19331221_230p_minutes.pdf

A meeting of the Federal Reserve Board MRS held in Washington

elaThursday, December 21, 1933, at 2:30 p. m.

PRESENT: Mr. Black, GovernorMr. HamlinEr. MillerEr. JamesMr. ThomasMr. Szymezak

Mr. Morrill, SecretaryMr. Carpenter, Assistant Secretary

Mr. Bethea, Assistant Secretary

The Board considered and acted upon the following matters:

Telegram dated December 20, 1933, from Mr. Austin, Chairman of

the pederal Reserve Bank of Philadelphia, and December 21, 1933, from

141's VernChairman of the Federal Reserve Bank of Kansas City, both

Etdvisi

Stated

dis

log that, at meetings of the boards of directors on the dates

' nc changes were made in the banks' existing schedules of rates

count and purchase.

Without objection, noted with approval.

Telegraphic reply to a letter dated December 16, 1933, from

,-""in, Federal Reserve Agent at Philadelphia; the reply reading

44 follew,:

::Your letter December 16. Board approves appointment Robert

villson as Examiner in Federal Reserve Agent's department yourcle, at salary rate of $4,512 per annum effective upon assumingu'lee. Please advise effective date."

be' each letter stating that, subject to the conditions prescribed

14 the etter, the Board approves the bank's application for membership

14 the pcdoral Reserve System and for the appropriate amount of stock

lipproved.

Letters to the boards of directors of the following State

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

490

12/21/33 -2-

1 the Federal reserve bank of the district in which the applicant is

Lxoted:

:.iplicant Bank

"Seaside Bank", Westhampton Beach,New York.

"The Iron and Glass Dollar SavingsBank of Birmingham", Pittsburgh,Pennsylvania.

The Angleton State Bank", Angleton,Texas.

Federal Reserve Bank

New York

Cleveland

Dallas

Approved.

Letter to the organizers of the proposed "United Bank of Farm-

5-1311", Farmington, Missouri, stating that, subject to the conditions

Pre3e1113ed in the letter, the Board approves the application made inbehal„' of the bank for membership in the Federal Reserve System and for

stook i

11 the Federal Reserve Bank of St. Louis, effective if and when81ach b„o,' receives its charter and is .authorized to commence business

by the c-°111missioner of Finance of the State of Missouri.

Oral.

Reply to a

Approved.

letter dated December 5, 1933, from Mr. Newton, Fed-

4"erve Agent at Atlanta; the reply reading as follows:fl,/lei-berme° is made to your letter of December 5, 1933, recom-rcling approval of an application of the 'Bank of Canton,' Canton,

for an extension of time from January 1, 1934 to Octoberen„034 within which to dispose of its holdings of stock of thei;

i1e7;°11 Cotton Mill carried in its investment account at $18,000.

the Board feels that corporate stock does not constitute aEA.11:lilr ble investment for funds of a depositary banking institutioncuricrould be disposed of as soon as feasible, in view of the cir-of 4_,ranees outlined in your letter of December 5, 1933 and in view

of e extension to October 1, 1934, granted by the Superintendent1934at c of the State of Georgia, the Board extends to October 1,of it'ne period in iahich the Bank of Canton may, as required by one

-8 Conditions of membership, dispose of its holdings of stock


j

L1/21/33

of the Canton Cotton Lill. It is requested, therefore, that you1 advise the bank. of the Board's action in the matter."

Approved.

ar Om.

491

Telegram to Er. Wood, Federal Reserve Agent at St. Louis, with

l'eM'd to conpliance by the Bankers Commercial Trust Company, Little

Rock, Arkansas, with the condition prescribed by the Board at the timeof the

institution's admission to membership in the Federal Reserve

4'6te111 which provided that prior to December 15, 1933, all of the capi-tea

The

CtOek of

telegram

the bank should be sold to individual private investors.

read as follow-s:

H Re matter of sale of common capital stock of the 'Bankers Com-

lrust Company', Little Rock, Arkansas, the Board, in viewYour telegraphic advice of December 16, 1933, that all of such

'ock has been sold to depositors or others, and in accordance

r:th Your telegraphic recommendation of December 13, 1933, will notquire issuance of stock certificates evidencing onnership ofliTh stock prior to nationalization, provided the matter is consum-a'-ed within sixty days, and you are requested to advise the bank"cordin0-11-d

kr p ,vvon, Federal Reserve Agent at Minneapolis; the reply reading as

tollowc

Approved.

Telegraphic reply to a telegram dated December 18, 1933, from

"ReferBarik your wire December 18, 1933 re application First Statetime°f hushmore, Rushmore, hinnesota, Board grants extension of

t° January 15, 1934 within which bank may comply with condi-'418 of

membership."

