19320401_Minutes.pdf

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A meeting of the Federal Reserve Board was held in the office of

the Federal Reserve Board on Friday, April 1, 1932, at 11:40 a. Pl.

PILZ12;T: Governor MeyerHamlin

Lir.llerMr. JamesUr. Magee

Mr. Morrill, Secretary

Hr. Harrison, Assistant to the Governor.

The following matters of business were considered and acted upon

by the Board:

Application of the Citizens National Bank, Brownwood, Texas, for the

surrender of 120 shares of stock of the Federal Reserve Bank of Dallas, the

application having been approved by three members of the Board on /larch 31,

1932.

Approved.

Letter dated March 31, 1932, from the Secretary of the Federal Re-

serve Bank of New York advising that the Board of Directors, at its meeting

on that date, made no change in the bank's existing schedule of rates of

discount and purchase.

4ithout objection, noted with approval.

Letters dated March 25, 1032, from the Secretary of the Federal Re-

serve Bank of Kansas City and the Chairman of the Federal Reserve Bank of

Dallas, and telegrams dated March 26, 1932, from the Secretary of the Fed-

eral Reserve Bank ofianneapolis and IIarch 29, 1932, from the Chairman of

the Federal Reserve Bank of San Francisco, all advising of the establishment

on the dates stated of the schedule of buying rates on bankers' acceptances

made effective at the Federal Reserve Bank of New York on Larch 25, 1932;

the Federal Reserve Banks of Minneapolis, Dallas and San Francisco also

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

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report in-; the establishment of a rate of 2 1/24; for the purchase of bankers'

acceptances under agreement to resell, and the Federal Reserve Bank of

Minneapolis reporting a rate of 3c,; for Purchases of trade acceptances.

Without objection, noted with approval.

Letter dated 1:arch 26, 1932, from the Comptroller of the Currency

recommending approval of a salary at the rate of .)3,000 per annum for 17r.

James C. Bina, recently reappointed a National Bank Examiner and assigned to

the Third Federal Reserve District.

Salary approved.

Bond in the amount of50,000, executed on March 18, 1932, by

A. T. Hibbard as Acting -"Assistant Federal Reserve Agent of the Federal Re-

serve Bank of Minneapolis.

Bond approved.

Reports of the Committee on Salaries and Lxpenditures recommending

approval of changes in the personnel classification plans of Federal reserve

banks, as follows:

St. Louis - The creation at the head office of a new

department to be called the "Collateral and

Collection, Reconstruction Finance Corporation

Department", and the creation in that depart-

ment of nine new positions.

The creation of two new positions in the

Collateral and Custody Department of the head

office.

The creation of the new position of "Clerk" in

the Collateral and Custody and Fiscal Agency

Department of the Memphis branch.

Kansas City - Decreasesin the salary ranges for three

positions in the Provision of Space-Building

Department of the bank.


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Dallas The creation of the new position of "Manager"

in the Reconstruction Finance CorporationDepartment of the bank.

Recommendat ions approved.

Reply to a letter dated March 24, 1932, from Assistant Deputy

Governor Yetterstrom of the Federal Reserve Bank of Chicago, requesting

approval by the Board of the payment to Stephens and Thor/tell, Clarinda, Iowa,

of :.,275.05 covering attorneys' fees and expenses in connection with services

rendered by them in three suits against the Federal reserve bank; the reply

stating that the Federal Reserve Board approves the payment referred to.

Reply approved.

Reply, approved by five members of the Board on. flarch 30, 1932, to

a letter dated I:arch 25, 1932, from the Chairman of the Federal Reserve Bank

of Cleveland advising of an arrangement under which lir. E. T. Fleming,

Deputy Governor of the bank, will also serve as Manager of the Cleveland

Agency of the Reconstruction Finance Corporation, his compensation for his

services to the Corporation to be at the rate of 40,000 per annum, and

stating that during the period of the arrangement, the Federal Reserve Bank

of Cleveland, with the approval of the Board of Directors of the bank, will

pay the balance of ..8,000 of Tr. Fleming's present salary of :118,000; the

reply stating that the Federal Reserve Board approves the payment to Mr.

