19320701_Minutes.pdf

A meeting of the Federal Reserve Board was held on Friday, July 1,

1932, at 11:30 a. m.

PRESENT: Governor MeyerMr. HamlinMr. MillerMr. TamesMr. Magee

Mr. Morrill, SecretaryUr. McClelland, Assistant Secretary

11r. Harrison, Assistant to the Governor.

The Secretary reported that the Comptroller of the Currency today

1884ad a call on all national banks for reports of condition as at the

el°aa of business on June 30, 1932, and that, in accordance with the usual

Pl'actice, a call was made on behalf of the Federal Reserve Board on all

State member banks for reports of condition as of the same date.

The call made on behalf of the Board was

ratified.

The Board then considered and acted on the following natters:

Memorandum dated June 29, 1932, from Assistant Secretary flcClelland

Ilee°111mending that Miss Mary E. Everett, a money counter in the Division of

1se4a and Redemption who has been suffering from a serious illness and

°Peration and who has been granted thirty days sick leave and thirty days

4411ual leave which expired at the close of business June 26, 1932, be granted

4 leave of absence without pay of not to exceed sixty days beginning Tune 27,

19321 with the understanding that should she resume her duties prior to that

4te she will be returned to the payroll and that otherwise the matter will

4g4in be taken up with the Board at the expiration of the sixty day period.

Recommendation approved.

Memorandum from the Secretary dated June 30, 1932, stating that since

the appointment on January 1, 1931, of Er. A. B. Carter, formerly of the

/1°ard's staff, as a national bank examiner in the office of the Comptroller

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

7/1/32

Of the Currency,

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and his detail to the supervision of the trust activities

of national banks, all work connected with applications of national banks for

trtist powers has been handled in the part of the office of the Comptroller of

the Currency which is supervised by Mt. Garter, that Mrs. Lulu C. Richardson,

4 clerk on the Board's staff, was detailed to that office to compensate for

the Work done by Mr. Carter and his staff on behalf of the Board; and that

it is now proposed, with the approval of the Board, to transfer to the

8°ardts Division of Examinations, on or before July 5, all files and future

Work relating to the granting of trust powers to national banks, and to

transfer Mrs. Richardson to the Division of Examinations without a change in

aalary.

Transfers approved.

Telegram dated June 29, 1932, from the Chairman of the Federal Re-

aarve Bank of Boston and letter dated June 30, 1932, from the Secretary of

the Federal Reserve Bank of New York, both advising that at meetings of the

b°arde of directors on the dates stated no changes were made in the banks,

e iating schedules of rates of discount and purchase.

Without objection, noted with approval.

Telegraphic replies, approved by five members of the Board on June,

309 1932, to telegrams of that date from Deputy Governor Paddock of the

44claral Reserve Bank of Boston requesting that the Board extend to July 15,

19322 the authority previously granted to the Federal Reserve Bank of Boston

to inake advances, in accordance with the provisions of section 10(b) of the

1?ederal Reserve Act, as amended, to the Worcester Bank and Trust Company,

17°reester, Massachusetts, the Peoples National Bank, Southbridge, Massachusetts,


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Etta the Quincy Trust Company, Quincy, Eassachusetts, in the amount of

01 000 S?75,000 and :43250,000, respectively, at a rate of 5 1/25 per annum

"d Payable on demand, the replies stating that the Board extends to July

151 1932 the authority requested.

Replies unanimously approved.

Telegraphic reply, approved by five members of the Board on Tune

29) 1932, to a telegram of that date from Deputy Governor Rounds of the

liederal Reserve Bank of New York, requesting authority for the purchase from

the First National Bank, Englishtown, New Jersey, of a tax note of the

8ca'augh of Englishtown in the amount of c4,800; the reply stating that the

Eloard authorizes the purchase with the understanding that the note meets

411 requirements of Regulation E except that the population of the issuing

44icipa1ity is less than 10,000 and the amount of the note offered exceeds

25% of the outstanding warrants of the municipality.

Reply approved.

