19370310_Minutes.pdf

375

A meeting of the Board of Governors of the Federal Reserve S:Ts-

tela was held in Washington on Wednesday, March 10, 1937, at 11:30 a. m.

PRESENT: Mr. Eccles, ChairmanMr. Szymczak

Mr. Bethea, Assistant SecretaryMr. Carpenter, Assistant SecretaryMr. Clayton, Assistant to the Chairman

Consideration was given to each of the matters hereinafter re-ter, ,'ea to and the action stated with respect thereto was taken by the

Board:

Telegrams to Mr. Powell, Secretary of the Federal Reserve BankOf mi

nneaPolis, Mr. McKinney, President of the Federal Reserve Bank of-4alae

8' and Mr. Sargent, Secretary of the Federal Reserve Bank of SanPratic.

isCO, stating that the Board approves the establishment without

"Etlige by the Minneapolis bank on March 8, the San Francisco bank onItTaret

9 end by the Dallas bank on March 10, 1937, of the rates of dis-

t-"u Purchase in its existing schedule.

Approved unanimously.

Letter dated March 9, 1937, to Mr. Young, President of the Fed-NI Ileserve Bank of Boston, reading as follows:

3 134,1 "This will acknowledge receipt of your letter of March

err ,-,ng of the action of your directors who voted that,he ective April 1, Mr. Sohn T. Fogg, an employee of your bank,re ,PPointed Auditor to succeed Mr. Harry F. Currier, who willal,t1ra on March 31, 1937. It is noted that, subject to therl'Proval of the Board of Governors, Mr. Fogg's salary has been

orld 7 at the rate of :t",5,000 per annum, which is an increase'20 over his present salary.45,0, The Board approves payment of salary at the rate ofbe, `,4 Per annum to Mr. Fogg for the period April 1 to Decem-'L 61, 1937".


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

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Telegram dated March 3, 1937, to Mr. Young, President of thePeaer

a-L Reserve Bank of Boston, referring to the application of "The

S°11thin +--gvon Bank and Trust Company", Southington, Connecticut, for per-

t118810/1 to withdraw immediately from membership in the Federal ReserveSYstem

-1 and statinv that the Board waives the usual requirement of sixk0th s notice of intention to withdraw, and that, accordingly, upon sur-Nuie

r of the Federal reserve bank stock issued to The Southington Bank

114"rlIst Company, the Federal Reserve Bank of Boston is authorized to

eirleel such stock and make appropriate refund thereon. The telegram

t118° stated that it was understood that the bank desired to continue as

t1414sured bank without interruption and it was assumed, therefore,t4tit

the termination of its membership in the System would be deferred

4" it could simultaneously be accepted by the Federal Deposit In-

Corporation as R nonmember insured bank.

Approved unanimously, together with aletter to Mr. Leo T. Crowley, Chairman ofthe Federal Deposit Insurance Corporation,reading as follows:

193 "Receipt is acknowledaed of your letter dated March 3,so 7 with respect to 'The Southingtin Bank and Trust Company',oruthington, Connecticut. The Board has likewise been informedti the bank's desire to withdraw from membership but to con-

Tille without interruption its status as an insured bank.Of "In accordance with the provisions of subsection (k) (2)ro,section 12B of the Federal Reserve Act, the Board, there-

hereby grants written consent for examiners for thein eral Deposit Insurance Corporation to examine The South-

Bank and Trust Company, Southington, Connecticut, ini,lIncetion with its application for continuation of deposit",stirance as a nonmember bank."

Telegram dated March 6, 1937, to Mr. Hamilton, President of the


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l'ederal Reserve Bank of Kansas City, reading as follows:

"Betel March 4, 1936 submitting request of 'CommerceTrust Company', Kansas City, Missouri, for permission toassume deposit liabilities of East Side Bank of Commerce,Xensas City, Missouri.

