Download - 19341011_Minutes.pdf

3140

meeting or the L;xecutive Committee of the 2!ederal ReserveBoay.,1

waS held in '::ashington on Thursday, October 11, 1934, at 3:30P.

PRESENT: /Jr. Thomas, Vice GovernorMr. HamlinMr. MillerMr. Tames

La% Bethea, _ssistant SecretaryMr. Carpenter, _Issistant Secretary

The Committee considered and acted upon the following matters:

Telegram dated October 11, 1934, from Mr. Hoxton, Chairman ofthe ,

cleral Reserve Bank of Richmond, advising that, at a meeting ofthe to

ard of directors today, no change was made in the bank's exist-izitt 8 ,

enedule of rates of discount and Purchase.

..iithout objection, noted with approval.

the bi

NrIsi°11 or Examinations, recommending the extension, for anotherthirty

Ir.emo randum. dated October 3, 193, from Er. :)aulger, Chief of

cia'Y Period from October 14 to November 12, lajq, inclusive, ofthe tem

D°1'erY employment of Miss Beverley 1:.athews as a stenographer indivi .

s1(:) , with compensation at the rate at which she was previously

.141 °Yed.

1:61-a°1"andum dated October 8, 19.34, from i. aulger, Chief of

"ion or ,2,x83aination3, recommending the extension, for another

d or twomonths, of the temporary employment of Liss Hazel E.

'Iltz.ickas a clerk in the division, with compensation at the rate at

ahe was

previously employed.

Approved.

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

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Letter dated October 10, 194, approved by four members of the

13°811'd, to r, Austin, Federal deserve 2_gent at the Federal Reserve

k or rhiladelphia, re dini; as follows:

"IIT• Hill's letter of October 5, 1934, aduressed to r.Paulcer, Chief of the iiivision of Examinations, tranalitted

eogY of your letter ol Lay 18, 1934, which was not receivedby the 3oard, and, in accordance with the request containedin Your lett,er, the Board approves the desic-pmation of the

seventeen employees of the bank as special assistants to!xaziners. The Board understands that such designations are

be on a temporary basis for the our-nose of lending cleri-e l assistance in the examinations of larger banks, and that11c)ne of the indiviuuals will be transferred permanently toe)caminin,l; work without the Board's approval."

Approved.

Letue- uated October 10, 1934, apnroved ID:: four members of the

4(1' to the board of directors of the "Iowa state Bank and TrustCO )

of 2a1rfie1d, Iowa",the

cotiditions

.1313lication for membership4DDI'oloriate

Fairfield, Iowa, stating that, subject to

prescribed in the letter, the Board approves the bnnk's

in the 7ederal Reserve L;ystem and for the

amount 01' stock in the Federal Reserve Bank of Chicago.

,nproved.

Letter dated October 10, 19‘:)4,

Llr. Stevens Federal _eserve .:..gent at the Federal leserveOf

Chloa*,o, reading as follows:

21 1:Reference is made to I,Tx. Young's letter of Septemberst 342 aavisin,] that on August 6, 1934, the 'Cherokeeor 13enkt, Cherokee, Iowa, assumed be deposit liabilityove 4ae State Trust and .Davinzs Bank, luimby, Iowa, and took

like amount of assets from the latter institution.totai rit is observed from the information suUditted that tae

deposit liability assumed by the member bank aggregatedthe",J.18; that the „Dtate Banking Department of Iowa approvedt1.0,arallsact10n and is satisfied that the assets taken over

the quizaby institution are good and collectible; thate°11ase1 is satisfied as to the legality of the proceediE:s

approved by four members of the


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7and that uhe transaction has resulted in no material change311 the general character of the assets of or broadening inthe functions exercised by the member bank.

"The Board has reviewed the information submitted and inview of your recommendation will take no action affecting theMerabership of the Cherokee State Rank by reason of the trans-action.”

,.pproved.

Letter dated October 10, 19'34, approved by four Rembers of the

) uo • 0,Conaor, Comptroller of the Currency, reading as rollows:

lits"t:::eio:t,:ea::71e.:ged of your :34' with reference to the proposed reduction in common capi-

r on ,ounuy iational Bank of L:edford',po °rds New Jersey, which was approved by the Board on Tune

193 ) pursuant to a clan which provided among other things the sale of v50,000 of preferred stock to present directorsother stockholders at a premium of ',25,000.You advise uhat the original plan of recapitalization has171 amended and that the bank now proposes to sell „;50,000 of

reeaterred stock to the Reconstruc3ion Anance Corporation andto

-L

lice its cammon capital 50,000, using the released capitala, eliminate unsatisfactory assets; also that the existingl'Iarectors) guarantees in the amount of c74,000, will continue

1'1.1,11 force and effect until the capital is fully restored.its "In ack;ordance with your recommendation the board Emendsrer Previous approval to provide for the sale of ,50,000 or pre-retred stock to the _eaonstruction Anance 0or,2oration, and the

ention of the existing directors' guarantees, as set forththe letter

olr or October 2, 193,i, with the unr'erstanding thatProvisions or the original plan remain unchanged."

Approved.