Approved.

Letter to ha-. O'Connor, Comptroller of the Currency, reading as

Boa n accordance with your recommendation the Federal Reservedvel-oves a reduction in the common capital stock of 'The


492

12/21/33-1-

:'Second National Bank of New haven', New Haven, Connecticut, from,2750,000 to ,:)370,000, pursuant to a plan which provides that thebank's capital shall be increased by the sale at par of c'e375,000new corranon stock to the present shareholders or others and that thefunds released by the reduction in the common capital stock shallbe used to eliminate substandard assets or to increase the bank'ssurPlus, undivided profits or reserve for depreciation and losses,all as set forth in your memorandum of December 15, 1933."

Approved.

Letter to the Federal reserve agents at all Federal reserve

cetting forth the procedure to be followed in connection with the

trca'n subsidiary member banks at the annual meetings of the stockhold-

-'ee by the Board of limited voting permits to holding company af-

68 ln order to enable them to vote the stock which they own or con-

ern p

such banks which ordinarily take place in January.

Telograrr to Mr. Newton,(18 folio 0:

Approved.

Federal Reserve Agent at Atlanta, read-

ni

tlack n re application for voting permit The Atlantic Trust Company,Florida. Please confirm Board's understanding thaty

4,:nd Executive Commdttee recoinmend approval of this application.ho-Cler because trustees hold stock of applicant in trust for share-

6 of The Atlantic National Bank (hereafter called bank) underthin agreement dated December 22, 1923 which provides among othercalci'ligs that successors to original trustees, who were directorsbaxlcor officers of bank, must be approved by board of directors of

appears that bank indirectly controls the election of aapi;i:''Y of directors of member banks listed on Exhibit A of thistalikleation and is therefore a holding company affiliate of suchcolit:' In previous case Board has ruled that where one corporationportfxj18 majority of stock of member bank directly and another car-

0' controls such stock indirectly both are holding company af-thajt°6 and each must apply for and obtain voting permit in orderPreve,84.t"k maY validly be voted. Board's practice under this rulingAti„„::'8 issuance of voting permit requested in application of Theapplic Trust Company until application has been filed by bank and°w/101.11!!,1,by board. This true even though bank is not registered'4.1u will not itself vote stock of the banks listed in Exhibit A.


49:i

12/21/33 -5-

"In filing application, bank at this time need furnish only appli-cation on Form P-1, accompanied by Exhibit A, Exhibit C, statementof financial condition of applicant as of date of application with-out supporting data ordinarily called for with Exhibit D, ExhibitG, 2xhib1ts L and N inasmuch as agreements and consents already onfile will be effective only during life of any permit granted toThe Atlantic Trust Company, and Exhibits P and Q if applicable.APPlication should also incorporate by reference information con-tained in application of The Atlantic Trust Company. Your recom-lljendation and that of Executive Cormittee should be forwarded toBoard with two copies of foregoing."

Approved.

Telegram to Hr. Wood, Federal Reserve Agent at St. Louis, read-

ing as follows:

f, "Re application First National Trustees, Louisvillc, Kentucky,417 voting permit. Because terms of trust agreement dated July 1,10')25, under which applicant trustees hold stock of certain memberanks, provide among other things for advisory committee, composedO Tr-embers of board of directors of First National Bank of Louis-

Zlile (hereafter called bank), which committee has measure of con-j°1 over trustees and determines who successor trustees shall be,aPPearc that bank indirectly controls election of majority of

't'rectors of each member bank listed on Exhibit A of this applica-pl°n.and is therefore holding company affiliate of such banks. In1:1110us case Board has ruled that where one corporation controls a

0(prity of stock of member bank directly and another corporationZtr°1s such stock indirectly, both are holding company affiliates14: each must apply for and obtain voting permit in order that stock41 validly be voted. Board's practice under this ruling preventsTIVITIce of voting permit requested in application of First National130-8"lies until application has been filed by bank and approved by110Zr.This true even though bank is not registered owner and will4p ts°1f vote stock of member banks listed on Exhibit A of thisoni,ication. In filing application at this time bark need furnish

cation on Form P-1, accompanied by Exhibit A, Exhibit C,tio,"lant of financial condition of applicant as of date of applica-E-b1.11.thout supporting data ordinarily called for with Exhibit B,41re G, Exhibits L and Y. inasmuch as agreements and consentsgra.4.11,6Y on file will be effective only during life of any permitable'ed to First National Trustees, and Exhibits P and Q if applic-corlts APplication should also incorporate by reference informationappl illed in application of First National Trustees. In additioncolltation discloses ownership by First Kentucky Company of 50 perXelrt-'4 of common stock and 2.e per centum of preferred stock oflleky Title Trust Company, state member bank, and 50 per contwa