"The Board has noted your opinion that, in view of theCharacter of the assets to be acquired and the relative sizeof the two banks, the transaction will not involve anyraEtterial change in the assets or the scope of the powers ex-ercised by the member bank. In view of the circumstances,tile Board likewise does not regard the transaction as comingWithin the scope of general condition of membership numberedunder which the bank was admitted to membership, and the

0q3Proval of the Board to the transaction is, therefore, notrequired."It is assumed that the East Side Bank of Commerce is

:ware of the provisions of Section 12B (i) (4) of the Fed-Reserve Act relating to the termination of the insurance

bn its deposits; however, it may be advisable to call the,!nk's attention to the provisions of such section in orderV1ht instructions may be obtained frora the Federal Deposit?surance Corporation relative to the procedure to be taken° terminate the insured status of the nonmember bank."


Letter dated March 6, 1937, to Mr. Leo T. Crowley, Chairman, Fed-'be

Posit Insurance Corporation, reading as follows:

28 "The situation referred to in your letter of January' 1937, regarding the 'Camden Safe Deposit and Trust Corn-

Camden, New Iarsey, has been discussed by representa-Nici'16,of the Board's Division of Examinations with Mr.

and other representatives of the Division of Exam-ion of your Corporation. It is understood from such

r-'0 0ussions that the request for permission for examinersthe Federal Deposit Insurance Corporation to examine1;1,1Z State member bank is not to be regarded as a precedent

yo that it is due simply to the local situation and thatCorporation feels that it is decidedly in its interest

4vObtain the collective picture of three banks in Camden byexaminers for the Corporation participate in the ex-

-luizlation of all three banks.(2) "In accordance with the provisions of subsection (k)the °I section 12B of the Federal Reserve Act, therefore,

114°&rd hereby grants written consent for examiners for


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“the Federal Deposit Insurance Corporation to participate withthe examiners for the Federal Reserve Bank of Philadelphia inthe next examination of the Camden Safe Deposit and TrustCompany.”


Letter dated March 6, 1937, to Mr. Gidney, Vice President of the

ecleral Reserve Bank of New York, reading as follows:

"Receipt is acknowledged of your letter of February 13,1937) advising that at the meeting on February 11, the direc-tors of the Federal Reserve Bank voted to hold the applica-tion of the Trust Company of New Jersey, Jersey City, NewerseY, for membership in the Federal Reserve System in abey-ence until the report of the next examination of the trustrrIPany becomes available, unless it should sooner appear6-alit the earning capacity of the trust company has improvedmaterially.

which"It has been noted that the examination of the bank, inYour examiners participated, in connection with the

bank's application for membership was as of July 15, 1936,t;11' that you expect that an examination can be arranged ine near future in cooperation with the State Banking De-varticnt and the Federal Deposit Insurance Corporation."


Letter dated March 6, 1937, to Mr. Gidney, Vice President of the?erl

'4* Tleserve Bank of New York, reading as follows:

and"From the report of examination of the 'Bank of New York

'19, T rust Company', New York, New York, as of September 18,(„26, it has been noted that in November 1935 the bank pur-Znased for $73,600 a building and lot at 22 East 63rd Street

Ile used as a branch site, carrying the investment in bankthrliaes. It appears, however, that the Board's approval of1,4 transaction under the provisions of Section 24A of theau eral Reserve Act has not been requested or granted, andinch action is necessary inasmuch as the bank's investmentit bank premises, amounting to $7,494,100, is in excess of

e capital stock of $6,000,000.iP6 0 While the capital stock of the institution amounts to

a net capital account of over $23,000,000 is re-in the report of examination, and the bank is reported


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"to be in good condition, under capable management, and in! liquid position. The additional investment in bank prem-ises is relatively mall and does not appear to be in viola--,1(3n of the spirit and purpose of the Federal Reserve Act.in view of the circumstances, therefore, and in order thatthere may be no question raised in the future as to compliancewith the provisions of Section 24A the Board approves theinvestment in question."

the p

the


Letter dated March 6, 1937, to Mr. Fletcher, Vice President of

ederal Reserve Bank of Cleveland, reading as follows:

"Reference is made to your letter of February 18, 1937,1;iegardirw the increase in investment in banking premises by

he Lorain Street Bank', Cleveland, Ohio, through the re-ent Purchase of the property occupied by its Lakewood branch4Or e consideration of 80,000.