Letter dated October 10, 1934, approved by four members of theto

O'Connor, Comptroller of the Currency, reading as follows:

1964 "P'eceiPt is acknowledged of your letter of October 5,c4Dil th reference to the proposed reduction in the coon2eatt or 'The University National Bank or Seattle',4Dp,"!;:: -aehington, from 400,000 to i200,000, which was

the .Board on .Tanuary 17, 1934, pursuant to a'000,00 provided, a,4ong other t_inzs, for the sale ofeorp, ' or preferred stock to the iieconstruction ,in-nce-ration.


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"You advise that the original plan has been amendedbY reducing the amount or preferred stock to be sold to the-A3construction rinance ,;or-ooration from „;300,000 to :)200,000.

'In accordance with your reconmendation, the Board amendsit8 Previous approval to provide for the sale of 200,000, ofPrererred stock to be Reconstruction Finance Corporation asset iorth in your letter or October 5, 1934.. "It is understood that the other provisions or the orig-inal plan remain unchanged, with be exception of the amount°r eliminations to be effected. Your letter of January 8,submitting the original plan to the Board, indicated that, inaddition to the released cauital, approximately ;122,000 fromtile; uankts surplus and undivided profits would be used to

.1-rilinato undesirable assets, whereas, your letter of October 5,-"341 refers only to the use of the released capital lor that0/411'13°se. In this connection, it is noted that, on the basisH. the report of examination of June 6, 1934, securities deprecia-111°4 unProvided amounting to approximately :.;301,000, exceeds: bank's surplus and undivided profits by approximPtely'000- It is assumed, however, that you have this condition

re 'Iliad and that whenever it is practicable to do so you willquire such further corrections as may be feasible."

Approved.

Lleincrandum dated October 6, 1934, from Lr. Smead, Chief of the

4171si°4 c)f Bank Operations, stating that some time ago the Federal De-

143urance Corporation asked for copies of the division's State

l'ee41)itU1atibg 4-°rIs of the Tune 30, 1934, condition reports of 'state member

contain certain figures not published in the :::ember Bank

C:11 that these figures were furnished co the Corporation with

"IlellIQderstandinr that they would not be made public without the

i)erru on; and that the Corporation has novt worked LID a state-

practically all the details contained in the member bank

Qc3litti°11 rePorts, including the items contained in most of the sche-

:7) 111(1 Proposes to publish State totals separately for national

1.°1 tate Doember ba i s, o: -tate nonmember banks, and for

11171 and industrial banks, and has asked permission to include


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14 the published table figures for State member banks. ...Ile memorandum

subzitted a letter dated October 5, 1934, from Er. L'ortimer T. Fox,

Chief Statistician of he Federal Deposit Insurance Corporation,

sta itr.L' that in the iour States in which there are two or less State

rcenther banks the figures for such banks will be consolidated with State

'c311Llember bank figures and not shown separately; and stated that this

l'iould make it impossible for anyone to obtain the detailed figures

811017111 in the statement for any one State member bank; that it is under-

ic'(3d that the Comptroller of the Currency has authorized the Federal

1)elposit Insurance Corporation to show uotal figures ror national banks

illeaeh state separately in the Corporation's Printed statement; and

tIlat it is recommended that the Board interpose no objection to thekl4e

of the ,tate totals for tate member banks unuer the conditions

et fc)rth in L.r. Fox's letter.

:Pproved.

the

rect

Tel-egram dated October 10, 19e, approved by lour members of

41ar(1, (A) the Federal reserve agents at all Federal reserve banks,

ite as roliows:

qui, ,iae Board has been asked whether Regulation T re-that adaitional nargin be obtained if in a restricted

:11bined aceount containing securities and commodity commit-rill." 'there are no new transactions but there are adverseadittlations of the commodity market. In reply the ioardobjsed that Regulation T does not require the creditor to

aduitional margin in the circumstances indicated and114;17 under section 4(b) of Regulation T the creditor mayle:cit credit to be maintained in such an account regard-e41°1 mere fluctuations in the camitiodity Larket and re-ti, -Lees of mere bookkeeping entries used to indicate such'etuations."

;4.Pproved.


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Telegram dated October 10, 1934, approved by four members ofthe

BoarA Go he Federal reserve agents at all Federal reserve banks,reari s_

j'IQg as follows:

"In renly to an irruiry, the Board has ruled that undersection 4(d) or Regulation f short sales may be made in a

restricted account if the margin customarily recuired by thecdreditor on such short commitments is demanded on the sameTIllY and is obtained within the time allowed by section 4(e).e s&me principle applies to he execution in restricted

'ee0unts of transactions of the kinds referred to in clause"t or

section5(f)."

4proved.

Telegram dated October 10, 193w±, approved by four members ofthe

(1) 1;0 the Federal reserve agents at all Federal reserve banks,

44c1111f. as follows:

"In replythe n to an inquiry, the Board has advised that, incon,lace of an account which has been designated a: an old ac-or--", Pursuant to section 7(a) of liegulation 2, a withdrawali4 cash which is n-ae prior to October 10 and which therebyth:.1liease3 the adjusted debit balance or the account is never-ztrieas Permitted if the account is not thereby made a re-l., ,ctea account nnd ii, on uctober 15, the account is an un--stiricted account.''

