19400229_Minutes.pdf

316

A meeting of the Board of Governors of the Federal Reserve

Srstelift was held in Washington on Thursday, February 29, 1940, at

11:30 a.m.

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. SzymczakMr. McKeeMr. DavisMr. Draper

?eder41 Reserve System held on February 27, 1940, were approved unani-

trIc)ilsky-.

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

The action stated with respect to each of the matters herein-

fter referred to was taken by the Board:

The minutes of the meeting of the Board of Governors of the

Telegram dated February 28, 1940, to the Chairman of the Fed-

Reserve Bank of Dallas, stating that the Board approved bonds,eah •

the amount of 10,000, executed under date of January 22, 1940,4ea

31'8' James Hansel Merritt as Federal Reserve Agent, Charlesclitto

Hall as Assistant Federal Reserve Agent, Emmett Albert Thaxtonaakite

Illate Assistant Federal Reserve Agent, and Grover ClevelandT'ova James Reed, and Clement Paul Gowland as Federal ReserveEkeerit,a Representatives, all at the Federal Reserve Bank of Dallas.

Approved unanimously.

Letter to Mr. Gidney, Vice President of the Federal Reserve

New York, reading as follows:

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

317

2/29/40-2-

"'Reference is made to Mr. Dillistin's letter ofFebruary 5, 1940, to President Mindnich of the FederalTrust Company, Newark, New Jersey, with respect to thestrengthening of the bank's capital position.

"It is observed that no definite plan has been de-veloped as yet which contemplates the introduction ofadditional capital and that the prevailing opinionWong the members of the bank's boar: of directors ap-Pears to be that a better capital structure will begradually attained by a continuation of the general1111Provement of the bank's condition.

"The Board's letter to you of October 18, 1938,referred to the inadeouacy of the bank's cPpital struc-Ure and asked that your office continue its efforts to'lave the bank introduce adiitinnal funds. It is dis-

tUrbing to note that the directors have not as yet taken114Y action to effect an increase in the capital of the?enk but apparently are hoping that general improvement11)11 the condition of the bank over a period of time willZing about a gradual increase in the bank's capital.'Ile seeming unwillingnes:3 of the management to presentEt1,_definite plan for the introduction of new capital toano Reconstruction Finance Corporation for its consider-

is particularly disturbing in view of the negoti-ons which have taken place between the bank's manEge-

'4ent and the Corporation."The Board hopes that, as stated in Mr. Dillistin's

letter to President Mindnich, there is no implication thathis .ad irectors are inclined to drop the matter of obtaining,.ional capital. It is felt that the important place

juich the Federal Trust Company occupies in Newark, thetl ge aggregate of assets of a fixed nature held by ittl,m the lack of expectation based upon the operations for

last five years that the capital structure may be builtrrom earnings within a reasonable period of time all war-

orlat and place upon the directors the duty and responsibilityturdeveloping definite plans to strengthen the capital struc-

e of the institution without undue delay.ror "It will be appreciated if you will continue your ef-th ta to have the bank provide additional capital, keeping6 Board advised of developments in this connection."


Letter to Mr. McLarin, First Vice President of the Federalrve'Ilk of Atlanta, reading as follows:


318

2/29/40 -3-

"This refers to your letter of Februry 20 inWhich you steted that you had received a letter fromMr. Edward Ball, president of Florida National Group,Inc., informing you thet you may expect to receivethe holding company affiliate's report on Form F.R.437 by March 15. As steted on page 1 of Form F.R.437, the annual rpports are requested for the infor-Illation of the Boerd in connection with the generalZ"ing permits held by holding company affiliates.he Board desires to have the requested information

418 current as practicable, and for that reason it wasrequested that the reports be filed with the FederalReserve banks not later then Februery 1, 1940. It isrecognized, of course, that the holding company affili-ate and other organizations in the group must have areasonable amount of time to compile properly from

neir books and records the informetion requested,

Vet it does not seem thet it should be necessary tolaY filing the holding company affiliete'e report

Until March 15.

b "It is noted that; the reports filed in the past

y ,u ilorida National Groue, Inc., have been accompanied'Y a considerable amount of detailed information re-

Various nonbanking organizations in the group.oue question is raised as to whether some of these

jglInizations might be considered as coming withinj.',Le exception steted in item 8 on page 9 of Form F.R.