Letter, approved by five members of the Board on Tune 30, 1932, to

W. S. Broughton, Commissioner of the Public Debt of the Treasury Depart-

stating that the Federal Reserve Board has designated flr. Kenneth R.

17ereon to represent the Board in connection with the audit of the reserve

"001c. of incomplete Federal reserve notes held by the Bureau of Engraving

441 Printing, which will be made beginning today, July 1, 1932.

Designation and letter approved.

Reply, approved by six members of the Board on Tune 30, to a letter

(14ted Ilay 19, 1932, from the Federal Reserve Agent at New York, with regard

to the action of the Continental Bank and Trust Company, New York City,


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New York, on September 15, 1931, in absorbing the Straus National Bank and

Trust Company and the International Trust Company, and on December 19, 1931,

in absorbing the Industrial National Bank, all member institutions located

New York City, the reply stating that the Board has reviewed the informa-

ti°n submitted which indicates that the transactions have not resulted in

411S" material change in the general character of the assets of the Continental

Beilk and Trust Colapany or broadening in the scope of the functions exercised

by it within the meaning of the general condition under which the institution

Wa3 admitted to membership, and that the Board therefore will interpose no

Objection to the transactions.

Reply approved.

Letter to the Federal Reserve Agent at :Anneapolis with reference

to a letter dated Tune 15, 1032, from Mr. Bailey, Assistant Federal Reserve

Aeent, stating that the State Bank of Revere, Minnesota, a me: ber, con-

teMPlates changing its location to Va1nut Grove, iinnesota, which change

17°111a not involve any broadening of the functions exercised by the member

; the Board's letter stating that on the basis of the information sub-

Mittea, the Board will interpose no objection to the change. The letter also

l'equested that the agent advise the Board as to the nature of certain im-

131"°veMents in the bank,s condition upon which it is understood the approval

Or the change of location by the State Gomnissioner of Banks will be made

°°11tin:;ent, as to whether the change will result in any change in the

Co17)0rate existence of the bank which will affect its status as a member of

the Federal reserve system, and as to what amendments, if any, are made to

the bank's charter.

Letter approved.


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Letter to the Chairmen of all Federal reserve banks, except

Cleveland, approved by six members of the Board on Tune 30, 1932, inclosing,

for the information and consideration of the various Federal reserve banks,

4 eoPy of a letter dated June 25, 1932, from the Chairman of the Federal

ries erve Bank of Cleveland advising that his bank has decided to discontinue

the Practice of requiring the protest of checks for which actual payment

has not been received due to the closing of the drawee bank and which have

been treated as dishonored at the request of the indorsers under the pro-

visions of the Uniform Bank Collection Code.

Letter approved.

Reply, approved by six members of the Board on June 30, to a

letter dated June 13, 1932, from Mr. H. J. Watchorn, Bankers Trust Company,

P4tis, France, inquiring whether corporations organized under section 25(a)

0t the Federal Reserve Act are permitted by the Federal Reserve Board to do

1/°th commercial and investment banking abroad; the reply inclosing a copy

°t Regulation K and a copy of the Federal Reserve Act, and stating that the

/3c)atd, prefers that questions as to the powers which may be exercised or the

blleiriess which may be transacted by an Edge Act corporation, within the

liroitations of the law, be considered only upon the request of the corpora-

Concerned, in the light of the facts and circumstances involved in

Ita situation.

Reply approved.

Reply to a letter dated Tune 23, 1932, from the Federal Reserve

Iteellt at Dallas requesting advice as to the form of answer which should be

41acie to a request received from the Bank of Brazil that it be placed on the

''ecle.zal reserve bank's mailing list for public statements and that it be


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with two copies of the by-laws of the Federal reserve bank and of

ite internal regulations; the reply stating that there can be no objection

to Placing the Bank of Brazil on the mailing list to receive the Federal

reserve bank's monthly review of business conditions and any other public

8tateroents issued by the bank, but that the Board does not believe the Bank

Brazil should be furnished with copies of the by-laws of the Federal

reserve bank or circulars issued by it which are not ordinarily distributed

to thegeneral public. The letter also suggested that the agent night for-

Watd a copy of the Federal Reserve Act and a complete set of the Board's

teallations with the statenent that the operations of the Dallas bank are

°011ducted in, accordance therewith.