I-_pproved.

Telegram dated October 10, 1934, approved by four members of

to the Federal reserve agents at all federal reserve banks,

r011OWS:

tO 13„ reply to an inquiry, hoard has advised that in orderrlis4i,e°flsidered a 'combination or transactions' within thethe i'g or the second proviso of section 7(a) of Regulation T,O t.Illlansactions constituting such combination must be madeecnsil"ule day except that any substitution of securitiesplIrch. Of a sale of securities in the account and thetz.. ia:se of other securities may be considered as a singlecizr, ion eccurriliv - on the day on which the purchase oc-' completed within a -ceriod of two successive business


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"days, regardless or whether the sale occurs before or afterthe

Purchase."

Apr roved.

Letter dated October 10, 1934, approved by four members of the0 eat. T' -0 zir. Austin, Federal Reserve Agent at the Federal Reserve Bank

ot'411ade1phia, reading as follows:

"Receipt is acknowledged of your letter of September 25,with inclosure, in regard to the application by the

1!!ting Service Company, Ardmore, Pa., for a loan under section"u or the Federal Reserve Act.

"From the information which you have submitted and from the,711 ter to he Board from the Heating Service Company, a copy of

You have received, it appears that the arplicant is en-

Vect la the business of leasing to the public, installing, andt;71-eing automatic heating equipment and that it desires to ob-13171;11 a loan under section 2.1) of the Federal Reserve Act for the41°2e or i,urchasin: adaitional heating equipment which willor eased under the company's service plan for a period of one

4.2,Tfc Years. In a recent letter from. Er. W. J. Davis, an

cieil

l-,:want Deputy Governorreserve of the Federal Resee Bank of Phila-th p ia) the au,licant was advised that 'general counsel for10:1,bank has rendered an opinion that your application for a

under Section l‘plo or the 2edoral Reserve Act as amendedo413',4)t eliible as the proceeds would not be used for workingatil talt - In your letter of September 25 to the Board, you/lot e that the Advisory Committee refused to recommend the lonn ot °fllY because the troceeds would not be used for the purposebQenrnishing the campany with working capital but, in adaition,-k)1 the financial condition of the company was unsatiarac-" and acceptA)le security could not be offered.

Llitt "After consideration of the inzollaation which has been sub-the !,c1 "d Particularly of the nature of the applicant's business,the -°ard is not prepared to concur in counsel's opinion thatDroji,:°ceeds or the loan would not be used for the purpose of

workinr-; capital, and feels that the question is ath.t 24..:11 one. In view or such uncertainty and of the beliefout law shoulu be liberally construed in order to carryor •Purposes of continuing and increasing employment anddolibtdine; 113.a11 commercial and industrial businesses, the Boarddeclis Whether the Federal reserve bank would be justified inthat 1.1j,11G the application in cuestion solely on the groundeEttit:14. e loan is not for the purpose of furnishing 'working1v/

tile Board's

the loan would meet the other reuirements of theth.

Board's Regulation S.


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"Of course, the cuestion whether a loan is acceptablefrcmi a credit standpoint is a matter for the determination°r the 1Jederal reserve bank with the recommendation of theIndustrial _Advisory Committee, and the Board does not cuestionthe propriety of the Committee's or the bank's refusing to ap-Prove the application on account of unsatisfactory credit condi-tions.

However, in view of the possibility that the applicationIljaY have been denied by the bank primarily because the loan was11(3t re6arded as one for the purpose or furnishing working cal)i-tal, the Board suagests that it may be desirable for the bankto

the

witn the applicant m-id explore the possibilities°r correcting the objectionable features of the application witha view to determining if the loan may be made on a reasonably

1111c1 basis, unless you are fully satisfied that L;here is noic)ssibility that the lo,,q2 can be made on such a basis.the "Althouch you stated in your letter of September 25 to

130ard that the ;,dvisory Committee refused to approve the-.;°Dlioation for credit reasons as well as for the reason that0T1 Committee did not believe the loan to be one for the purpose

furnishinj; working ca-Dital, the letter to the applicant ad-it of the Federal reserve bank's denial of the applica-

n ilerely stated that counsel had ruled that the loan was not;-;1-1ible as the proceeds would not be used for working capital.04.Board feels that it is desirable that an applicant shouldor be advised fully as to the reasons for the denialor 4:ts alo'-ilication and that, if it may be avoided, disapproval11.1418'n application should not be based solely on legal groundste,e23 iis cle:,r that the loan aoes not come within the in-

and language of the Act.40. , "It will be appreciated if you will advise the Board as

tatuisposition is made of this matter."

Approved.