referring to organizations which are not signifi-f t in relation to the group with respect to either'0'.) investments in or advances to such organizations,41' (2) their functions. You will note that, in con-

on with any organizations which may properly bea!garded as coming within that (reception, only balanceelleets or trial balances ae of the end of the holdingrniPanY affiliate's fiscal year need be submitted, thus0-41cing the burden upon or inconvenience to the holding°111PanY effiliete in completing its report to the Board.

the "It is suggested also that it might be feasible for

r:e holding company affiliate to file immedietely its

13Z,.. °rt on Form F.R.437, exclusive of the reports or

ri ence sheets of the affiliated nonbanking organizations,

the to submit the complete reports or balance sheets, as

eq.! cases may require, of such other organizations as soonerwerd as may be practicable.

Please advise Florida National Group, Inc., accord-



319

2129/4o -4-

Revised memorandum dated February 27, 1940, prepared in

4"°rdance with the action taken at the meeting of the Board on

that ,'ate, for use in advising the Securities and Exchange Corn-

188104 of the Board's comments on proposed legislation relating

to iAlrestmont trusts which was being prepared by the Securities

44 ellange Commission, and reading as follows:

"That companies, including investment trusts,

nioh are bank holding companies under the defini-°-°ns in the Banking Act of 1933 and which obtain72ting permits should not be subjected to additional"gUlation by another governmental agency.

bidA4 "The Reserve Board sees no objection to for-

„--AJ-ng the creation of any additional interlocking."lrecterships between banks and investment trusts.

"The Board feels that if recommendations areto be made to Congress as to modifications in the

:liating Bank Holding Company Act, they should bein hearings under the pending Wagner Resolution

11' in some other over-all study of banking legis-21tion and not in connection with the pronosed in-vestment trust legislation.

"Without having an opportunity to review theeomP-Lete text of the pr000sed investment trust legis-on, these views must be considered as tentativethn final; and the Board will feel free to

m:4113 eug,3estions to Congress regarding the invest-trust legislation after such legislation is

t tl'oduced, if the submission of any such sugges-°Ila by the Board should become appropriate.”

iieuerv


Letter to Mr. Hitt, First Vice President of the Feder-

e Bank of St. Louis, reading as follows:

24 "Reference is made to your letter of Januarywh' 1940, with enclosures, presenting the questionE416'at_her the following communities are "adjacent" to(5 1. other within the meaning of exception numbered

of section 8 of the Clayton Act:


2/29/40

320

"(1) Wood River and Alton, Illinois(2) Alton and East Alton, Illinois(3) National Stockyards, Illinois, and

University City, Missouri(4) St. Louis, Missouri, and an unincor-

porated and unnamed area about sixblocks beyond the corporate lirlitsof St. Louis, in which area theGravois Bank of St. Louis Countyis situated.

(5) St. Louis, Missouri, and an unincor-porated area known as Wellston,Missouri

(6) St. Louis and Normandy, Missouri"It is understood that in a discussion of the

Zatter With a member of the Board's staff at the timeOf the recent Examiners' Conference you were of the?Pinion that the communities respectively enumerated'11 items (1), (2), and (3) above should not be re-garded as "adjacent", whereas the communities enumer-r4;Ited in items (4) and (5) above should be so regarded.n the basis of the information submitted in your letter'here appears to be no reason to reach a different con-

With respect to these situations, particularly44 view of your knowledge of the communities in question.1, "With respect to St. Louis and Normandy, Missouri,

7vever, the Board is not in a position to reach anyt°11clusion on the basis of the limited information con-lined in your letter. The question whether two com-w1174-̀ ties are adjacent usually presents no difficultiese','Elre the communities in question are far apart, veryClose

together, or separated by distinct obstacles toth"sPortation, business intercourse, etc., but where

question is whether two communities "are locatede, ,8_11ch close proxiplity and are so readily accessible tot;ca other as to be in practical effect e single city,er1/11, or village," it is necessary to give full consid-tani°n to all pertinent facts. No doubt the necessary

ue are available if not already known to you and it ispo'

x448811110 that the situation as regards St. Louis and Nor-111,4d5r is comparable to other situctions which you haveteelviously determined, on the basis of which you can de-

the pending question. However, if you still de-Ilene a ruling by the Board on this question, it will be-essarY for you to submit detailed facts together withatatement of your views regarding the situation."



Thereupon the meeting adjourned.


19400229_Minutes.pdf

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