19340919_430p_minutes.pdf

2856

A meeting of the Executive Committee of the Federal Reserve

4krduus held in Washington on Wednesday, September 19, 1934, at4130 13. m.

PRESENT: Mr. Thomas, Vice GovernorLr. HamlinMr. S zzimc zak

Er. Iorri1l, SecretaryLr. Bethea, Assistant SecretaryMr. Carpenter, Assistant Secretary

The Conmittee considered and acted upon the following matters:

Telegrams dated September 19, 1934, from Mr. Curtiss, Chair-or the

Federal Reserve Lank of Boston, Mr. Austin, Chairman of

the 4deral Reserve Lank of Philadelphia, and Mr. Wood, Chairman ofthe

Federal Reserve Bank of St. Louis, all advising that, at meetingsOr the

boards of directors today, no changes uere made in the banks'

eli.4.1111g schedules of rates of discount and purchase.

Without objection, noted with approval.

Letter dated September le, 1934, approved by four members ofthe b°ard, to Li'. Sailer, Deputy Governor of the Federal Reserve BPrkor Ile

17 York, reading as follows:

stud "Referring to your letter of August 24, pending a furtheror dri of the report of the 'Survey of Activities and Expensete the ItTedical Division and Other Welfare Activities' forwarded14.th e Board with Mr. Case's letter of July 9, the Board notesreet 4PProval the reduced salaries fixed by your Board of Di-°I".,1 for the physicians in the Medical Division as follows;Dr. Mary Y. Crawford 6,700 per annumDr. Walden E. Yuns 4,360 per annumDr. Belle Thomas"The 3,900 per annumPer e Board also notes with approval the salary of ,:;804scr er blhl fixed for Dr. Warren B. Spurge (dentist), the succes-

Charles H. Large, deceased.'-uhe salaries provided for the three physicians named above

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

2857

4.9/19/34 -2-

Itamount to ,14,960, a reduction of ;:)700 from the salaries pre-

paid, such reduction being due to a curtailment of thetlme they are in regular attendance at the bank. In this con-

and in connection with the Board's further considera-

it3ion of the survey of activities and expense of the Medicalivision, it would appreciate your advising whether arrange-xente can be made for a further reduction in the hours ofEl. tendance of the physicians so that not more than one physi-elml. will be on duty at the bank at any one time, and stilllaalntain a satisfactory Medical Division."

Approved.

Letter dated September 18, 1934, approved by four members ofthe Board,

To Ur. Case, Federal Reserve Agent at the Federal Reserve

Of Batik

New York, reading as follow,:

Receipt 1934

aeeeipt is acknowledged of your letter of September 5,, with which was inclosed a copy of a letter dated Septe-b moer 4 ln

p 4.1:2 -Lu34, addressed to you by Er. J. Stewart Baker, Chairmanthevue Bank ,ankof the Manhattan Company with further reference to

TrustPositin of the stock hold by that bank in The CountyoCompany, White Plains, New York.

or v_.The Board has givon consideration to your letter and thattO Baker, and in accordance with your recommendation grantsAprileiBank of the Manhattan Company an extension of time toZia 1935, in which to dispose of its holdings of stock ofis- '°untY Trust Company, White Plains, New York. The extensioncollgallted with the expectation that the Bank of the Manhattanstee kly 74111 continue to exert sincere efforts to dispose of the

the 13_.ard, to Mr. Williams, Federal Reserve Agent at the Federal Re-aerve Batik

Approved.