Reply approved.

Telegram to the Federal Reserve Agent at Chicago, approved by five

laell3bera of the Board on June 50, 1932, stating that in view of the except-

1°441 situation occasioning unusual demands for currency in the Chicago

district and in view of the fact that the actual margin for the system as a

Whole Prior to June 24, 1932, was at all times below :)375,000,000, and has

11c)t at any time exceeded the .-igloo,000,000 margin authorized by the Board's

letter of Lay 2, 1932, the Board ratifies the agent's action in accepting

direct obligations of the United States from the Federal Reserve Bank of

°Ilicago as collateral security for Federal reserve notes on June 24 to June

29, inclusive, in amounts exceeding those permitted by the Board's letter

°.t iatY 2, and that the Board has voted temporarily to authorize the Chicago

betbkto offer and the agent to accept as security for Federal reserve notes,

clit"t obligations of the United States at par value in such amounts as may

be absolutely necessary in view of the situation existing at the time; pro-


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however, that (1) total cash reserves and eligible Paper plus the

amount of United States securities pledged with the agent shall not at any

time exceed the amount of Federal reserve notes in circulation and the

Millimum 35c; reserve against deposits by more than .,)90,000,000, (2) the agent

shell make every effort to hold the margin as closely as possible to

c.?v0,000,000 and to bring it within that figure as soon as possible, and (3)

Unless the time is extended by the Federal Reserve Board, this authorization

17111 expire automatically at the close of business as of Tuly 9, 1932, and

thereafter the authority of the bank to pledge and of the agent to accent

clireet obligations of the United States as security for Federal reserve

/10tee will be limited as provided in the Board's letter of Iay 2, 1932.

Telegram approved.

Telegram and letter to the Governors of all Federal reserve banks

viith regard to the question raised by the Chairran of the Governors' Confe-

ence in his telegrams of Tune 20, 1932, as to whether the Federal reserve

bslike should absorb the two cent Federal tax on remittance drafts received

tl*°t1 banks in settlement for cash letter:3; the telegram stating that the

13cQra is of the ooinion that as a matter of system policy Federal reserve

b-̀ `' 4̀ should not reimburse remitting banks for the tax on remittance drafts;

th4t the tax is levied on drawers of drafts and should not be absorbed by

scleral reserve banks for the same reasons that they should not absorb any

°ther taxes levied on member or nonmember banks; that in view of the

l'easonableness of this position and the fact that the amount involved for

remitting bank is very small, the Board believes no great difficulty

84°Uld be encountered and very Levi, if any, withdrawals from the par list

11'-',A1d result if the situation is explained properly to banks raising thee


300

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question, and that the experience of one Federal reserve bank of which the

Federal ieserve Board has already been advised supports this belief. The

telegram also stated that the law and the Board's reculations reouire menber

bEtni:s to remit at Par for checks forwarded to them for collection by reserve

banks, that the latter are forbidden to receive for collection checks on

n°11menber ',)an1:s which cannot be collected at par, and that the deduction of

4 tax from remittance drafts is not a par remittance.

The letter inclosed a summary of the replies received from the

various Federal reserve banks to the Board's telegram of June 23, 1932, on

the above subject, and stated that it is not believed that it will be

necessary to issue a regulation covering the matter or that a public announce-

raent 18 desirable, but that the matter should be taken up individually with

each bank when necessary. The letter also suggested that if any bank

on deducting the amount of the tax fram its remittance drafts the

tatterould be reported to the Board ish n the case of a member bank, or the

should be removed from the par list in the case of a nonmember bank.

Telegram and letter approved.

aenort of Standing Committee dated June 29, 1932, recommending

ePProval of the following change in stock at a Federal reserve bank:

04A2.Ibion for ORIGINAL Stock: Shares

7.-e'ti°nal _lank of Bay City, VIchigan. 300

Approved.

Thereupon the meeting adjourned.

APproved:

Or.


19320701_Minutes.pdf

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