494

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the

-G-

ifof stock of First National Bank of Louisville. Since 9980 shareswere voted for election of directors of First National Bank at pre-ceding election, First Kentucky Company is owner of more than 50Per centum of number of shares voted for election of directors ofFirst National Bank at preceding election and is, therefore, hold-

Company affiliate of First National Bank within meaning of Sec-tion 2(e) of Banking Act of 1933 and must apply for and obtain fromBoard permit to vote shares of First National Bank awned by it, be-fore same validly may be voted. If shares owned by First KentuckyCoMpany in Kentucky Title Trust Company represent more than 50 percentum of number of shares voted for election of directors of Ken-tucky Title Trust Company at preceding election, First KentuckyCompany is holding company affiliate of Kentucky Title Trust Com-PanY within meaning of Section 2(c) of Banking Act of 1933 andzust apply for and obtain from Board permit to vote shares ownedbY it in Kentucky Title Trust Company before same may validly be7°ted. First Kentucky Company should file application for votingp,erzlit on Board's prescribed forms with respect to First National7°nk.and with respect to Kentucky Title Trust Company if it is

_ 11.111g company affiliate of latter on basis above outlined. Appli-u!lion should incorporate by reference information contained in ap-

Vication of First National Trustees, but may omit Exhibits li, I,alld 0. Your recorrendation and that of executive committee should

'41 forwarded to Board with two copies of each application."

Approved.

Reply to a letter dated September 5, 1933, from Er. E. C. Smith,

or of the Gap liational Bank and Trust Company, Gap, Pennsylvania;

l'oply reading as follows:

th "Thic refers to your letter of September 5, 1933 addressed to

Board Comptrollerroller of the Currency and referred to the Federal Reserveil for reply. You state that your bank has outstanding a large

bulliatber of certificates of deposit which are of indefinite maturity

viri,with respect to which your bank reserves the right to requirevilitctten notice of thirty days before payment; and you inquireIvithher You may pay the above certificates that are now outstandingrlot ,interest without requiring notice. You also state that it hasie ,"(1/1 your practice to require notice before payment of a certif-%e ef deposit.

1301.Y?11 will observe that under the provisions of footnote 4 of theden0(1. Regulation interest may not be paid on a certificate ofto';s1t with respect to which the bank merely reserves the rightR(turuire notice before payment. Under other provisions of thewith nlon, however, a member bank may pay interest in accordance

"le terms of any certificate of deposit which was lawfully


495

12/21/33 -7-

"entered into in good faith prior to June 16, 1933, and in forceon that date and which may not lawfully be terminated or modifiedby the bank at its option or without liability; but no such cer-tificate of deposit may be renewed or extended unless it be modi-fied to conform to the provisions of the regulation, and everymember bank is required to take such action as may be necessaryas soon as possible consistently with its contractual obligationsto bring all such certificates of deposit into conformity with theProvisions of this Regulation. The certificate of deposit inclosedwith your letter, which you state is an exact duplicate of thecertificates of deposit outstanding, appears to be of indefinitematurity and it would seem to the Board that your bank might law-fully have terminated the contract contained in the certificate atanY time upon paying the amount due to the depositor after givingreasonable notice to him of your intention to terminate the arrange-Tent; and that, accordingly, it was the duty of your brink toerminate or to modify such a certificate of deposit as soon as pos-ible so as to bring it into conformity with the provisions of theegulation. The payment of interest accruing after such modifica-

tion or Isermin ation of the certificate on any deposit representedtiiereb3 prohibited, unless the certificate as modified conformsto tile requirements of the Regulation.

"With respect to the certificates of deposit issued by your'Ilk after June 16, 1933, on the form submitted with your letter,Yd°11 are advised that, inaamuch as such form does not conform to the_!finition of a time certificate of deposit contained in Section IIIur L'he Regulation, no interest may be paid thereon under the law.Board'Upon Section 19 of the Federal Reserve Act, the Federal Reserve, is required from time to time to limit and is authorized to

Ze”ribe the rate of interest which may be paid by member banksof

u

time deposits and it is believed desirable that time certificatesent ePosit and other time deposit contracts hereafter issued or

theereed into by member banks should refer to this fact. It isicert-fore suggested that your bank print or stamp upon such certif-st.s'e? of deposit or contracts hereafter issued, a provision sub-'fltlally in the following form:

'The rate of interest payable hereunder is subject tochange by the bank to such extent as may be necessary tocomply with requirements of the Federal Reserve Board madefrom time to time pursuant to the Federal Reserve Act.'