"In view of all the circumstances surrounding the pur-Vlase of this property and the fact that, in your opinion,,;are was no intent on the part of the bank to disregard con-'iltion of membership numbered 8 through making the invest-leht without first submitting; the matter to the Board forcd°nsideration as required under the provisions of the con-ition, the Board will interpose no objection to such invest-ant Provided the total investment in banking premises will

11°t be in excess of the limitations prescribed by State law."It is suggested that, if you have not already done so,

u acquaint the bank with the Board's views which are known'° You with respect to making adequate provision for depre-ciation in banking quarters owned."


Letter dated March 9, 1937, to Mr. Clark, Vice President of

liederal Reserve Bank of Atlanta, reading as follows:

"Reference is made of your letter of February 6, 1937,in regard to the exercise of trust powers by the Farmers

13anict , of Pelham, Pelham, Georgia, without having first ob-s!Ined the permission of the Board in accordance with its1°-called general condition of membership, which requires,

41 Part, that except with the approval of the Board theree!'11 be no change in the general character of the bank'sti78ets or broadening in the functions exercised by it, such

will tend to affect materially the standard maintained


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"at the time of its admission to membership and required asa condition of membership.

"The report of examination of the bank as of January 2,1937, shows that the bank is acting as executor of an estate

d is therefore exercising trust functions to that extent.the report also shows that this is the only instance in whichthe bank has acted in a fiduciary capacity since it was ad-zitted to membership in 1923. The Board has heretofore taken

position that the exercise of trust powers by a State mem-par bank constitutes a broadening of its functions within theMeaning of this condition, and, since the State bank was not3/c'erc1sing trust powers at the time of its admission to mem-,ershiP, it should have obtained permission of the Board be-'Ore exercising its trust powers.

"In the circumstances, the Board will raise no objec-ti on to the Farmers Bank of Pelham acting as executor of the:Ile account it now holds, but if such bank contemplates ex-4,feising trust powers in other instances it should obtain

permission of the Board before doing so. Please advisehe bank accordingly."

ec'11).Ein


Letter dated March 8, 1937, to the "First National Bank and Trust

Of Middletown", Middletown, New York, reading as follows:

193 "This refers to the resolution adopted on December 30,-) by the board of directors of your bank signifying thebank;

desire to surrender its right to exercise the trust13(1°16ars which have heretofore been granted to it by the Fed-

the Reserve Board, now known as the Board of novernors of

Federal Reserve System.or "The Board understands that your bank has been discharged

otherwise properly relieved in accordance with the law of

V-1 of its duties as fiduciary. The Board, therefore, hasV-1et formal certificate to your bank certifying that it

i)ov no longer authorized to exercise any of the fiduciarypeci'ers covered by the provisions of section 11(k) of theci eral Reserve Act, as amended.'

This certificate is in-°sed herewith.

ra , "In this connection, your attention is called to theorc that, under the provisions of section 11(k) of the Fed-beeneserve Act, as amended, when such a certificate hassy issued by the Board of Governors of the Federal Reserves,, t.anl to a national bank, such bank (1) shall no longer be4""Ject to the provisions of section 11(k) of the Federal Re-

1"7e Act or the regulations of the Board of Governors of


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the

-7-

"the Federal Reserve System made pursuant thereto, (2) shallbe entitled to have returned to it any securities which itmaY have deposited with the State or similar authorities forthe Protection of private or court trusts, and (3) shall notexercise any of the powers covered by section 11(k) of theFederal Reserve Act except with the permission of the Boardof Governors of the Federal Reserve System."

Approved unanimously, together witha letter to Mr. Dillistin, AssistantVice President of the Federal ReserveBank of New York, reading as follows:

"This refers to previous correspondence relating to thedesire of'First National Bank and Trust Company of Taddle-tc3wn', Middletown, New York, to surrender its right to exer-cise trust powers.