Letter dated October 10, 1934, approved by four members of the

8Q1*(1) to Liz,.6ecretary of the Federal deserve Bank of Chicago,

as follows:

iOctob, oe iPt s acknowledged, with thanks, of your later oftileeti-1' 43 1934, transmitting a copy of the minutes or the

of the board of airectors of your bank held on Septem-the :E431 Your letter and its inclosure have been brought toti0a—It°11t10n of the members of the Board for their informa-

1,-,_6-ile Board has noted the lollowing entry appearing onof the minutes:


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"'PROPOSED VISITS TO HAI:KERSRE INDUSTRIAL LOANS Governor Schaller

submitted a letterfram the Federal Reserve Board suggesting that theofficers of the Federal Reserve Bank of Chicagocall on bankers in the principal cities of thedistrict in regard to industrial loans.'

is assumed that this entry refers to the Board's letter ofT.ePtember 19 suggesting that arrangements be made to call meet-

Of representative bankers in the Seventh district for the:-rix)se of discussing the industrial loan program. laile it7:TDears that your directors took no action in this connection,lutae Board would appreciate it if you will advise whether there

f1" 1,8 aaY discussion in regard to the proposal which would reflect

reeling of the directors in the mater."

Approved.

Or tallala

8 City, reading as follows:

reA "The Federal Reserve Board has given consideration to thele;°Inillendation of your Executive Caamittee, contained in yourO r !" or September 21, 1934, and, pursuant to the provisionsthe'47ction 19 of the Federal Reserve Act, grants permission to

National Bank in Denver', Colorado, effective withette'•"'st semi-monthly reserve computation period beginningpeder the date of this letter, to maintain a reserve with theor -LL:1 Reeerve Bank of Kansas City equal to not less than 75aetr: aggregate amount of its demand deposits and 3% of the

gate amount of its time deposits.or th"I'lease advise the Union National Bank in Denver, Colorado,the re 13°4rd te action in this matter, calling its attention toi?ederact that such permission is subject to revocation by thethe Ittab::817

):::.Board at any time after appropriate notice to

Letter dated October 10, 1904, approved by five members of the

LIcClure, Federal Reserve Agent at the Federal Reserve Bank

Approved.

tt, Letter dated October 10, 1934, approved by four members of the

14_ v"raor McKinney of the "federal Reserve Bank of Dallas, read-s, tta rolavirs:


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"This refers to your letuer or September 13, 1934, toetherwith its inclosure, regarding the euestion whether the CityNational Bank, flainview, Texas, may lawfully pay interest ondeposits of Hale County, Texas, which are payable on demand.

It is unuerstood that prior to Tune 16, 1933, the CityNational Bank entered into a contract with the commissionerscourt of

6

Hale County, Texas, to act as depository for all rundsthe county and to nay interest on such funds until Tanuary

m' 1965. Under section 19 of the l'ederal Reserve .1ct the bank

!ilawfully pay interest on the funds in question in accordanceth the terms of such contract, and the principal question to

_3rilletitute a°e.determined, therefore, is whether the funds in question con-

r'deposit of public funds * * * with respect to whichnt of interest is required under State law' within the mean-04g of thiss section so as to authorize the bank to pay interest

4 such funds after the expiration of the contract.th„„ "Under Article 254Y1 of Vernon's Annotated Texas Statutes,

oomissioners court of each county is 'authorized and re-eilred e at the lebruary term thereof next following each generalrrection ''o receive proposals for the custody of county funds

131,:tany banking corporation, association, or individual bal*err.laY desire uo be selected as a depository. Article 2b45

SeclettinT banking corporation, association or individualto bid shall deliver to the county judge a sealed

ria2°sal 3tatinE; the rate of interest offered to be paid on theopecbi °I* the county. .:rticle 246 prescribes the procedure forto bids and makes it the duty or the commissioners courtbe2cV-ect as the deoository of all the funds of the county theto :jag corporation, association or individual barker offeringTh,i_aY the largest rate of interest per annum ror said funds.1.1Z section lUrther provides -uhat the interest upon such countythe sh:-111 be computed upon daily balances to the credit ofecu4;0untY with such depository and shall be payable to theact aY treasurer monthly. In the event that no proposals toDr0;003_?euntY depository are received or in the event uhat all1.equils should be declined, the commissioners court is thenwith l'ed by ...rticle 2550 to deposit the iunds of the countyi4ciivrly one or more banking corporations, associations, oreet

Pe bankers at a rate of interest not less than 1-i:37 1)er-r annum.

oDitli:It is noted that counsel for your bank expresses theao not4,that rticles 2544, 2545, and 2546, above referred to,

cer materially from the statutory provisions relet-. tQ B, Y depositories; and uhat inasmuch as the ;JecleFal

40t(1° (1kIrd has heretofore ruled that the latter provisiontheState:2quire the payment or interest on funds of cities in

inter, etot 13 not14

-texas, it must be concluded that the payment ofrequired under State law with respect to

fund

ac-'

ine3) except in the event that such funds are depositedruance with the pivisions of _rticle 2550.