Fleming by the Federal Reserve Bank of the salary stated during the 'period

of the arrangement.

Reply approved.

Reply, approved by five merbers of the Board on iarch 31, to a

letter dated March 17, 1932, from the Chairman of the Federal Reserve Bank

of San Francisco stating that the Board of Directors of the bank had voted to


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accept compensation from the Reconstruction Finance Corporation for the

services being rendered to the Corporation by certain officers of the bank;

the reply stating that the Board approves the arrangement made with the

Corporation, it being the understanding that the salaries of the employees

involved will be paid in full by the Federal reserve bank, and that reimr-

bursement will be obtained monthly from the Reconstruction Finance

Corporation, as follows:

William A. Day (:)10,000W. L. Partner 4,000Fred C. Bold 3,000R. B. West 4,000C. R. Shaw 4,000D. L. Davis 4,000

Reply approved.

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

29, to a telegram dated Ilarch 28, 1932, from Deputy Governor Rounds of the

Federal Reserve Bank of /Jew York requesting authority to purchase from the

Bank of Depew, New York, a tax note of the Village of Depew in the amount

Of .)30,000; the reply stating that the Board authorizes the purchase with the

understanding that the note meets all requirements of Regulation E, except

as to the population of the issuing municipality and that the amount of the

note exceeds 25,7, of the total amount of outstanding warrants of the

municipality.

Reply approved.

Telegraphic reply to a wire dated raIrch 31, 1932, from Deputy

Governor Rounds of the Federal Reserve Bank of New York requesting authority

for the purchase by the New York bank from the Bank of Nutley, New Jersey,

of 45,000 of tax anticipation notes of the Town of Eutley; the reply stating


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that the Board authorizes the Purchase with the understanding that the notes

meet all requirements of Regulation E, except that the net funded indebtedness

Of the municipality exceeds 10% of the valuation of its taxable property and

that the amount of warrants offered, together with . 100,000 of warrants now

held by the New York bank, exceeds 25;9 of the total amount of outstanding

warrants of the municipality.

Reply approved.

Telegraphic reply, approved by five menbers of the Board on March

29, to a letter dated March 26, 1932, from the Federal Reserve Agent at

Chicago, transmitting and recomrending approval of the application of the

Adrian State Savings Bank, Adrian, Michigan, for permission to rediscount

Paper acquired from or bearing the signature or indorsement of the Deerfield

State Bank, Deerfield, Michigan; the reply stating that the Board authorizes

the Federal Reserve Bank of Chicago, in its discretion, for a period of six

months from March 29, to rediscount for the member bank good and eligible

Paper acquired from or bearing the signature or indorsement of the Deerfield

State Bank. The reply also called attention to the coments nade in the

Board's letter of November 20, 1931, with respect to a similar case involving

the Commercial National Bank of Madison, Tlisconsin.

Reply approved.

Telegraphic reply, approved by five menbers of the Board on March 28,

1932, to a telegram of that date from Deputy Governor Zurlinden of the Federal

Reserve Bank of Cleveland, requesting approval, under Section 10(b) of the

Federal Reserve Act, of an advance of ,46,000 by the Federal reserve bank,

for a period of thirty days, at a rate of 5 1/2, and on the security of

,787,000 of miscellaneous bonds rating A-1 to B, to the First National Bank


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Of Pennsylvania, which institution has less than :7125,000 of

conzaercial paPer, little of which is eligible for rediscount, the reason

given for the member bank's application beinp; that heavy withdrawals have

resulted in a low cash position and further withdrawals are expected, and

that the bank cannot sell its bonds at this time except at ruinous losses.

The reply stated that the Federal Reserve Board authorizes the advance by the

Federal Reserve Bank of Cleveland under the terms and conditions proposed.

Reply unanimously approved.

Reply, approved by five members of the Board on March 30, to a letter

dated March 21, 1932, from the Federal Reserve Agent at Philadelphia, report-

ta,S- that the First National Bank of Mount Holly Springs, Pennsylvania, has

been deficient in its required reserves for a period of six months; the reply

stating that in accordance with the Agent's recoramendation the Board will take

ne action in the matter at the present time, it being understood that the

Agent will submit a further report following the next examination of the bank

Which is to be made shortly.