• '11 respect to your inquiry concerning the waiving of the re-r erleyou a of notice of intended withdrawal of a savings deposit,

vid,,,re advised that such requirement of notice may be waived, pro-colZthe merber bank complies, in all respects, with the provisions'fled in Section VI of the board's Regulation q."

Approved.

Reply to a letter dated December 12, 1933, from Mr. E. 1.71+ •


496

12/21/33 -6-

41/418end, Assistant Financial Advisor of the Federal Home Loan Bank

844'd; the reply reading as follows:

"I assume that the inquiry in your letter of December 12 re-lates solely to bonds of the Home Owners' Loan Corporation. Theconditions under which Federal reserve banks may accept such bondsas collateral for loans to member banks are prescribed by sections10(a) and 10(b) of the Federal Reserve Act as amended, a copy of*Lich is inclosed for your convenient reference. Loans underthose sections can only be made in certain unusual circumstancesvhen the member banks receiving the proceeds of the loans are with-out sufficient amounts of eligible and acceptable assets to enablethey to obtain adequate credit accommodations otherwise.

'The Federal reserve banks have no authority to buy such bonds.;Llis memorandum quoted in your letter indicates that it may havebeen suggested that the Federal reserve banks would have suchauthority under section 43 of the Act approved May 12, 1933, but'S the President has not taken action under the terms of that sec-"-on the possibility of purchase of such bonds by the Federal re-serve banks under that section has not been determined."

Approved.

Letter to the Federal Deposit Insurance Corporation, reading

f°110170:

here is inclosed for your consideration copy of a letterdatedat December 14, 1933, received from the Federal Reserve Agentmi the Federal Reserve Bank of Richmond, together with a copy of2,,letter of acknowledgment of this date, stating that it is his?erstanding that the Federal Deposit Insurance Corporation will,

trelor to the first of the year, publish a list of banks, not mem-ti±s,of the Federal Reserve System, which have been admitted to

'4.1tt iemporary Insurance Fund.atioin view of the fact that the Federal Deposit Insurance Corpor-f n issued a regulation under date of November 22, reading as0 lovizt

'No bank shall hereafter advertise its prospective con-nection with the Temporary Fund of this Corporation, by anyf°rm of announcement or publicity, nor shall any bank announce(1_3,1' advertise that it is, in fact, a member of the Temporaryuad of this Corporation or that its deposits are insured

Within the limitations of the Banking Act of 1933 until an-

111°114oement of the name of such bank as a member of the fundboon made under the authority of the Board of Directorsit 141 this Corporation.'

d be appreciated if you will advise whether the Corporation


497

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centamplates announcing at the close of the current year thenemes of all banks admitted to the Temporary Insurance Fund effec-tive January 1, 1934, including all banks, other than nationalbanks, which are meMbers of the Federal Reserve System."

Approved.

Letter to Mr. Hoxton, Chairman of the Federal Reserve Bank of

11.10,-44nd, prepared in accordance with the action taken at the meeting

°11 December 18, 1933,

"Reference is made to the memorandum submitted at the meetingOf the Federal Reserve Board on September 26, 1933, by a committee°f your directors consisting of Messrs. Delano, Rieman and Reed,E/ques; approval by the Board of the purchase by the Federal Re-.zer\Te Bank of Richmond of the lot which directly adjoins your annex,uilding and has a 110 foot front on Eighth Street and 120 foot,,..epth, and to the Board's letter of September 28, 1933, advising'hat the Board had considered the request of the committee of di-recttors and did not approve the proposed purchase.t 'The Federal Reserve Board has now given further consideration1.ihe request, and I have been asked to advise you that the Board

-' interpose no objection to the purchase by your bank of the87.t referred to at a cost of not to exceed 385,000, plus commis-

/30°118. In this connection it is noted that at the meeting of thethard on September 26, the committee of directors stated that whileeh° option then held by your bank on this property specified a pur-abr) Price of c185,000, it was anticipated that the bank might be

obtain the property for 375,000 or ';80,000.th_ It will be appreciated if you will advise the Board if and when

PrePerty is acquired by your bank, and the price paid therefor."

reading as follows:

Approved.