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"In letters dated i)ecamber 0, 19,3,D, and I:arch 27, 1934,ill connection with the payment of interest on funds of theity or Dallas and of the City of Vernon, respectively, the

14ard stated that althoush Article 2559 of the Texas statutesappears to authorize a city to receive proposals from banks8tatinE the rate which will be Paid on daily balances of cityilinas, the procedure prescribed therein apparently is notTandatorY as it was not followed by the City of Dallas, anduhe Board concluded that the payment of interest is not re-quired with respect to runds or the cities of Dallas and Ver-

t' l 0;iever, it is to be noted that under such 1-rticle 2559fle governinL; body of every city, town and village in the tate

'2exas is merely 'authorized' to receive proposals for the-11st°dY of city funds, whereas under :_rticle 2544, which is:Dial-cable in the instant case, the commissioners court ofi.!ch county is 'authorized and required' to receive proposals", act as deository of county funds. Loreover, it is the duty

ILthe commissioners court to select as depository or countys the bank or banker offering to pay the largest rate of

ri/ter st per annum and ir all proposals are declined it isinulred that the funds be de_,-sited at interest with a bank-'', institution in the sane or an adjoining county.

. "Accordinzly, in view of the fact that the statutory pro-13:(3113 _?,overning depositories of county funds are in terms

clatorY, it is the opinion or the vederal Reserve Board thatDaYment of interest on funds deposited by Hale County,

011:(Q81 in the ..;ity National Bank of Plainview, Texas, is re-Under ,:tate law within the meaning or section 19 of the

bed'eral _;eserve ,xct, and that, therefore, interest may lawfullypaid on deposits of such funds which are rayale on demand."

Approved.

ot.11,c1,ttsr dated October 10, .194, approved by four members of the

to 1,argent, Assistant .b'ederal 2eserve :gent at the _ederal

Barik of ',;an Francisco, reading as rollows:

."2his refer- to your letter dated ‘Jeptember 14, 1934,l'eEard.,;or 111C the termination of the status of .Lerndale tjinancial

-te J2ernda1e, ,ashinc_;ton, as a holding company affil-01: The _irst ::ationfll Bank or rerndale, Ferndale, WashinL:-

1, within the meaning or section 2(c) or the Banking Act of33.

dElle the opinion of your counsel, it uppears that Fern-zhinancial Corporation now holds only 1 of the 250 outstand-ares of capital stock of The l'irst National Bank of Fern-


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"Although the Federal Reserve Board believes Ghat itshQuld not attempt to pass upon the questions or localearl:oration law and practice invoked in the transfer orthe.bank stock by Ferndale Financial 'Corporation to certain01 its stockholders, the Board finds nothing in the facts11D.L11tted to cause it to dif.er from the conclusion reachedYour counsel that Ferndale Financial Corporation is no

-")11C:er a holding company afiiliate of The First National BankOf Ferndale."

:)proved.

Letter dated October 10, 10'0/1, approved by our members of the13oax,A," to :Jr.

Case, Federal Reserve Agent at the Federal Reserve Banktiew

York, statinc that the Board has given consideration to the rol-

t/le 24111,_d is of the opinion that section 32 is applicable to the rela-tinn h6 covered by the application; and that, therefore, unless

re Other circumstances which the agent believes should be con-

b' the Board, it is requested that he advise the applicanta ae-zlato.ely,

although in the event the applicant desires to submit

l'41ther l'acts or arguments in support of the application the Eoard is

1)1'e.Pel'ed to .6;ive them careful consideration:

aDDlication or a permit under section 32 of the Banking Act of

13̀1; that, in the light or the information set rorth in the letter,

nti17 4̀°rdon Luchincloss, for permission to serve at the same:17s a director or The Chase National Bank or the City of

New York, New York-, and as a director or the .meri-- Iliternational Corporation, New York, New York.

Approved.

Lett)8c1 or dated October 10, 19(4, approved by four members of the_

--• .Elrgent, .s.sistant Federal Reserve Agent at the Federal`'eltire

-'411k ',1;an Francisco, reading as follows:


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b "Consideration has been given to your letuer of :lepteme"1 , 1934i, and inclosures, reigLrding the applicability ofsection 32 of the Banking _et or 103 to the service ofS. 'alldo Coleman as a director or the Bank oi California,National :.ssociation, as president and director or the Common-ealth Investment Company, and as president and director ofliorth .:,:merican Securities Company, all of San Francisco, ,Cali-fornie.

"It appears that Commonwealth Investment Company, which1'3 an investment trust of the management tiype, was organizedSeptamber 6, 1932, and that its capitalization consists of

out 00 of Par value stock, of which there were

37,500 as of August 31, 19,54. Commonwealth In-:7'dttlIent Company, in order to increase the size of its invest-',411.t lune, is offering aaditional shares of its capital stock.

-,(,1118 Operation is now beinghandled through 17.orth AmericanSee Operation

Comuany, which purchases such shares for its own?count and resells them to dealers, absorbing any profit ortoss incidental to such purchLse and sale. Because of these„T cts, he Board stated in its letter of July 17, 1934, to

Coleman that it appeared that :orth American Securitiesbnpany, which transacts virtually no other business, should

reGarded as

or negotiating securities' within the meaning oOfl 32.

