr, the Question whether deposits of receivers of insolvent na-

re,nalrded banks and deposits of conservators of national banks may be

-irla by a member bank in which such funds are deposited as de-of :,.,deposits 'due to banks' within the meaning of Section III(b)re Board's Regulation D.110 The Board has taken the position that a Federal reserve bank has011 .11,:thority to receive deposits from a receiver of a national bank,Ine_'flo ground that Section 6 of the Federal Reserve Act requires anber -ank, upon the appointment of a receiver, to surrender stock


189

11/20/33

"held by it in a Federal reserve bank and that, therefore, a na-tional bunk for which a receiver has been appointed can no longerbe considered a member bank within the meaning of Section 13 ofthe Federal Reserve Act, which authorizes a Federal reserve bard:to receive deposits from its member banks. If, upon its insol-vency, a national bank can no longer be regarded as a member bank,lt may be argued that it cannot be considered a bank for any other

Purpose. Furthermore, the receiver of an insolvent national bank'cads legal title to the assets of the bank as trustee for thebenefit of the bank's creditors. Accordingly, upon his appointment,tl:le bank may be said to cease to exist as a going banking organiza-tlon, and to exist only for the purpose of winding up its affairs.

On the other hand, a national bank in the hands of a conservatorMaY continue to perform characteristic banking functions. Under?ctical 206 of the Bank Conservation Act of Larch 9, 1933, as amended,lfe conservator may, under the direction of the Comptroller of the;?:•rency receive deposits and allow withdrawal of deposits on aJearated basis. Lioreover, that act authorizes the Comptroller of the,IlrrencY, in his discretion, to terminate the conservatorship and4'1'm-it the bank to resume the transaction of its business under theIll agement of its own officers. It is clear, therefore, that the ap-

tl-j.tment of a conservator contemplates not the cessation of bankinglvitios, but the conservation and protection of the bank's assets,

tdernporarily.

t, 7For the reasons above indicated, the Board is of the opinion,241, while deposits made by a conservator of a national bank mayto'42perly be considered deposits 'due to banks' within the meaning131 Regulation D, deposits made by a receiver of an insolvent national41k may not be so regarded."

rettd,_

follows:

Approved.

Letter to the Federal reserve agents at all Federal reserve banks

(;, "Reference is made to the Board's letter of October 26, 19337655), inclosing mimeographed copies of the Board's Regulation L

-crt the Board's Forms 94, 94a, and 94b, pertaining to the provi-c of Soctions 8 and 8A of the Clayton Antitrust Act, as amended.

tiz Le revision of the Board's Forms 94d and 94e was made at thatcince it seemed that those forms would be so little used as to

il""e such revision unnecessary. However, the old forms do not call

41/.1t411the information which is now required in view of the enact-of Section 8A and the revision of the Board's Regulation L;

111014, !ince it now appears that Forms 94d and 94e may be used inOf the

a few instvnces, there are inclosed six mimeographed copies

J tbi :le hoard's revised Forms 94d and 94e, which have been approvedhe

Federal Reserve Board.


190

11A0/33 _39

"It is requested that you have these forms printed in the samemanner as Forms 94, 94a, and 94b, referred to in the Board's let-ter of October 26, 1933."

Approved.

Reply on :ovember 16, 1933, approved by five members of the

13", to a telegram dated November 1 from Lr. Stevens, Federal Reserve

'exit at Chicago; the reply reading as follows:

"Reference is made to your telegram of November 1, 1933, regard-ing the applicability of Section 8A of the Clayton Antitrust Act toa director of a national bank serving as an officer or director ofa c

orporation which is not a bank, banking association, or trust"r1PanY and which occasionally makes loans secured by its own stockor which occasionally makes loans secured by stock or bond collat-eral

through the call loan market or otherwise.i 'Section SA applies to any corporation (other than a mutual sav-T2C bs-nk) 'which shall make loans secured by stock or bond collat--1, to any individual, association, partnership, or corporation"fler than its own subsidiaries'. The wording of the provisionv41.°1-11d seem to leave no room for a construction which would make it'llaPplicable to a corporation mahing loans secured by its own stock;and, for the same reason, the section is applicable to a corporation

Trakill.0 loans throurh the call loan market or otherwise on stock oruond collateral.