Reply approved.

Letter to the Federal Reserve Agent at Dallas, approved by five

members of the Board on March 30, referring to his letter of March 19, 1932,

With further regard to the continuous reserve deficiencies of the First

National Bank of George West, Texas, and recomnonding, inasnuch as no response

was received from the directors to the letters which the Agent addressed to

them concerning the bank's reserve position, that the matter be brought to

the attention of the Comptroller of the Currency with a view of obtainin7, his

assistance in ascertaining the causes for the continued deficiency, and, if

Possible, its elimination. The reply inclosed a copy of a letter to the


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Comptroller of the Currency, also approved by five menbers of the Board on

March 30, transmitting a copy of the Federal Reserve Agent's letter for the

Comptroller's consideration, and requesting that he advise the Board, for its

information and that of the Federal Reserve Agent, of any action taken by

him in accordance with the Federal Reserve Agent's recommendation.

Letters approved.

Reply, approved by five members of the Board on Earch 30, to a letter

addressed by Congressman ;iright Patman to the Comptroller of the Currency

under date of Larch 21, 1932, and by the latter referred to this office; the

Board's reply stating, in response to an inquiry contained in Congressman

Patman's letter, that the Federal Reserve Board has not at any tine during

the past ten years issued any order or regulation for the purpose of encouraging

the liquidation of unlisted securities and purchase of listed securities.

Reply approved.

Letter to the Federal Reserve Agent at St. Louis, approved by five

members of the Board on ',larch 29, referring to his letter of I:arch 15, 1932,

in which he advised that the Board of Directors of the Chouteau Trust

Company, St. Louis, lassouri, has not, in accordance with a condition of

Membership to which the bank is subject and the agreement executed by the

directors on December 15, 1931, removed from the bank the 80,000 of first

mortgage serial real estate notes held in its assets, but that definite plans

are under way which should result in the removal of the notes at an early

date; the reply stating that the Board will defer taking any action in the

matter at this tine, and requesting that the Agent keep the Board advised of

the progress made by the trust company toward the consumation of its plans.

Letter approved.


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Letter to the Federal Reserve Agent at Dallas, approved by five

members of the Board on I.:arch 29, referring to his letter of Larch 19, 1932,

transmitting a report covering the hearing held in his office on rarch 2,

1932, for the purpose of giving the Forney State Bank, Forney, Texas, an

Opportunity to show cause why its membership in the Federal Reserve System

Should not be terminated, and stating that the information submitted at the

hearing was considered by the Board of Directors of the reserve bank on

March 7, when it was voted to recommend that the Federal Reserve Board take

no action with reference to the bank's nelrbership until after the next

examination, but that as the bank has failed to reduce its loans in accord-

ance with assurances given by its representative, the matter will again be

submitted to the Board of Directors of the Dallas bank at its next meeting

on April 7; the reply stating that in view of these circumstances and the fact

that the Forney State Bank waived its right to appear before the Federal Re-

Serve Board on March 29, 1932, the Board will defer taking any action until

the Board of Directors of the Federal Reserve Bank of Dallas has had an

Opportunity to give further consideration to the matter and to submit a

recommendation to the Board as to the action which should be taken.

Letter approved.

Reply, approved by five members of the Board on larch 26, to letters

dated Larch 1 and March 3, 1932, from the Cashier of the City National Bank

of Lansing, Michigan, stating that the Michigan authorities are unwilling to

release the securities deposited by the bank in connection with the operation

of its trust department until authorized by the Federal Reserve Board, and

requesting advice as to when an investif:;ation of the bank's trust department

could be made to determine whether it has been properly relieved of its


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duties as fiduciary, and what the probable cost of the investigation would be;

the reply stating that, if the bank desires, the Board will request the

Comptroller of the Currency to have his examiner make such an investi -ation

at the time of the next regular examination of the Capital National Bank of

Lansing, I.:ichigan, which recently took over the assets and assumed the

liabilities of the City National Bank without the latter going into liciuida-

tion, which investigation would cost only a small amount to cover the

examiner's tiiae. The reply also noted that the Llichigan authorities would

be willing to make an examination of the bank for the purpose of determining

whether all of its trusts have been relinquished, and stated that the Board

deems it desirable, in accordance with its usual practice, that the facts

in the case be established through an investigation by an examiner designated

by the Comptroller of the Currency, before a certificate terminating the

bank's right to exercise trust powers is issued by the Board.