'engaged primarily in the business of Imrchas-

th

WO is now suggested that the present arrangement between

ceuPanies be altered so that North American Securities00;lanY will act merely as the agent of Commonwealth Investment44841Y in the acceptance of subscriptions for shares of the

in consideration of a fee, with the result that 1.orthwealth ecurities Company will not : Airchase shares of Common-po:Investment Company for its own account nor take any'it Ion in such shares.st.1:“ "It aPPears that it is the purPose of section 32 to re-

relation3hips betl,een member banks and organizationsiirtaeu aze directly interested in issues of securities throughOf jviritinC, distributing, or dealirw in such issues, becauseIhe n! possible undesirable effect of such relationships upon14 cr'raher bank's credit or investment policies or its policiesit a alinl: with its customers. Under the suggested arrangement,dire ars that the relationship would be one which would fallzecur7-ci within the purpose of the law, since North LmericanIlessOa33 upany would be enga'ed in virtually no other busi-ezeep;'" would receive income from virtually no other source0r the the Sale and distribution to the public of the sharesbelie C"3

ommonwealth Investment Company. Therefore, the Boardth -11a-l.d et. at) under the suggested arrangement, section 02111 be applicable to Ir. Coleman's service as a direc-the

'.)z‘e:310/1t Bank Ol Galilornia, National _Lssociation, and asand director of North American Securities Company.


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Colcian is also serving as president nnd director ofCollamonwealth investment Company, and the applicability of sec-On 02 to such service under the suggested arrangement is also

The information which has been submitted in connec-'1°n With that company coverin,: its operations for the fourzonths in 1932 following its organization and for the twelvela°11ths 1933 shows that Turchases and sales of securities borethe

followi-gn relation to total assets:

1932 (4 months)193'0 (12 )

Purchases 108, 13.8.;125%

It also appears that profits from the salebo re the following relation to total profits:

1032 ( 4 months)1933 (12 " )

of securities

Percent of profits from sale ofsecurities to total Gross Profits

46.5%67.2(„;

foli al0appears that the securities in the company's port-° on June 30, 190,L, had been held for the following periods:

Held less than 6 months 'Held from 6 to 12 monthsHeld from 12 to 18 monthsHeld ror more than 13 months

0.0(7022.2%14.6%

it an. 011. the basis or the inioniation which has been submitted,act.v..ears that Commonwealth Investment Company has been engngedID111%11relY in the purchase and sale of securities primarily for thetriP,,°se c)f obtaining the advantage or appreciation in markett ell'es. Under the ciTicumstances, the Board believes tat it is4e4Eil. ed Primarily in the buJiness of purchasing, selling, orZRIL-44ting securities' within the mem-ling or section 32 of the

01 1933; 1 933; and, for the reasons stated in the Board's'chat ft7,111Y 17, 1934, to Lir. Coleman, the Board does not feel

properly issue a permit authorizing the service oflezbe ell or director of such a corporation as a director of

,

whieb- uank. Thererore, unless there are other considerationst4 t .You believe should be lyrought to the attention or the Boardiliely" ease, it is suggested that you advise idr. Coleman accord-

the r4cts event that Mr. Coleman desires to submit further

as serve °r arc;uments in support of an application for a permit to

°flicer and director or the Commonwealth Investmenttioil%and as director of the Bank of Calirornia, National -ssocia-rlal -e(pard is prepared to give such facts or arguments care-raolltz-eration. However, any such additional facts or argu-

34ould be submitted as promptly as pos,ible through you


3154

-lo-

• wri GinF.

Approved.

Letter dated October 10, 19, approved by four members of the B'oard,to

• (3 se, federal L?,eserve Agent at the 7Cederal deserve Bank of rew York,

1114Eas follows:

"Reference is made to r. Dillistin's letter of September28 194t,q, transmitting a copy oi a letter addressed to you by17tet C. Lehman, to whom the Board recently granted a

permit to serve at the same time as a director orThe "Union 1:ational Bank of _Pittsburgh, ittsburgh, Pennsylvania,

lied as a uirector oI the Llanufacturers Trust Company, rew York,caw Y0rIc-, which permit had been forwarded by you to the appli-laint with a letter expressing the Board's views with regard to1.618ctillnlr:c117.tta=ze at directors' meetings of the Lanu-

di "lir- Lehman states that it has always been his opinion thataallijectorts value to a bank was based to a great extent on his04 for advice on the Eeneral problems ot the bank,abi.?.'s knowledge of creuits and trade tendencies, anu on hisoil ty to secure business for the bank, particularly businessLeth!ilde of the locality in which the bank might be located. Lr.to

;

1,all 3tates that he lives outside of rew York and can4ot arrange

1414= b meetings at weekly directors' meetis but that ho irecuentlyY the bank by letter and telephone and that he con-

s with the oflicers of the bank when he is in row York.Tru,t"The Board realizes that Lehman and the L]anufactur,i rstO "I'll1PazY may feel that his services are of peculiar valueY01.k bauk and that by reason of his residence outside of L-ew4everi.! cannot be present at all meetings of the directors;liez,10:-'eless when a director or a bank assumes the duties andstatesibilities incident to that ofrice, the Board feels, as3atis(1',t11 itS letter of illAgust 27, 1934-, that he should have a

,e,t0rY record of discharging his duties and responsibi-bar Participating in the management and operations of ai4g2.7"ich he is serving through attendance at directors' meet-

1304.A. 4t a 8 further stated in its letter of 2lugust 27, 19w,L, the• - l'quesni t- that, when you submit your recomenciation as a