tiole ileleZat,he provisions of Section 8 of the Clayton Antitrust Act,Reserve Board is authorized, under certain circumstances,

issue Permits covering services of the kinds referred to in Sec-iz°11s 8 and 8.A. However, the provision of Section 8 which author-01," the Board to issue Permits refers only to banking institutionsto ?ertain classes, and the Board is, accordingly, without authoritynonTue permits involving relationships betWeen national banks andton eainC organizations which COMB within the provisions of Sec-

11,_"Referenoo has been made to the possible broad effect of a stat-tZsforbiddin_ the directors of a national bank to serve as direc-cour of other corporations making such loans, but as you are of

str1136 aware, the Federal Reserve Board is not at liberty to con-of ,? a statute in a way which would conflict with the plain meaningwords used by Con;;ress.should be noted, however, that Section 8A refers to any cor-Z:"t10/1 which 'shall make' loans of the kind described, and, in

sectirtnection, your attention is directed to paragraph (3) ofdirec,11 IV(b) of the Board's Regulation L dealing with interlockingAct. '"°ratoc and other relationships under the Clayton Antitrusttr4118,1he statute does not refer to the business which may have been

Let" by a corporation in the past, but refers only to the


191

11/2v33-40-

"lousiness currently and presently transacted after the effectivedate of the section; and, therefore, the prohibitions of Section81. are inapplicable to a director of a national bank who shallserve as a director, officer or employee of a corporation, or as avember of a partnership, which in the past has made loans securedbY Stock or bond collateral, if such corporation or partnershipshall make no loans of that character after January 1, 1934."

Approved.

There mere then presented the followinE; applications for orij.nal

or additional stock,

balliztsor for the surrender of stock, of Federal reserve

AJ-jeations for oaIGETAL Stock:Diatri,,

1 0. 1.lr‘st

Bank of Fort Fairfield, F ortPairfield,Lajne

4j013triet No. 7.Tentral ITE:Cional Bank at Battlo Creek, achioan 600

11114:4:tetn Bank of Edgerton, Edgerton,

lona]. Bank of Savanna,le flat Savanna, Illinoisi°flal Bank of Washington, 7:hington,-Lowa

Shares

Ap-4J-cations for ADDITIONAL Stock:DtIstrict 4. 5.

iOflIri-EZZIORal Bank, Bristol, Virginiaancre ase in capital, preferred)

strict 110. 9.11Per

( ior

National Bank, Hancock, lachiganIzerease in capital, ereforrod, partly°ffset -y decrease in surplus)t. ' 1 d Wisconsin

, a lonal Bank, Rhine an r ecrec.se in capital, preferred, partly

°ff3et by decrease in surplus)

Stock:

°nal ,T Bank Central Cherry Valley, N. Y.

(-114°1-vent)

36

3636

36Total

150

30

36

708744

150

84 114Total 264

36


1_92

11/20/33

0ations for SURRENDER of-

Stock;

(Con(Continued)tt National Bank, Lyons, (Continued)

(Voluntary liquidation, New York

Lyons National Bank)

Newby

Lstrict No. 3.Plrstp.

(Insolvent)lr

iTat1Ofl Bank,

at National Bank,(Insolvent)

No.liezdaton Count-Y.-National.

(Insolvent) Bank, Cleves, OhioF

lrst National Bank,

(Insolvent) Cherry Tree, Pennsylvania

ti.wt 1\0. 3.

Ircrb Bank,(I

nsolvent)

kctrict No, 7.llational Bank in Braidwood,p

(Insolvent) Illinois

Etrzors ( Nation Bank ,Cambridge, Ban,In

solvent)Cambridge, Illinois

*Ir” National Bank, Compton, Illinois,

\Insolvent) vExrziers

liational Bank, Viola,(Ins Illinois1 olvent)41'First

National Bank and Trust48.Yfle, Indiana (Insolvent) Company, Fort

`kl-aers Pirst a(Bein • Ntional Bank,

conservator)Indiana

. llquidated throughNOW Castle,

, vent)

\J.nsol iktional Bank of Earshall Go., Plymouth, Indiana

'I .t Lational Bank, ilawkeye, Iowa

'Thers liational Bank, Kingsley,

1:evir(Insolvent) Iowa

\44s (1, rional Bank, relv 4)1140

London, Iowan iat

.olvent)

Port 1,.orris, 1.01,v Jersey

Somers Point, New Jersey

Grantsville, Laryland

Approved.

Shares

120

132

60

74

150

30

24

90

21

28

1,800

180

117

13

23

26

156

192

224

30

2,327 Total 2,929


Thereupon the meeting adjourned.


19331120_minutes.pdf

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