Reply approved.

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

members of the Board on Earch 30, referring to Assistant Federal Reserve

Agent Young's letter of February 16, 1932, transmitting detailed information

With regard to the action of the I:onticello State Bank, I:onticello, Iowa,

on December 30, 1931, in purchasing the assets and assuming the deposit

liabilities of the Lovell State Bank of Lonticello; the Board's letter stating

that before considering the question whether, as a result of the purchase,

there has been any material change in the general character of the assets of

the Eonticello State Bank or broadening of the functions exercised by it at

the time of admission to menbership in the Federal Reserve System, the Board

desires information coverinf certain matters referred to in the letter, and


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also as to whether consideration has been given to increasing the bank's

capital as a further protection to its depositors. The letter also requested

the Agent to advise whether the information requested is available at this

time or whether it will be necessary to await a report of the next examination

Of the member bank, in which it is assumed the Agent will arrange to

Participate, and, which, if Possible, should be made by June 1, 1932.

Letter approved.

Reply, approved by five members of the Board on 'larch 29, to a letter

dated ITarch 4, 1932, from the Federal Reserve Agent at Chicago transmitting

detailed information with regard to the action of the Bank of Sturgeon Bay,

aisconsin, on November 30, 1931, in acquiring the assets and assuming the

liabilities, other than to stockholders, of the State Bank of I:aplewood,

Wisconsin; the reply stating that, in accordance with the suggestion con-

tained in the Agent's letter, the Board will defer any action looking toward

the discontinuance of the membership of the Bank of Sturgeon Bay in the Fed-

eral Reserve System, pending receipt from the Agent of a report of the

results of a conference which the bank is to have with the State Bank

Commissioner in the very near future. The reply also requested that the

Agent apprize the Board of Directors of the Federal Reserve Bank of Chicago

Of the situation affecting the member bank, and that he furnish the Board

With the directors' recommendation in the premises.

Reply approved.

Reply, approved by five members of the Board on Farah 29, to a

letter dated February 19, 1932, from the Federal Reserve Agent at New York

with regard to the consolidation on ',larch 14, 1931, of the First Rank and

Trust Company, the Citizens Trust Company, and the Utica Trust and Deposit


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Company, all of Utica, New York, under the title of the First Citizens Bank

and Trust Company of Utica; the reply stating that it appears from the in-

formation submitted that the consolidation has had the effect of materially

improving the banking situation in Utica and has not resulted in a change in

the general character of the assets of the First Citizens Bank and Trust

Company or in a broadening of the functions exercised by it within the meaning

Of the general condition of membership, and that, accordingly, the Federal

Reserve Board will raise no objection to the transaction. The reply also

stated that inasmuch as the Agent feels that it would be unwise to have a

Special examination made of the consolidated bank as suggested in the Board's

letter of November 10, 1931, the Board will not require that such examination

be made.

Reply approved.

Reply, approved by five members of the Board on Larch 31, to letters

dated February 16 and Larch 0, 1932, from the Federal Reserve Agent at San

Francisco relative to the transaction by which the First Savings and Trust

flank of Whitman County, Colfax, Washington, a nember, acquired certain of

the assets and assumed the deposit and loan liabilities of the Colfax

National Bank, effective as of February 1, 1932; the reply stating that the

Board has reviewed the information submitted which would indicate that there

had been no material change in the character of the assets of the First

Savings and Trust Company or broadening in the scope of the functions exercised

by it within the meaning of the general condition under which it was admitted

to membership in the Federal Reserve System, and that, in accordance with

the Agent's recommendation, the Board will interpose no objection to the

transaction.

Reply approved.