"It is understood from advices received from the officeOf the Comptroller of the Currency that First National Bankelid Trust Company of Middletown has been discharged or other-wise properly relieved, in accordance with the law, of allof its duties as fiduciary.

be "It appears that the words 'and Trust Company' have not

4 en eliminated from the title of the bank as required by sec-;011 16(b) of Regulation F. However, the bank has been in-?.clUidation since 1931 and, in the circumstances, it appearsrlet to require a change in the name of the bank would in-,?lve unnecessary inconvenience and hardship. Accordingly,ne Board has waived compliance with the pertinent provisions

Regulation F.ti "Accordingly, the Board has today issued to First NEL-th°nal Bank and Trust Company of Middletown a certificate tot,.e effect that the bank is no longer authorized to exercisea"'t_Ist powers, and a copy of such certificate, together with'oPY of the Board's letter to the bank, is inclosed here-with vi

Letter dated March 6, 1937, to Mr. Sargent, Vice President of

l'edel'al Reserve Bank of San Francisco, reading as follows:

"This refers to your letter of January 25, 1937, inclos-of, a letter from the Superintendent of Banks of the Stateciit?regon with respect to the publication of reports of con-?, '°11 of State member banks in accordance with the Board'stl',1'11 105e and the acceptance of such published statements byState bankin5f, department. It is noted that the Stateliking department feels that the manner in which the capital


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tt,1 c01-Int is set up under Item 31 of the Board's Forms 105 and;Ze 'does not permit the proper reporting of capital debentures,:101 under Oregon laws do not affect the actual amount of com-7)11 stock outstanding but operate to reduce the stockholders,quitY therein', end that the department suggests a somewhat dif-'erent set-up to accomplish the desired purpose.ba The Board will interpose no objection if the three State

111c members in Oregon which have capital debentures outstandingtheir capital accounts on Forms 105 and 105e in the manner;4130sed by the State b'enking department provided that it is also

etac:,,21ear that the reported amount of surplus represents the011 s'"6 of surplus if no account is taken of the bank's liabilitytilecaPital debentures outstanding. This may be accomplished alongbe V,nerel lines indicated by the Board's letter X-9379 of Novem-bero") 1935, by amending the caption 'Surplus' to read 'SurplustQ. Ise Provision for capital debentures'. In such event, the capi-kto_account as of December 31, 1936 of the E. G. iounE 8c, Companyert:1 Oaklend, Oregon, for example, would be shown as follows,ere eliminating the capital account sub-items for which no amountsl'ePorted and which, accordingly, do not have to be published:

4Pitel notes and debentures sold to Reconstruc-tion Finance Corporation *(00,000) ) .50,000eialraon stock, 500 shares, par ;100 per share111,"lus before providing for capital debentures4,1ivided 15,000profits 6,731.71

Tc48.1 capital account (*Includes capital debentures) $71,7:7:1.71"


Letter dated March 6, 1937, to Mr. Hamilton, President of the Federal

Ilk of Kansas City, reading Ps follows:

teeti ftleference is made to Mr. Helm's letter of February 2 in con-With deficiencies in reserves of the Security National Bank,Dert-4-; Nebraska, during the semi-monthly reserve computationzkat%8 ended on December 31, 1936 and January 15, 1937, which re-ti e' in the assessment of penalties of e4.49 and $,3.07, respec-/!el3r.

4eri-t:rt is noted that notice of an increase in reserve require-c)1 Thie,,IIPPa1ent1y did not come to the attention of the appropriateNh-r of the member bank, because of the fact that your addresso-le list had not been changed so as to show the name of,•11.et1111---r officer designated to receive such mail. In view of these',4[1t, ;lances and of the action of the Executive Committee of your`rel..1,Z“cle Board of Governors authorizes the waiver of the penaltiesto.”



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Letter dated March 6, 1937, to Mr. Day, President of the Federal

"erve Bakn of San Francisco, reading as follows:

"Reference is made to your letter of February 19 in re-to recent changes in territory assigned to the Bead Of-

fice and the Portland, Seattle and Spokane branches of yourbatik, and inclosing a map showing the territory assigned toe"h of the above mentioned branches.

"The Board of Governors of the Federal Reserve System!PProves the assignment of territory to the Bead Office and;he Portland, Seattle and Spokane branches of your bank as°110wa, effective as of Sanuary 18, 1937:

I.12.9.1-2SILERCalifornia -- The following Counties:

AlamedaAlpineAmadorButteCalaverasColusaContra CostaDel NorteEldoradoFresnoGlennHumboldt