Letter dated September 18, 1934, approved by four members of

of Cleveland, reading as follows:

7, lp:IAleceiPt is acknouledred of Er. Evans' letter of September1934--'' *lioh has reference to the Board's letter of July

o0,2advising of an extension of time to September 1, 1934,

wIliT,11 which 'The Marengo Banking Company', Marengo, Ohio,may

1rwith the provisions of membership condition

numbered

dkte 0,f3,?vides that the bank should, within three months of the

4t8 admission, reduce all excessive loans to amount

s


2858

94-9/34 -3-

"within the limits prescribed by the lams of the State of Ohio.It has been noted that all of the bank's loans have been reducedto amounts within legal limits except the line of C. B. Smith,that the report of examination made by an examiner for the StateBanking Department does not list this loan as being legally ex-cessive although it is the feeling of your office that it isexcessive, that the cashier of the bank feels that the loan canb? adjusted within a reasonable time and that it is the sugges-:blcn of your office that the bank be granted an additional-uhlrty or sixty days within which it may comply with conditionnumbered 17.

."In view of all the circumstances, the Board grants an ex-Bon of time to November 1, 1934, within which The Marengo

!allicing Company may comply- with the provisions of condition ofnembership numbered 17, and it is requested that you advise thebank accordingly."

Approved.

Letter dated September 18, 1934, approved by four members ofthe

Board, to Lis. L. J+Pirst

National Bank offollows:

"This refers to the resolution adopted on November 27,11,933, by the board of directors of your bank signifying the;47fTk's desire to surrender its right to exercise trust powers4J-oh lhave been granted to it by the Federal Reserve Board./loch 'The Board understands that The First Rational Bank of

rester has been discharged or otherwise properly relieved in

eordanoe with the law of all of its duties as fiduciary. Thec:ard, therefore, has issued a formal certificate to your bnrcv:th05=hat it is no longer authorized to exercise any of

y powers covered by the provisions of section 11(k)Reserve Act, as amended. This certificate is

that, this connection, your attention is called to the factserve "der the provisions of section 11(k) of the Federal Re-by the '12t' as amended, when such a certificate has been issuedshall() zederal Reserve Board to a national bank, such bank (1)or th.11° longer be subject to the provisions of section 11(k)Reser- l'ederal Reserve Act or the regulations of the Federalhave "ge Board made pursuant thereto, (2) shall be entitled towith Turned to it any securities which it may have depositedPrivat e State or similar authorities for the protection ofe or court trusts, and (3) shall not exercise any of the

Fiegel, Vice President and Cashier of "The

Rochester", Rochester, Ninnesota, reading as


2859

9/19/34

IIpowers covered by section 11(k) of the Federal Reserve Act ex-cept with the permission of the Federal Reserve Board."

Approved.


the Boards to Mr. Logan, General Counsel of the Federal Reserve BankOr

New York, reading as follows:

"This refers to your letter of July 23, 1934 transmittingcoPies of statements of charges for services rendered by Messrs.Davis, Polk, Wardwell, Gareinererd Reed in connection with theactions brought against the Federal Reserve Bank of New York byBickford's, Inc., and by Morris Finkelstein, involving certainquestions arising out of the closing of the Bank of the United4tes. You state that the payment of the charges as submitted

"as been authorized by the Board of Directors of the Federal Re-rrve Bank of New York. It is understood that the Bickford suiti:t4ts been finally disposed of and that the complaint in the'..t,ilifelstein action has been dismissed by the court with the pos-1°Ility that an amended complaint may be filed. It is also

1.derstood that unless there are further proceedings in the;103clalkel stein case no further charges will be made by Messrs.Polk, Wardwell, Gardiner and Reed for services or expensesst connection with the litigation in question. With this under-the Federal Reserve Board approves the payment by theReserve Bank of New York of the amount of $8,675.01 to

saulars. Davis, Polk, Wardwell, Gardiner and Reed, for servicesYour

IlfrZas described in their statements transmitted with

Approved.

