19351022_minutes.pdf

21_44

A meeting of the Board of Governors of the Federal Reserve System

Was held in Washington on Tuesday, October 22, 1955, at 11:30 a. in.

PRESENT: Mr. Eccles, ChairmanMr. Thomas, Vice ChairmanMr. HamlinMr. MillerMr. JamesMr. Szymczak

Mr. Morrill, SecretaryMr. Bethea, Assistant SecretaryMr. Carpenter, Assistant Secretary

The Board acted upon the following matters:

Letter to Mr. Case, Chairman of the Federal Reserve Bank of New/or

lc, reading as follows:

"Reference is made to your letter of October 10, 1935, ad—that your directors have approved a renewal of the

trrangement under which Mr. John H. Williams, economist of yourconducts courses in economics at the Harvard Graduate

ochoo 1, giving at least two days a week of his time to the Fed—"al Reserve Bank of New York; his salary, during his part time!IIPloYment being one—third of his regular salary, or at the4-aze

of $7,35.35 per annum."The Board of Governors of the Federal Reserve System

!PProves the adjustment in Mr. Williams' salary beginninguctober 1, 1935, for the current academic year, in accordancewith the action taken by your directors."

lelter- dated October 11 from Mr. Preston, Deputy Governor of the FederalIleeer

Ve Bank of Chicago, which requested approval of certain changes in theDere°

nnel classification plan of the bank. The memorandum stated that Mr.

Approved unanimously.

Memorandum dated October 18, 1955, from Mr. James submitting a

l'set n°-'s letter advised that the proposed changes were caused by the con-

4011a

ation of the Stenographic Division, the Files Division and theNto

6111Phic Float Division, and that Mr. James had reviewed the proposed

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

21.45

10/22/35

changes and recommended that they be approved.


Memorandum dated October 16, 1935, from Mr. Parry, Chief of the

411e1on of Security Loans, submitting proposed letters to all Federal

414"e agents requesting them to inaugurate as of October 51, 1935, another

"teneion of the Board's system of obtaining monthly reports from member

r141Us or national securities exchanges. The memorandum stated that the4tt

era Were in accord with the Board's action of August 26, 1935, requiring

tePor te, and were supplementary to the Board's letter of September 20, 1935,

ich all Federal reserve agents were requested to begin obtaining

41°I1til1Y reports from member firms of certain of the leading exchanges; and

thatafter the proposed extension, the report service will have been

IhaupMrated li„

in all Federal reserve districts in respect to all member firmsor

the following exchanges:

New York Stock ExchangeNew York Curb ExchangeBoston Stock ExchangePhiladelphia Stock Exchange •Pittsburgh Stock ExchangeCleveland Stock ExchangeBaltimore Stock ExchangeNew Orleans Stock ExchangeChicago Stock ExchangeDetroit Stock ExchangeSt. Louis Stock ExchangeSan Francisco Stock ExchangeSan Francisco Curb ExchangeLos Angeles Stock Exchange

eMorandum also requested approval of proposed letters as referred tobelow

$ which were attached to the memorandum:


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Letter to Mr. Fletcher, Acting FederalReserve Agent at the Federal Reserve Bank ofCleveland, reading as follows, and similarletters to the Federal Reserve Agents at theFederal Reserve Banks of Chicago and San Fran-cisco:

"Supplementing the Board's letter of September 20, 1935, itwill be appreciated if you will request all member firms of theCleveland Stock Exchange who have their principal offices inYour Federal Reserve District to make monthly reports on FormFa-. 240, beginning with reports as of October 31, 1935, in thesame manner in which you requested reports as of September 30,1935 from member firms of other national securities exchanges.

"Letters are being addressed to each Federal Reserve Agent"king him to request any member firms of the following ex-changes having their principal offices in his District to makemonthly reports on Form F.R. 240:

Cleveland Stock ExchangeBaltimore Stock ExchangeNew Orleans Stock ExchangeDetroit Stock ExchangeSt. Louis Stock ExchangeLos Angeles Stock ExchangeSan Francisco Curb Exchange

"Please inform the Board as to whether any member firms of theCleveland Stock Exchange have their principal offices outsideYour District. The Board will coordinate and relay the information,0 the appropriate Federal reserve banks. You will receive from°le Board the names and addresses of any member firms of the above!xChanges (other than the Cleveland Stock Exchange) who appear to"ave their principal offices in your District, and it will belefPreciated if you will request such firms to make reports to youeginning with those for October 31, 1935 in the same manner asmember firms of the Cleveland Stock Exchange.