• to Y°ur annual review of this permit, you report fullyLehman's attendance at directors' meetings."

itipproved.Letter ,

eted October 10, 1934, approved by four members of the


3155

1°/11/34.—15—

P4ezoto L. Hoxton, Federal Reserve .gent at the Federal Reserve Bank

Rie4111°4d, inclosing the lollowin- Clayton L.ct permit; suggestim: thatthe

agent advise the applicant that it is with the expectation that he

411Dr°ve his attendance at directors' meetings of the banks involved111 the

--PDJAcation that the permit has been granted; and requesting that,

thaL'ent submits his recommendation as a result of his annual re-

" er4e Permit, he report fully as to the applicant's attendance at

eetcrs' Meetings:

Tht1e“s D. Campbell, for permission to serve at the same

a3 a director and officer of The First National Bank ofiBarton, 1.:aryland, as a director of The Citizens :a.tiona

0111- of ,;esternoort, „esternport, Maryland, and as ,a air”t

- Me First National Bank of 2iedmont, 1-iedmont, host Virs*-111-

Approved.

Letter dated October 10, 1964, approved by four meithers of the

'aelamom", reading as follows:

Lo:The Board has reconsidered the ap tion of Taske:lica rraisei nde32 73 Baltimore .-3treet, Cumberland, ilaryland, Lor 2 -a under the

per-Provisions of the Clayton ct to serve at theCoereille --e as Lirecbor and officer of The Second National Bank of

the , -411134, Cumberland, Maryland, as uirector and officer oftor 1berland ',avinGs Bank, Cumberland, Maryland, and as direc-cial,C ofticer of The Lowndes savings Bank and ?rust Coral)anYsrorth3lprg, -Jest Virginia, and in view of the circumstances

set

-Irin,-411 the letter signed by the directors of the Cumberlandthe eri8a11%, dated September 11, 193, has granted a permit tober 3iI)-4cant, effective, however, only until the close of liecm-elaYto' -L934. There are inclosed the original and copies of theto T"et Penult granted to flr. Lawndes for transmittal by you

?I and and the three banks, and a copy for your files.Ileithel,4;reViewing this case, it is the :Board's opinion

that

:Lc;riecl-1„4-1*. Lo17ades' letter or September 15, 1934 nor the letter4"erahwY the directors of the Cumberland Savings Bank, dated

11') thecredit

11, 1934, has justified the nature and extent of --e credit facilities of the three banks by the

applicant ,

to'La tioxton, Federal eserve Agent at the Federal Reserve Bank


3156

ti

10/11/64

toara

t° Mr. Newton, federal eeerve Agent at the Federal Reserve Bankoi

--va, reading as follows:

salci - "Reference is maae to the applications of Mr. W. F. aaith0- P. Daniel for permission under the provisions of the-JeaYton Act to serve at the same time as directors and/or offi-

bjs or irst Bilk in Bristol and Union Trust Bank,'h or Bristol, Tennessee.

th„,. 4, "In the consideration of these applications it was notedthe Union Trust Bank is not under the supervision or the

haPsTment of Banking of the State of Tennessee and that ittuti-° deposits. It was noted also, however, that this insti-1,01:°4 Liakes loans secured by stock and bond collateral. Astical'44°w, if the Union Trust Bank is not a 'bank, banking associa-alicl or trust company' within the meaningof Lhe Clayton Act[..-ran.illakes such loans, the Board would be without authority to01 Peruits to Mr. Smith and ..r. Daniel for the continuance11..treir services at the same time with that company and aseitec, beak, and it would therefore be necessary for them to

ulleir relations with either the national bank or the ,tio4402rust Bank in order to comply with the provisions of „-;ec-quest̀ )L- or the Clayton Act. In the circumstances, you are re-is to determine definitely whether the Union Trust Bankit a bankinc association or trust company' and whetherI4 tle„,:uallY does make loans secured by stock or bond collateral.tio4-- eirent you find that it is not a 'bank, banking, associa-

trust comPany, 'within the meaning or the Clayton _let

Stu"et it makes such loan, it is suested that you inform

th and ijr. Daniel o.c the Provisions of Section 8;..

-17-

"his family and his interests. It was largely upon such use(?1 the banks' credit that the Board's unfavorable action upon

Lowndes' application was based and it should be understoodthat the Board's ,action in .71..anting the limited _permit has been.'or the Purpose of preventing any possible embarrassment to the,C.1:1.mberland Savings Bank (and the other banks concerned) which

result from a seveT.ance or Loundes' official connec--cions with some of the banks at this period of the year.4., "The Board requests that you brin-_; to hr. Lowndest atten-,v1°4 the limited status of the permit and inform him that itrslas been ,:ranted with the expectation that he will bring his7?1*710es with the banks concerned into conformity with the pro-lslons of the Clayton Act at the expiration of the permit.

"Please keep the Board informed of the action taken inthis

matter."

Approved.