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Reply, approved by five members of the Board on March 30, to a letter

dated March 2, 1932, from the Federal Reserve Agent at Cleveland, with further

reference to the action of the Cleveland Trust Company, Cleveland, Ohio, a

Member bank, on January 11, 1932, in acquiring for liquidation the assets of

the Midland Bank of Cleveland, and in assuming certain of its liabilities;

the reply stating that the Board has reviewed the information submitted and

has given consideration to the fact that the transaction was an emergency

measure, but that, in the absence of more detailed information regarding the

classification of the assets acquired from the Midland Bank, the Board will

defer consideration of the Question whether the transaction will result in

anY material change in the general character of the assets of the Cleveland

Trust Company or in the sco/pe of the functions exercised by it within the

neaning of the general condition under which it was admitted to membership

in the Federal Reserve System. The reply also requested that, following

the next examination of the Cleveland Trust Company, the Agent submit a

further report to the Board regarding the matter.

Reply approved.

Letter to the Federal Reserve Agent at Cleveland, approved by five

members of the Board on March 31, stating that the Board has had under con-

sideration the application of the Peoples City Bank, ITcKeesport, Pennsylvania,

for membership in the Federal Reserve System and 1,200 shares of stock in

the Federal Reserve Bank of Cleveland, which was transmitted with Assistant

Federal Reserve Agent Fletcher's letter of March 19, 1932, and that, while

the condition of the bank is apparently satisfactory, the Board does not feel

that the information submitted is sufficiently complete to be used as a basis


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for action by the Board in approving the application and that, accordingly,

action is being deferred until after the next examination of the bank. The

letter also suggested that, if it is not feasible for the Agent to conduct a

Special examination of the bank, he make arrangements to have an examiner

Participate in the next regular examination by state authorities following

Which a copy of the examination report should be forwarded to the Board,

to -ether with an analysis thereof, and a new recommendation of the member-

ship committee, based on the information contained in the report.

Letter approved.

Reply, approved by five members of the Board on I-arch 31, to a

letter dated February 20 1932, from Assistant Secretary of the Treasury

Lawman requesting that the Federal Reserve Board prepare a report to the

Chairman of the Committee on. Banking and Currency of the Senate for the

Signature of the Secretary of the Treasury, on Bill S. 2491, "to prohibit

the use of the mail in furtherance of bucket-shop transactions and short

sales of securities"; the reply stating that this bill is one which does not

come directly within the jurisdiction of the Federal Reserve Board and the

Board is without adequate information upon which to base a considered opinion

in the matter. The reply also called attention to the fact that the

Committee on Banking and Currency has recently been authorized and directed

by the Senate, under the provisions of Senate Resolution 84, to make a

thorough and complete investigation of the practices with respect to the

buying and selling and the borrowing and lending of listed securities upon

the various stock exchanges and to the effect of such practices.

Reply approved.


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Telegraphic reply to a wire dated Larch 31, 1932, from the Federal

Reserve Agent at Dallas stuting that he had received a letter from the

Financial Commission of the Japanese Government, New York City, requesting

the names of all me:Iber banks in the Eleventh Federal Reserve District, the

amount of capital of each, and, if possible, the amount of reserve carried

by each member bank; the Agent inquiring whether the Board has any suggestions

as to the character of reply which he should make to this request. The

reply stated that the Board sees no objection to the Agent furnishing the

Commission with a list of the member banks in the Eleventh Federal Reserve

District, and the capital of each, and suggested that he call attention to

data regarding reserves contained in the consolidated call report for

December 31, 1931, without attempting to supply information as to the reserves

Of individual banks, which the Board considers confidential.

The reply was approved, and the Secretary

was instructed to send a similar telegram to

all other Federal reserve agents for their in-

formation in the event of receipt by them of

similar inquiries from the Commission.

Telegraphic reply to a letter dated Earch 21, 1932, from the Governor

Of the Federal Reserve Bank of Dallas referring to previous correspondence

regarding the unsatisfactory condition of the First National Bank of

Amarillo, Texas, and stating that the bank has very little eligible paper,

and, in order that it may be in a position to [let temporary assistance from

the Federal reserve bank, pending final action on its application for a loan

from the Reconstruction Finance Corporation, has indicated a desire to

qualify under Section 10(b) of the Federal Reserve Act for a loan of

;$250,000 for a period of sixty days at a rate of 5 1/2':, per annum; the


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Governor recomending that the privilege requested be granted on the under-

standing that before any advance is made he will telegraph the Board as to

the character of the collateral tendered by the bank as security for the

advance. The Board's reply referred to the Secretary's telephone conversa-

tion today with GovernorEaKinney concerning the matter, and stated that,

on the basis of his recommendation and the facts stated in his letter of

Larch 21, the Board is disposed to approve the application of the First

National Bank of Amarillo and will act i)romIrtly upon receipt of wire advice

concerning the nature of the collateral offered as security for the advance.

