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A meeting of the Board of Governors of the Federal Reserve Sys-

t-t414" held in Washington on Tuesday, August 3, 1937, at 12:15 p. m.

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. SzymczakMr. McKeeMr. Davis

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

Consideration was given to each of the matters hereinafter re-

tellred t0 and the action stated with respect thereto was taken by theBoard:

Peder.,-3- Reserve System held on Aupust 2, 1937, were approved unani-

1°11813,.

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

Telegrams to Mr. Stewart, Secretary of the Federal Reserve

ila'6( or St' Louis, Mr. McKinney, President of the Federal Reserve

IDalias, and Mr. Sargent, Secretary of the Federal Reserve

°t San Francisco, stating that the Board approves the establish-without

change by the respective banks today of the rates of dis-

Elnd purchase in their xisting schedules.

Approved unanimously.

Memorandum dated July 30, 1937, from Mr. Parry, Chief of the

vistori or

401/4q, Security Loans, recommendin the transfer of Mr. Bonnar

Read Of the Department of Security Loan Regulation of the

eserve Bank of San Francisco, to the Board's Division of

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See4r4Y Loans as Special Assistant, with salary at the rate of 3,200

Per'`mnumy effective as of September 7, 1937, or such later date as

the transfer becomes effective. The memorandum stated that it was as-sum-,

that inasmuch as Wir. Brown is at present a member of the Retire-merit s

Ystea of the Federal Reserve Banks it would not be necessary for

hira ttake the usual physical examination.

Approved unanimously.

There vas submitted a recommendation from Messrs. Spurney and

IC°P/Datig that the following persons, who had been selected in accord-

ellee 'dth theauthority granted by the Board on July 12, 1937, and who

11`1Dassed satisfactory physical examinations, be appointed as char-

341ell in the Board's new building, each with salary at the rate of 5C4Per

hour, affectiv as of August 3, 1937:

13.4111t

Mrs. Ida :A. BeachMrs. Elizabeth RolandoMrs. Mamie L. Boltwood

Approved unanimously.

Telegram to Mr. Sargent, Vice President of the Federal Reserve

Or S.—ITancisco, reading as follows:

thrveal ...Lour letter July 22, 1937 re application 'CowlitztirA Bank', Kelso, Tashington, for permission to reTad,; 5,000 capital debentures. Purpose of the Boardsre.14-ce.that authority of reserve banks to approve capitalto uctlons under conditions of membership did not applytiorneductions below the amount required for the organiza-

- °f a national bank in that locality was to give the

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7Board opportunity to review cases which involve such reduc-tions for which a bank's membership in the system might bet oral nat ed.

"In view of the information submitted with your letterJulY 22, it does not appear that, if made, the amount of

Lh? reduction of itself would be such as to warrant for-feiture of membership. The reserve bank, therefore, ishereby

authorized to approve the proposed reduction if itfeels1, that, as a practical matter, such reduction is justi-

c_leninuTedis appears

to be a close question in view of thegrowth of deposits. Board, however, has no in-regarding the current status of bond account or

,solpt of appreciation or depreciation therein, which itelt would have a significant bearing on the applica-tion.

a4 "Board interpose no objection to the retirementeach sami-annual interest period of such small amountswill enable the bank to obtain the benefit of the re-

c',1sced interest rate offered by the Reconstruction FinanceurPoration to banks complying with its requirements."

Approved unanimously.

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

York, readin;4 as follows:

111 "Reference is made to your letter of July 27, 1937, re-ore:,t.ing the opinion of the Board as to the applicabilityto provisions of section 8 of the Clayton Act as amendedoff ne services of certain individuals who are serving as.. e,,,1?,are and directors of The Equitable Trust Company of" York and Manufacturers Trust Company, New York, New

act "It is understood that, in connection with the trans-pc) whereby Manufacturers Trust Company assumed the de-assets

i ilities and purchased substantially all of thebu of The Equitable Trust Company, as of the close ofth,..1!le88 June 5, 1937, certain directors and officers ofTr- -Latter became directors and officers of Manufacturersbellt Co

becameand that these interlocking relationships will

spe -,:rinat ed on or before August 5, 1937, except with re-the services of Messrs. Edward E. Steele and Spencer

pann Ir., who are serving as officers of both trust con-t -e8 and who are the only officers familiar with the de-

-Ls of certain very important trust accounts retained by

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"The Equitable Trust Company. Accordingly, the question isPresented whether these relationships come within the pro-

of section 2(d)(6) and/or section 3(b) of the Board'sRegulation L.

bon "From the information submitted by the firm of Chad-

-rne, Wallace, Parke & Whiteside, counsel to both trust,e,° Pahies, in its letter of July 19, 1937, to you, it ap-!,'ears that, although the corporate identity of The Equitable'-'rust Company still exists, Manufacturers Trust Company has/:an over all of its deposit liabilities, substantially4.1 Of its investment portfolio and loans and certain of;6s trust accounts; that the assets of The Equitable Trustl omPahY now consist almost exclusively of cash and four'-e°,1as which were retained because of special relationshipsf2.sting between the respective borrowers and the estate

the late Mr. Charles Hayden which holds all of the stock

ji the trust company except directors' oualifying shares;ace Equitable The Equitable Trust Company has no deposits and is notit rting any new business of any kind or character; that

it 1a

substantial number of trust accounts which, however,

With attempting to eliminate as rapidly as is consistent

at sound fiduciary practice; and that it 'does no businessexcept such as may be necessary to wind up its pres-

ter effairs and such as may be necessary to protect the in-

all of beneficiaries of presently existingtrust accounts,

of which are to be shifted as soon as conveniently proper.'Tr4st In View of these facts it appears that The Equitable

Company is not at the present time engaged in the busi-of banking as that term is ordinarily understood and

buesFef°re that it is 'not engaged in a class or classes ofwii issa' in which Manufacturers Trust Company is engaged2q111 the meaning of the exception set forth in sectiontici(6) of the Board's Regulation L, and that the prohibi-notil e°htained in section 8 of the Clayton Act as amended isO r n°11 applicable to the services of directors, officersyouerIP1°Yees thereof who are serving other banks. However,

attention is directed to the fact that should Theties le Trust Company resume any regular banking activi-in Ls° as to be 'engaged in a class or classes of business'

Ilich other banks are regularly engaged a different con-itq would result. In this connection, it is noted that

s Possible that the trust company, instead of beingercTIdated and dissolved, will be sold by means of a saleiltlk"s stock, but that in such event, Messrs. Steele andthaext'' the only directors or officers who will be servingto b trust companies after August 5, 1937, will cease

e officers at or before the consummation of the sale."Since the relationships involved appear to come within

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:the exception set forth in section 2(0(6) of the Board'sL, it is unnecessary to determine the applicabil-

'AY of the provisions of section.3(b) of the regulation tosUch

relationships."

Approved unanimously.

Ur. Morrill submitted a recommendation, which had been approved

krtl—ei per

eonnel Committee, that the Board authorize the purchase ofm

ror the emergency room, soap,

°LI) kIleeling pads, and perforated mats

144* 1843, 1844, 1845, 1846, 1847, 1848

14 1868, 1869, 1870 and 1871, at a

orbent cotton and adhesive plaster

tthe Treasury Department, as listed

la the Board's new building.

Approved unanimously.

tlee

Thereupon the meeting adjourned.

Chairman.

caster frames, chair casters,

as listed in purchase orders

1849, 1851, 1852, 1854, 1866,

total cost of $515.92, and of

from the Procurement Division

in purchase order No. 204, for

OAALalfS cretary.

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