Letter dated October 10, 19'64, approved by four members of the


315710/11/34

"It was noted rram the statement of condition of theLInion Trust Bank as of ',larch 5, 19, submitted with theaPplications, that this institution has 'Bonds Guaranteed'

.:100,700 and 'Collateral -rust -,Bonds' of i;21,000. ,huethe Board does not have detailed iniormation with respect(z) the character ol the business conducted by this concern,

.13Pears possible that the provisions of Section 32 of the7.41drIL: Act of 1933 are applicable in these cases. There-Or, th Board reruests that you rake such investigation

is necessary to determine the status of Lir. smith and L.nii With respect to the provisions of 8ection 32. If youtsInd that their services with the national bank and the Union:1:1:-;t Bank come within the Provisions of Section 82, you areque3ted to inform them of the requirements of that section

74cil I

ill the event they are not Precluded from serving the two,trolstitutions under the prohibitions of Section 8_ of the Clay-

"et, as to the procedure in 1.:a king formal apillications,vr a ''.ection 32 permit.v 'It is suggested that it may be desirable for you to!

It

for your bank pass uPon the questions involvedlai.,6lieSe cases, in which event, his opinion shouhl be sub-

to the Board for its consideration.a.0131."Inaamuch as further consideration (pi_ the Clayton ctDelad cations of dmith and flr. Daniel is being deferred

receipt of the information requested, it will be ap-Z elated if you will inform the Board as promptly as possible

YoUr findin3.3 in these yatters."

tOE,ct,

t° alIlleant3 for permits under the Clayton _let, advising of.0)711

t:heir applications as follows:

-1)e'rtta'l U. Dow, Sr., or Permission to serve at the samecobi s a airector and officer or The i'irst National Bank of

Cobleskill, I:ew York, and as a director of The1.at1ona1 Bank or Liddleburgh, iliddleburgh, New York.

L.pproved.

Letters dated October 10, 1934, approved uy lour members of the

• 1.10T7n Atirae 4 -'&11U C)* Dixon, for permission to serve at the sni

a3 a director and officer of The Citizens ::ational Bankofr?cateraport, „esteraport, I.:arylan.J., and as a director an1Q11d er °f The Iiirst natiorr'l Bank of Barton, Barton, ...ary

aa 1-u, ,

iugnln, for permission to serve at the same timere etor and officer of The kirst National Bank of Barton,


10/11/34-19-

3.158

Barton, Maryland, and as a director or The Citizens NationalBank or ':iesternport, hesternport, Maryland.

lar. Albert D. Graham, for permission to serve at the same timea8 a director and officer of The First National Bank of Balti-"81 Baltimore, Laryland, and as a director and officer of

4ae Bank of Sparrows Point, Sparrows Point, Maryland.

lir* Walter Hopkins, ror permission to serve at the same time" a director of The First National Bank of Baltimore, Balti-

o!°re, MarYland, and as a director of the Bank of Sparrows Point,

Parrows Point, Laryland.

Itre George 'A)ems Willinms, for permission to serve at the same33./;ITa.as a director of The First National Bank of Baltimore,01.4-tulwre, Maryland, and as a director and officer of the Bank

'Parrows Point, Sparrows Point, Laryland.

ass rcher C. Holloway, for permission to serve at the same timeRill director and officer of The Jammercial National Bank of .Snow

* 1110w Hill, Maryland, and as a director and officer of TheBank of Newark, Newark, Maryland.

Mr s.dir Ryan, for permission to serve at the same time as avtractor and officer of The National Bank of Herndon, Lerndon,b, glnia, and as a directoT. or The Peoples National Bank of Lees-

, Leesburg, Virginia.

Ur. 'u

ler.Ao, Dickson, for permission to serve at the same time as

(11• ,4-rector of ihe Merchants National Bank of Indianapolis, Indianap-I4X, Indiana, and as a director of ihe Indiana .1'rust Company,lanapolis, Indiana.

!Liz,48 P. Frenzel, 0-r., for permission to serve at the sane timeaizt director and officer of The Merchants National Dank of In-or m1113°118, Indianapolis, Indiana, and as a director and officer

".e Indiana Trust Company, Indianapolis, Indiana.• x_

ae M. Mendenhall, for permission to serve at the sane timeulrector and officer of the Brightwood State Bank, Indianapo-

Irldln 4diana, and as an employee of The Merchants National BAnk of-'4113°11j, Indianapolis, Indiana.

• G,4 di '48aia Weaver, for permission to serve at the same time asejad fector of The First National Bank of Wortham, Wortham, Texas,leh,''s a director of The First National Bank of Richland,Texas.

Itr. Al

Rich-

a, di;441ell Anderson, for permission to serve at the saMe time asor and officer or The Capital National Bank of Sacramento,


lohl/ „Lx-20-

Sacramento,, California, as a cii:ctor of the A.rst :ationalEarlk or Chico, Chico, California, and as a director andofficer of the Baw?_' of io Vista, Rio Vista, Califorl(,ia.

Approved.

?here Was then presented: the follerrin';

111 stock Of a liederai re;_serve bank:114lienf.)7)1z.t or 011IG-M;l:L Stock:

11.:i national Bank oi San•an Antopio, Te;:as

4proved.

3159

Rilication for a chanEe

Shares

360

Thereupon the meeting adjourned.

-7ice ,027.11Cr.

360

Assistant 3ecreLr:T.