f 0 "In the Board's letter of September 20, you were requested torward each month to the Board separate figures for (1) member

!irme of the New York Stock Exchange and (2) other member firms14 national securities exchenges. The figures collected pursuantuo this letter should be included with those already beingeollected from 'other member firms of national securitiese changesl.n

Letter to Mr. Hoxton, Federal ReserveAgent at the Federal Reserve Bank of Richmond,reading as follows, and similar letters to theFederal Reserve Agents at the Federal ReserveBanks of Atlanta and St. Louis:


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"Supplementing the Board's letter of September 20, 1935,it will be appreciated if you will request all member firmsof the Baltimore Stock Exchange who have their principaloffices in your Federal Reserve District to make monthly re-ports on Form F.R. 240, beginning with reports as of October31, 1935, in the same manner in which you requested reportsas of September 30, 1935 from member firms of other nationalsecurities exchanges.

"You will receive from the Board, within a few days, alist showing the names and addresses of firms who appear to bemembers of the Baltimore Stock Exchange having their principalOffices in your District, and a list of such firms having theirPrincipal offices outside your District. It is suggested thatYou check the accuracy of these lists by consultation with theofficials of the Baltimore Stock Exchange, and inform the Board,as promptly as possible, of any changes, additions, or othercorrections.

"Letters are being addressed to each Federal Reserve Agentasking him to request any member firms of the following ex-l's.nges having their principal offices in his Federal Reserve

ulstrict to make monthly reports on Form F.R. 240:Cleveland Stock ExchangeBaltimore Stock ExchangeNew Orleans Stock ExchangeDetroit Stock ExchangeSt. Louis Stock ExchangeLos Angeles Stock ExchangeSan Francisco Curb Exchange

"You will receive from the Board the names and addresses°f any member firms of the above exchanges (other than thenaltimore Stock Exchange) who appear to have their principal°faces in your District, and it will be appreciated if you willrequest such firms to make reports to you beginning with those!or October 31, 1935 in the same manner as member firms of theBaltimore Stock Exchange.

• "In the Board's letter of September 20, you were requestedto forward each month to the Board separate figures for (1)Tember firms of the New York Stock Exchange and (2) other member'Iirms of national securities exchanges. The figures collectedPursuant to this letter should be included with those of 'othermember firms of national securities exchanges'."

Letter to Mr. Curtiss, Federal ReserveAgent at the Federal Reserve Bank of Boston,reading as follows, and similar letters tothe Federal Reserve Agents at the Federal Re-serve Banks of New York, Philadelphia,Minneapolis, Kansas City and Dallas:


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"Supplementing the Board's letter of September 20, 1935,letters are being addressed to each Federal Reserve Agentasking him to request any member firms of the following ex-changes having their principal offices in his Federal ReserveDistrict to make monthly reports on Form F.R. 240:

Cleveland Stock ExchangeBaltimore Stock ExchangeNew Orleans Stock ExchangeDetroit Stock ExchangeSt. Louis Stock ExchangeLos Angeles Stock ExchangeSan Francisco Curb Exchange

"You will receive from the Board, within a few days, thenames and addresses of member firms of any of such exchangesWho appear to have their principal offices in your Federal Re-serve District. It will be appreciated if you will request eachsuch firm to make monthly reports to you, beginning with thereport as of October 31, 1935, in the same manner in which yourequested reports as of September 500 1935 from member firmsof other national securities exchanges, pursuant to the Board'sletter of September 20, 1935."

All of the letters were approved unani-mously.

Letter to Mr. Stevens, Chairman, Federal Reserve Agents' Confer-

Prepared in accordance with the action taken at the meeting of the

1/011Y0on October 18, 1935, and reading as follows:

"Your letter or October 10, 1935, with regard to a con-erenc e during this Fall of chairmen and Federal reserveagents, was discussed at a meeting of the Board, and I wasl'equested to advise you that it is believed that such a

Testing prior to the reorganization of the Board which is toAa e place as of February 1, 1936, pursuant to the Bankingct of 1935, would not be productive of results which wouldjustify calling the conference."


Letter to Mr. W. N. Macartney, Assistant Treasurer, Horrocks-

' Ibbot r,8- \J- o., Utica, New York, reading as follows:


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"Receipt is acknowledged of your letter dated October 9,1905, addressed to Mr. Eccles, Chairman of the Board ofGovernors of the Federal Reserve System, regarding collectionPolicies of banks and expressing your belief that, throughoutthe United States and in accordance with instructions,examiners are putting pressure on bank officials to collectslow loans.