Letter dated Septerber 18, 1934, approved by four members oftha 4ar

Ur. G. L. Hickey, Secretary-Treasurer of the Wyoming

13ankers Association, Warsaw, New York, reading as follows:

the,IIReceiPt is acknowledged of your letter of September 5 andCoutt'4313Y* inclosed therewith of a resolution of the WyomingratseY 13ankers Azsociation favoring a reduction in interestto thellaidcn time deposits. This resolution has been brought

°Pur4ttention of the Federal Reserve Board.Reserve suaat to the provisions of section 19 of the Federal194. 'Acts as arended by section 11(b) of the Banking Act ofsaid after raking a careful survey of banking practices


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9/19/34 -5..

"throughout the country, the Board fixed a limit of 35 upon theinterest that may be paid by member banks of the Federal re-serve system on time and savings deposits. However, there isnothing in the Board's regulations or in the considerationsthat led to its action that would prevent any bank or group ofbanks in any particular section from fixing lower rates. Onthe contrary, it was contemplated by the Board that, in fixing?nlY a maximum rate, banks would be free to take such action2.n. their own discretion, and many banks throughout the countryhave done so as a matter of sound banking practice.

"Recently the Board reviewed the situation throughout thecountry with respect to interest rates on time deposits and:sifter carefully considering the matter it does not feel that?.t would be justified in lowering the maximum. Accordingly,;:t has notified the Federal reserve banks that no change will;ue s.lade in the regulation at the present time and, as previous-±Y indicated, the action of the Board leaves member banks of the?deral reserve system generally in a position to exercise theirawn discretion and sound judgment as to the desirability of re-J°..14118 in interest rates to meet the peculiar situations of"01r particular localities."

the BoaI'd' to Mr. Case, Federal Reserve Agent at the Federal ReserveBatic

Approved.


of New York, reading as follows:

1934 "Receipt is acknowledged of your letter of September 4,,7! and the inclosed copies of your letter of July 30, 1934,'4.r.

e Gustav P. Heller and of Ur. Heller's letter to you of

Of 8arne date regarding his application under the provisionsas section 32 of the Banking Act of 1933 for a permit to serveas diretor of The Dover Trust Company, Dover, New Jersey, and4 Illanagervi Jersey

of L Newark . F. Rothschild & Co., Nerk Branch, Newark,e ." Ththat 1,4-6 ,dcard has noted Mr. Holler's statement to the effect

brit,';'s functions as manager of the Newark Branch do noter into Contact with the company's activities as a deal-/rliss mILIch as the Newark Branch does almost exclusively a cm-to th-" uusinoss. The Board has also noted his statements ascomp:, 31111111 extent of the dealings between the bank and theto 1.;' Y' as well as his explanation of his reasons for desiring

'vith r111owe,4111 as a director of the bank. Hover, the Board agreesadyazi u in believing that the additional facts and arguments

eeneC1 bY Heller are insufficient to lead to a differenttion.with h°n from that previously reached by the Board in conneo-is

application.


vi9/34 -6-

2861

"As you know, the position taken by the Board in its let-ter to the applicant, dated July 23, 1934, a copy of which wasforwarded to you, was the same as that taken with respect toOther applications in which similar circumstances were present,and was adopted in order to give effect to the purposes whichthe Board believes Congress had in mind in enacting section 32,namely, to terminate relationships of the types described there-in between member banks and dealers in securities, apparentlybecause it was thought that such relationships might have atendency to influence the credit and investment policies ofr.flember banks in a manner which Congress did not consider compat-ible with the public interest. In view of the policy thus de-clared by Congress, the Board feels that, except in unusualeases .which are not within the class contemplated by the stat-ut?, it should not issue permits authorizing relationshipsich are within the prohibitions of the section."

Approved.