Nevada -- TheChurchillDouglasEsmeraldaEureka

"I'attl!IT1214.1n1aL

KernKingsLakeLassenMaderaMannMarioosaM.endocinoMercedModocMonoMonterey

NapaNevadaPlacerPlumesSacramentoSan BenitoSan FranciscoSan JoaquinSan Luis ObispoSan MateoSanta ClaraSanta Cruz

following Counties:HumboldtLanderLyonMineral

NyeOrmsbyPershingStorey

ShastaSierraSiski youSolanoSonomaStanislausSutterTehamaTrinityTulareTuolumneYbloYuba

Washoe

The entire State of Oregon, and the town of Ilwaco and the4'°110wing five counties in the State of Washington:Clark Cowlitz Klickitat Skamania Wahkiakum

SeEtttl

The entire State of Washington except the city of Spokane,

Pich is affiliated with the Spokane Branch, and the town oflwaco and the following five counties, which are affiliatedwith the Portland Branch:Clark Cowlitz Klickitat Skamania ':,ahkiakum

4180, the following counties in the State of Idaho:

Benewah Bonner Boundary Clearwater Idaho1Cooten8i Latah Lewis Nez Perce Shoshone


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2:aa(Alsalt2Eanch

The city of Spokane."


Letter dated March 9, 1937, to Mr. Leach, President of the Fed-

Reserve Bank of Richmond, prepared for the signature of Chairmantecles

) and reading as follows:

"Under the procedure now in effect, as you know,requisitions for the transfer of funds from the accountt Your ban% known as 'Board of Governors of the Federalleserve System--Special Fund' to the account 'Board of°vernors of the Federal Reserve System--Fiscal Agent'and requisitions for the transfer of funds from the ac-

runt known as 'Board of Governors of the Federal Reserve,Pten--Building Account' to 'Board of Governors of the'ederal Reserve System--Fiscal Agent Building Account'el'e made by the Chairman, the Vice Chair_aan or some otherMember of the Board, and are also signed by the Secretary" en Assistant Secretary.

"As one of the steps in relieving the Chairman and1?„!her members of the Board of merely routine matters, the1-t;u41rd has decided to change the procedure in this respectsrld hereafter requisitions for the transfers of funds de-lacribed in the preceding paragraph will bear only one eig-Blitlire--that of one of the members of the Board or of the10°Eird's Secretary, it being expected that ordinarily theera's Secretary will sign such requisitions."


Telegram dated March 9, 1937, to Mr. Stewart, Assistant Vice

1::eitlellt of the Federal Reserve Bank of St. Louis, stating that theJone.rd. orrers

hoiciers no objection to the issuance as a report to the stock-

of the Federal Reserve Bank of St. Louis of the statements sub-tIttted with . rr

4 Stewart's letter of March 3, and that the last sentence

7 the 8°erd's telegram of January 26, 1937, requesting that reports to

qoekholders be submitted to the Board for review before publication


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IPPlied only to reports to stockholders which included an annual review

cn economic developments.


Letter dated March 9, 1937, to Mr. Walter W. Smith, President of

the Pederal Advisory Council, prepared for the signature of Chairman

-') and reading as follows:

"Receipt is acknowledged of /our letter of February 26,1937) and its inclosure, expressing the views of the FederalAdvisory Counbil concerning certain of the proposed amendmentsto the Bankruptcy Act contained in a bill (H.R.12889) introducedby Representative Chandler at the last session of Congress.

"While, in certain respects, the pertinent provisionsOf the bill are somewhat ambiguous, the proposal obviouslywoulddeprive banks of substantial rights which they now have

respect to the set-off of deposits against loans. Such'legislation would, of course, be of concern to banks and, while,t is urged that the existing law gives banks an unfair advantagejer other creditors, the Proposal must also be considered in

e light of the public interest in view of its possible ef-fect on the extension of credit by banks and the continued con-duet of normal business transactions by persons who are in'lnancial difficulties."1 understand the bill has not been re-introduced at thePlies ent session of Congress and is not now pending, although IZIadvised that it is being given further study and will be

r oduced in a revised form at some later date. I am not in-as to whether it is expected that the Provisions referredO

above will be changed in the revised bill.pe, "1 appreciate your furnishing me with the views of theeral Advisory Council with respect to this matter and theywill be carefully borne in mind in the event occasion arises

04-14 expression of my views or those of the Board on thesklbject.”


Thereupon the meeting adjoi4,

Assistant Secretary.

Chairman.


19370310_Minutes.pdf

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