Reply approved.

Reports of Standing Committee dated March 28 and 30, 1932, recommend-

ing approval of the followin7, changes in stock at Federal reserve banks:

A2Tlication for ADDITIONAL Stock: Shares

1•District No. 7.

1First National Bank, Dale, Wisconsin.

AP.pAilitions for SURRENDER of Stock:

District No. 2.First National Bank, Hornell, N. Y. (Insolvent) 216 216

District No. 3.Peoples Trust Company, Frackville, Pa. (Insolvent) 114 114

District No. 4.Peoples National Bank, Pitcairn, Pa. (Insolvent) 54

First National Bank in Hazard, Ky. (Tnsolvent) 66

First National Bank, Pitcairn, Pa. (Insolvent) 105

First National Bank, Turtle Creek, Pa. (V.L.Abs. by

Turtle Creek Savings & Trust Comany) 120 545

District No. 9.Oneida National Bank, Rhinelander, Wis. (V.L.Abs.

by 1.Terchants State Bank of Rhinelander) 75 75

District No. 10.First National Bank, Y.onte Vista, Colo. (Insolvent) 36

National Bank of Kaw City, Kaw City, Okla. (V.L.Abs.

by First National Bank in Kaw City) 18 54


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ApDlications for &THREADER of Stock: (Cont,d) Shares

District No. 11.First National Bank, Goree, Texas. (V.L.Suc. by

First National Bank in Munday, Texas.) 15

Coleman National Bank, Coleman, Texas. (V.L.Suc. by

First Coleman National Bank of Coleman) 144

First National Bank, Coleman, Texas. (V.L.Suc. by

First Coleman National Dank of Coleman) 75

First National Bank, Davison, Texas. (Cons. Liberty

National Bank of Dawson with the above bank) 30

First National Bank, rlunday, Texas. (V.L.Suc. by

First National Bank in Lunday) 48 312

District No. 12.First National Bank, Ontario, Oregon. (V.L.Abs. by

Ontario National Bank) 60Bank of Fountain Green, Fountain Green, Utah. (V.L Abs.

by First National Bank of Nephi, Utah) 36 96Total 1,212

Approved.

Reports of Standing Comittee dated March 26 and 30, 1952 recomending

aPDroval of the following Clayton Act applications:

1:r. Edwin W.. Hunt for permission to serve at the same time

as director and officer of the Home National Bank of Brockton,

Massachusetts, and as director of the Whitman National Bank of

Whitman, Massachusetts.

Fir. Andrew J. Sordoni for permission to serve at the sanetime as director of the Wyoming National Bank of Wilkes-Barre,Pennsylvania, and as director of the Kingston Bank & Trust Co.,Kingston, Pennsylvania.

Mr. John H. Brooks for permission to serve at the same time

as director of the First National Bank of Scranton, Pennsylvania,

and as director of the Wyoming National Bank of Wilkes-Barre,Pennsylvania.

Mr. Frank Brooks Vincent for permission to serve at the sane

time as officer of the Citizens and Southern National Bank of

Savannah, Georgia, and as director of The LaGrange National Bankof LaGrange, Georgia.

Mr. II. J. Dugan for permission to serve at the same time as

an employee of the Calcasieu National Bank in Lake Charles, Lake

Charles, Louisiana, and as director of the First National Bank ofLongville, Louisiana.


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Lir. Harold H. Sanson for permission to serve at the same timeas director of the North Birmingham-Amarican Bank of Birmingham,Alabama, and as director of the First National Bank of Birmingham,

Alabama.

Approved,

Thereupon the meeting adjourned,

APproved:

Secretary.

Governor.


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