Letter dated September 18, 1934, approved by four members ofthe Board, to Ir. Case, Federal Reserve Agent at the Federal ReservetEtnk _-

vz New York, reading as follows:

"Consideration has been given to the information submittedwith Lr. Dillistin's letter of August 21, 1934, in connection

thethe request of hr. Harold C. Richard for a ruling as to11116 aPPlicability of section 32 of the Banking Act of 1933 to2:!.serviee as

director of Ynnufacturers Trust Company and asveljVery:lc,t7tk0: Varec Investment Corporation, Ltd., both

his letter to you dated June 14, 1934, a copy of which-tu closed, Mr. Richard states:

this :In regard to the Varec Investment Corporation Ltd.,n u ls 100/. owned by iv immediate family and is merely; "olding corporation, has never issued or underwrittenETtUrities and does nothing except invest its own money.'price It appears, further, that the total purchase and salesilac 4 securities purchased and sold by the corporation dur-total e Years 1929 to 1933 inclusive, in terms of percentage ofassets, were as follows:

Year Purchases Sales1929 .0--

I:. 68.66.25 6.71

19322.25 1.870.79

46.8

0.50 0.61

1933 5.78


2862

9/19/34.

"In the circumstances, it would appear that the corporationis similar in its purposes and activities to the corporation re-ferred to in the Board's letter of December 22, 1933 (X-7739),and the Board sees no reason to differ with your conclusion thatsection 32 of the Banking Act of 1933 should not be regarded asaPPlicable to Mr. Richard's service as director of ManufacturersTrust Company and as officer and director of Varec InvestmentCorporation, Ltd."

Approved.


the Board, to I. Case, Federal Reserve Agent at the Federal ReserveBalIck of New York, reading as follows:

"There are inclosed the original and copies of a Clayton4:et permit granted to la-. Edward T. Rooney, Englishtown, New,

ers"rs to serve at the same time as director and officer ofthe First National Bank of Englishtown, Englishtown, New Jersey,

rd as a director of the Freehold Trust Company, Freehold, NewJersey, for transmittal by you to Mr. Rooney and the two banks,4 copy for your files. On May 22, 1934, the Board concurredYour opinion that the permit should not be granted in view

ve4 information then in hand and the application has been re-

aZeidered In the light of information subsequently furnished1934!he recommendation contained in your letter of August 14,

"In considering this application it was noted that the?oi rst National Bank of Englishtown appeared to be in poor con-

examined as of March 20, 1934. If estimated losses,76ful assets and securities depreciation had been charged tonZP'tal accounts, the net sound capital remaining would have;;;°,111ated to only 4.6 of deposits. Preferred stock sold locally.b4 to the Reconstruction Finance Corporation has brought thebujl of sound capital funds to approximately 12% of deposits,irirl,the condition of the bank's investment and loan accounts-4-otes 4-,,he need of constant and careful attention.30,r 'The

Freehold Trust Company was reorganized in 1932 whenzix °II all deposits was made available and after a period ofOf enthe ef the remainder was made available at the first1934 -°" 311°31th. The bank was examined by the F.D.I.C. on June 5,vhich and had only c:;63,000 in deposits subject to restrictionoolatiaw" to have been made available July 1, 1934. For yourAalds efltial informtion, the report indicated net sound capitalPiliallenunting to only 8% of deposits. The ReconstructionPrete; '°rPerati value

but has agreed to purchase 350,000 par

red took, but the sale has not been completed. Assets


28639/19/34

-8-

tlclassed as slaw will exceed the total of capital funds after

the increase through the sale of preferred stock."The Board took into consideration the improvements effected

and in process of completion with respect to the condition ofboth banks, and the fact that the management of each appears tobe alive to the situation and sincerely endeavoring to improveits condition. It was also noted that Mr. Rooney's service asdirector of the Freehold Trust Company and as director and in-active vice president of the First National Bank of Englishtomnbegan in 1932, after the reorganization of the Freehold TrustCompany and after the acquisition of the undesirablo assetsthat have been the cause of the difficulties of both banks, and,hat his services are considered especially valuable to bothu!Inks because his business contacts give him direct informationlth respect to agricultural credits in the territory served byboth hanks. In the circumstances, and in viowof your recom-m.?ndation, the Board concurs in your opinion that the permitShould be granted but, because of the condition of the banksInvolved and the fact that the interlocking relationship maycause the condition of the State bank to reflect unfavorably4,13. on the national bank, the Board suggests that you endeavor,cooperation with the appropriate supervising authorities, to

assist in the completion of plans now on foot and to bring about;liZlo!'e satisfactory condition in the two institutions. Men youth.liat Your recommendation as a result of your annual review ofprlos Permit, the Board requests that you report fully as to the