"The loaning policies of a bank, both in the extensionand the collection of credits, are the responsibility of thedirectors of the bank. Instead of undertaking to curtail bankcredit, the Board of Governors of the Federal Reserve Systemand various Governmental agencies have encouraged banks tomeet all legitimate demands for credit. Certainly examinersfor the Federal reserve banks have not been instructed to work!ntrary to such policies, and it is confidently believed thathe same can be said for the national bank examiners and theexaminers for the other supervisory agencies."

Letter to

kilt of New York,


Mr. Case, Federal Reserve Agent at the Federal Reserve

reading as follows:

"Consideration has been given to the information submittednth Mr. Gidney's letter of August 28, 1955, in connection withI'Drle request of Mr. S. C. Clark for a ruling as to the applica-ilitY of section 32 of the Banking Act of 1935 to his service!I.,e a director of Fulton Trust Company of New York, New York,Zew York, and as a director of Chartered Investors, Inc.,raterson, New Jersey.

"It appears that the corporation is a so-called 'invest-trust', and that its purchases and sales of securities

Zther than its own amounted to the following percentages of its°tal assets for the years indicated:

Year Purchases Sales1930 40.26 25.871931 6.57 7.391932 4.45 4.631933 3.80 5.541934 9.54 7.38

Average for five years13.25 9.55

tie "It further appears that as of December 31, 1934, the securi-t 8 in the corporation's portfolio had been held for the following'ell°ds in the following percentages:

Held less than 6 months 3.37Held 6 to 12 months 5.79Held 12 to 24 months 3.24


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“Held 24 months or over 87.60100.00

"It also appears that the corporation has sold none of itsown securities since the original issue in 1929, and that,except for a portion of its cumulative preferred stock, it hasnot repurchased or redeemed any of its own securities.

"It appears that the corporation has engaged in two trans-actions involving the issue, underwriting or distribution ofsecurities other than its own during the five-year period 1950to 1954. The securities involved were issued in 1929 and 1930.The profits from these transactions amounted only to about 1Per cent of the gross income received by the corporation frominterest dividends, etc., during the five-year period. Thecorporation also joined a 'purchase group' to purchase a blockcr securities from an estate. The securities acquired by thecorporation through this transaction in March 1930 were helduntil December 1933, and the transaction was therefore ap-Parently entered into for the purpose of acquiring securitiesfor investment at a discount, although the corporation received4 small profit from the group. Of course, if the corporationShould engage in the future in a substantial amount of trans-actions involving the issue, underwriting or distribution ofsecurities, a further question might be raised as to theaPPlioability of section 32.

"On the basis of the information submitted, the Board seesri° reason to differ with the conclusion reached by your office!lid by counsel for your bank that section 52 is not applicableto the relationships described in the first paragraph of thisletter.”


Letter to Mr. Case, Federal Reserve Agent at the Federal Reservekrat

01' new York, reading as follows:

"Consideration has been given to the information submittedIljth Mr. Gidney's letter of August 27, 1935 in connection with"8 request of Dr. Edwin W. Kemmerer for a ruling as to thetoricability of the provisions of section 32 of the Banking Act0 1933 to his service as director of Princeton Bank and Trust

el!PanY, Princeton, New Jersey, and as director of United States"Ireign Securities Corporation, Newark, New Jersey.

ti "It appears from the information submitted that the corpora-is a so-called 'investment trust' engaged in the business

an,investing and reinvesting its funds; and that its purchasessales of securities other than its oval amounted to the


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"following percentages of its total assets for the yearsindicated:


Average for five years 45.31 34.22"It further appears that as of December 31, 1934, the

securities in the corporation's portfolio had been held forthe following periods in the following percentages:

Held 6 months or less 6.05Held 6 to 12 months 7.81Held 12 to 24 months 37.14Held 24 months or more 49.00

100.00"It appears that the corporation has not offered any of its

?wn shares or other securities for sale since 1924, and that itnas not purchased or redeemed any of its securities during thePast three years except that during 1932 and 1935 it purchasedfor retirement a portion of its first preferred stock.

"It further appears that during the past 5 years, the cor-Poration has engaged in ten transactions involving the under-wrlting or distribution of securities other than its awn, onlythree of which seem to have been entered into for the purpose

y acquiring securities at a discount for investment. However,he profits realized from such transactions amounted to lesst.hart 2 per cent of the gross income of the corporation from!Alterest and dividends during the period. Also, since February

1932, the corporation has engaged in only one transaction ofThis nature, from which it received a profit amounting to lessthan 1 per cent of its gross income from dividends and interesttOr the year. Of course, if the corporation should engage ina substantial amount of such transactions in the future, aturther question might be raised as to the applicability ofsection 32.