Of ffe8s made in bringing about an improvement in the condition,Lese banks."

the Boar

Approved.


d' t° LL', Case, Federal Reserve Agent at the Federal Reserve

New York, reading as follows:

rel "Reference is made to your letter of August 29, 1934,Boanve to the steps which you have taken pursuant to the

cerrl 3 request contained in its letter of July 31, 1934, con-certain criticized matters noted in considering the

J °11 4et application of Ladison L. Toms, Morristown, Newersey.st,

approvoa inew of the facts recited in your letter, the Board8 the

procedure suggested by you."

Approved.Letters

dated September 18, 1934, approved by four members


2864

9/19/34 -9 -

of the Board, to the respective Federal reserve agents, stating that

the Board has given consideration to the following applications for

Permits under the Clayton Act, and that, upon the basis of the infor-

tion before it, feels that the issuance of the permits applied

f°r would be incompatible with the public interest. Each letter

Ills° requested the agent to communicate to the applicant the Board's

tion in the matter, and to advise the Board promptly as to

whether the applicant desires to submit any additional data, and,

if tot, as to that steps he proposes to take in order to comply withthe Pr

ovisions of the Clayton Act:

12" 0* A. Schlapfer, for permission to serve at the same time

38 an officer of the Montclair Trust Company, Montclair, New,ersoY, as a director of The First National Bank of Cedar Grove,.edar Grove, New Jersey, and as a director of The Caldwellilational Bank, Caldwell, New Jersey.

l!r.'all4 C. Irvine, for permission to serve at the same time

,8 a director and officer of the First National Bank in Taren-

Z: Tarentum, Pennsylvania, and as a director of The Citizens1°Ilal Bank of Evans City, Evans City, Pennsylvania.

14r. Thntim -Inas C. Boushall, for permission to serve at the same

as a director of The Morris Plan Bank of Washington, Wash-41,gvra. D. C., as a director and officer of The Morris Plan Bank11. ,ginia, Richmond, Virginia, and as a director of The Morris

cank of Wilmington, Wilmington, North Carolina.Lr. n" 4-* Graham, for permission to serve at the same time asco °fficer and director of the First National Bank and Trust

toltr11)," °f Racine, Racine, Msconsin, as an officer and direc-ric„:" the West Racine Bank, Racine, Wisconsin, and as an of-

%Iscelt=r of the State Bank of Union Grove, Union

dire1—

1,,i_ccetor

Hoy,

for permission to serve at the same time as as1117=er, of the First National Bank of Woodstock,

Y, as a director of the State Borlr of Hunt-


9/19/34 -10-

2865

C. Jamieson, for permission to serve at the same time.as an officer of The First National Bank of Madison, Madison,disconsin, and as a director of the Bank of Poynette, Poynette,Wisconsin.

Approved.

Letters dated September 18, 1934, approved by four members

of the Board, to the respective Federal reserve agents, inclosing

the following Clayton Act permits; suggesting in each case that the

48ellt advise the applicant that the permit has been granted -with the

e-Pectation that his attendance at directors' meetings -will be im-

and requesting that the agent, .when he submits his recom-

11"44tion as the result of his ennual review of the permit, reportfull_

concerning the applicant's attendance at directors' meetings:

11r. Clarence L. Fisher, for permission to serve at the same2nnle 0.8 a director and officer of The Lyons Falls National Bank,

°Ils Palls, New York, and as a director of The Black River Na-ulonal Bank of Lomille, Lomille, New York.

H. r,

dir . Gould, for permission to serve at the same time as a17,;1!”tor and officer of The Lyons Falls National Bank, LyonsTr '48, New York, as a director and officer of the Les County?illet Company, Lomille, hely York, and as a director of the'st Citizens Bank and Trust Company, Utica, NeyrYork.14r ati140.-sorge R. Griffith, for permission to serve at the same

a director of The Peoples National Bank and Trust Com-T-1:14Y ?t Irvington, Irvington, New Jersey, and as a director ofPlrst National Bank of Cedar Grove, Cedar Grove, New Jersey.• S. v. -

a dir. 1-(amage, for permission to serve at the same time asoil c:'et,or and officer of The First National Bank of Oil City,ing eltYs Pennsylvania, and as a director of The Citizens Bank-

°raPanY, Oil City, Pennsylvania.lir. Lout, Aas a di ‘) Johnson, for permission to serve at the same timeburg, ivrector of The Union National Bank of Clarksburg, Clarks-11111)aitv :13t Virginia, and as a director and officer of the Com-

,,avings and Loan Company, Clarksburg, West Virginia.EdwarA

u. Baker, for permission to serve at the same time


28669119/34 -11--

as a director and officer of The St. Charles National Bank,St. Charles, Illinois, and as a director of the State Bank ofSt. Charles, St. Charles, Illinois.

Approved.

Letters dated September 18, 1934, approved by four membersOf the Board, to applicants for permits under the Clayton Act, advis-

iI1C Of approval of their applications as follows:

Horace A. Yoses, for permission to serve at the sane time!118 a director and officer of the West Springfield Trust Company,

st Springfield, L'assachusetts, and as a director of The ThirdAational Bank and Trust Company of Springfield, Springfield,Lias

sachusetts.

14:1.• iheOdOreW. Dawes, for permission to serve at the same timer a director of The First National Bsrk of Blairstown, Blairs-b°7414, New Jersey, and as an officer of The Caldwell National'Dank, Caldwell, New Jersey.

' R. Einstein, for permission to serve at the sane timeiw'c! a director and officer of The Merchants National Bank ofAt!t,n4ing, Kittanning, Pennsylvania, and as a director of TheQ. ong County Trust Company, Kittanning, Pennsylvania.4. ou_ jdir Omwake, for permission to serve at the same time as aecetor of the Cincinnati branch of the Federal Reserve BankIlat.levoland, Cincinnati, Ohio, as a director of The SecondtorlOf 1 Bank of Cincinnati, Cincinnati, Ohio, and as a direc-Ohl°.. The Norwood-Hyde Park Bank & Trust Company, Norwood,

a ;4rib." 1. Carroll, for permission to serve at the sane time as

and as a director of the West McHenry State Bank,

8t the First National Bank of Woodstock, Woodstock,

Illinois.

as a 1.1rY C. Murphy, for permission to serve at the same time111. dIrector and officer of The Upper Avenue Bank, Chicago,Balatclaels, and as a director and officer of the First NationalOf

Woodstock, Woodstock, Illinois.Lir̀ -Arthur IDas a A.; Janes, for permission to serve at the same timecormaZractor and officer of the First National Bank and Trustficel;-Y of Racine, Racine, 'Wisconsin, and as a director and of-of the iiorth Side Bank, Racine, Wisconsin.

Approved.


2867

9/19

There was vas then presented the following application for a

in stock of a Federal reserve bank:

licatian for ORIGINAL Stock:

411.,?ity NiTgilal Bank,‘,.1.1 City, Pennsylvania

App0 ed,2

01/LAS Secret y•

Approved.

Shares

390 390

Thereupon the meeting adjourned.

Vice Governor.


19340919_430p_minutes.pdf

Documents

federal reserve agent

chairmanthevue bank

cases letter

federal reserve lank

members ofthe board

federal reserve4krduus

board notesreet

board of di