"On the basis of the information which has been submitted,Board sees no reason to differ with the conclusion reached

DY your office and by counsel for your bank that section 52 isrl°t applicable to the relationships described in the first para-graph of this letter."


Letter to Mr. Austin, Federal Reserve Agent at the Federal Reserve

°t Philadelphia, reading as follows:


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"Consideration has been given to the information containedIn Mr. Hill's letter of August 21, 1955 regarding the applica-bility of section 32 of the Banking Act of 1933 to the serviceof Dr. E. W. Kemmerer as director of the Princeton Bank andTrust Company, Princeton, New Jersey, and as director ofSecond International Securities Corporation and United Statesand British International Company, Ltd., respectively.

"The information submitted indicates that both companiesare so-called 'investment trusts' engaged in investing and re-investing their funds in securities. With respect to UnitedStates and British International Company, Ltd., the informationshows that purchases and sales of securities for its portfoliodurinE: the years indicated were equivalent to the followingPercentages of its total assets:


Average for five years 47.3 47.7"It further appears that the securities in the corporation's

Portfolio at the close of the fiscal year ended November 30,1934 had been held for the following periods in the following per-centages:

Held less than 6 months 8.2Held 6 to 12 months 24.6Held 12 to 24 months 16.7Held 24 months or over 50.5

100.00"It also appears that, during the years 1930 and 1931, the

??mPanY participated in certain underwriting transactions.futhough the profits which it received were relatively small, akrther question as to the applicability of section 32 might, ofe°11rse, be raised if the company should engage in a substantial4mount of such transactions in the future.

. "It appears further that no sales of the company's own se-:rities have been made during the past three years, and that42 Purchases or redemptions were made during that period, excepts redemption of a portion of its Debentures during the years1932 and 1933.n . "The information submitted in connection with Second Inter-

Securities Corporation shows that purchases and salessecuritiPs for its portfolio during the years indicated were

eqUivalent to the following percentages of its total assets:


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"Year

—10-

Purchases Sales1930 51.75 59.041931 27.33 20.861932 31.09 42.891933 30.46 25.661934 26.50 37.

Average for five years 36.07 38.62"It appears that the securities in the corporation's

Portfolio at the close of the fiscal year ended November 30,1934 had been held for the following periods in the followingPercentages:

Held less than 6 months 8.85Held 6 to 12 months 28.84Held 12 to 18 months 6.39Held over 24 months 55.92

100.00"It also appears that the corporation, during the five

Years ended November 30, 1934, participated in no underwritingsyndicates; that none of its shares or other securities weresold during the past three years; and that none of its sharesor other securities were purchased or redeemed during thatPeriod, except that in 1932 a portion of its Debentures wereredeemed. -

"On the basis of the information submitted, the Board isof the opinion that section 32 of the Banking Act of 1933 is4c)t applicable to the relationships described in the firstParagraph of this letter."


There were then presented the following applications for changesA4-'°ok of Federal reserve banks:

A 1,4-Icati0ns for ADDITIONAL Stock:

-'l-rat National Bank of Cedar Grove,Codar Grove, New Jersey.

„°4'.4 National Bank of Newark,tiL'ark, New Jersey.;ZNational Bank and Trust Company of Elmira,

Thera, New York.rst National Bank of Harrison,

The -,4.s0n, New York.jirst National Bank of Mineola,

New York.-" ilational Bank of Minoa, Minoa, New York.

Shares

3

2

8

29

1209 171


2154

Shares

9

1524

30

15

2

1

6

93

9Total

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lications for ADDITIONAL Stock: (Contld)

'he Drovers National Bank of Chicago,T1, Chicago, Illinois."e Second National Bank of Richmond,Tis Richmond, Indiana.

TheNational Bank of Waterloo, Waterloo, Iowa.

-"e National Lumberman's Bank of Vuskegon,p Uuskegon, Michigan.t National Bank of Blue Island,Blue Island, Illinois.

Pr11-.81'1°.3"2"Die Security National Bank of Pasadena,

t, Pasadena, California.'irst National Bank of Independence,,vt Independence, Oregon.

First National Bank of Portland,Portland, Oregon.


Thereupon the meeting adjourned.

415111'01Ted:

275

Sacra ary.


19351022_minutes.pdf

Documents

federal reserve agents

federal reserve districts

federal reserve systemwas

fedal reserve bank of

boards letter

proposed changes

approval of proposed

proposed extension