Reply to s letter dated December 9 1933, from Mr. McKay, Deputy

l'°110w13.of the Federal Reserve Bank of Chicago; the reply reading as

III Icop,

ilave Your letter of December 9 and read with interest thellelesed therewith of your letter to Dr. Burgess at New York

iliait:rd to the proposed plan for providing for depreciation inclose- States Government securities held for system account at thetrom oc)f the year on December 31. I have also received a letterOf th

e " Bur ess dated December 12 inclosing a copy of his letter

3rile date to the Governors of all Federal reserve banks on


49

1,2/21/33

bazik

-10-

"this subject. Az I understand it, the procedure proposed by Dr.Burgess with respect to the Government securities held in systemaccount on December 31 of this year is based upon the formulawhich was approved by the Federal Reserve Board for use at the endof 1931. It is the view of the Board that this formula is a sound°40 and that it should be applied both to the Government securitiesheld in system account and to the Government securities heldseParately by each Federal reserve bank."

Approved.

Letter to the Federal reserve agents at all Federal reserve

s, reading as follows:

"The last paragraph of the Board's letter of Llay 1, 1933,7:7426, on the subject of procedure with regard to violations of"le Clayton Act, reads as follows:

'The Board suggests that each Federal Reserve Agent adoptthe practice of making a review during the course of eachYear of the outstanding Clayton Act permits issued to appli-cants in his district; and of submitting to the Board hisrecommendation in each case in which in his opinion thePublic interest requires the revocation of a permit effectiveeither immediately or at the time of the next annual electionof directors, together with his recommendation in each casein which he feels that there' is .,;round for doubt under the

”_Board's instructions as to the action which should be taken.'he,_ It will be appreciated if you will advice what procedure youtto7e, adopted and at progress you have made in carrying out the

-d's suggestion."

tooa..4,

N431. ()val. of "1

L.8 application as follows:

Approved.

Letter dated December 20, 1933, approved by six members of the

toezt applicant for a permit under the Clayton Act, advising of

Lir 1,ti;errederick S. Chamberlain, for permission to serve at the same14114 as director of the Federal Reserve Bank of Boston, Boston,ti:achusetts, and as director and officer of The New Britain Na-

‘111a1 Bank, New Britain, Connecticut.

Approved.

here wnre then presented the following applications for °rig-or

-‘4uitional stock, or for the surrender of stock, of Federal


b,)

12/21/33

reserve banks:

.12lications for ORIGINAL Stock:

1.142I, No. 2.%evili7-TTaTICTnal Bank, Edgewater, NewJerseyrirat

National Bank of Spring Lake, SpringLalces New Jersey

4"

Naffr-Bank of Barbourville,Barb° urville, Kentucky

AZP.272:4'412ns for ADDITIONAL Stock:bistrict-4_National Bank, East Islip, New York

\Increase in capital)_

4.

IQ° Trust Corroany, Toledo: Ohioillerellee in capital, through sale ofeaPital notes in the amount of $5,000,000

partlytc) the Reconstruction Finance Corporation,

Offset by a decrease in surplus)

A 14n4 ''J'eations for SURRENDER of Stock:T,tatrict No. 1Irat

ilational Bank of Pepperell, sEal'ePPerell,

Liassachusetts (Being

tmo

11-qUidated throuh conservator)

1irlZt vat (Be.

)

4tPelier National Bank, Y,ontpelier,O liquidated through

•4.ticna1 Black River Bank,Vex.lle,

conservator)

Proctorsvithrough

mont (Being liquidated

Ilernt,1)itri et

No. 2*

Pir'i,;44ta ilational Bank, Dunkirk: New Yorkt'"erease in capital and surplus)t

Se Llerohants National

1l ?111131sulY,

laddleto New Yorkwn, Bank &

Trusquidated throu,rh conservator)

(Being

Ttz....n" 4*

I)ist •

›burz Lational Bank, Harveysburg,(Insolvent)

-11-

Shares

45

75

36Total

15

1,300Total

48

150

51

120

240

300

18

36 ,156

15

1,300

1:315

249

540


500

11

12/214/33

Plications for S EDER of Stock: (Continued) p_istrict 11.--47-

717-,ont=ledT-Jefferson County National Bank, Brookville,p. Pennsylvania (Insolvent)lisct

National Bank, Nen, Wilmington,Pennsylvania (Being liquidated throughconservator)

ural Valley National Bank, Rural Valley,Pennsylvania (Beini; liquidated throughF. conservator)

lret Rational Bank & Trust Company, Tarentum,Peconsellc=:

) (Being liquidated through

District No* 5.Pirat National 13anl:, Hancock, Maryland

Pi (Beillg liquidated through conservator)-r,t National Bank, Roncoverte, West Virginia

kVoluntary liquidation, succeeded byliational Bank in Ronceverte)

Eltrict No. 7.'Irst

National Bank, Monticello, IllinoisP eing liquidated through conservator)

Lational Bank, Morrison, IllinoisIlls0lventrlret National Bank, Valley Junction, .Iowa

(Ncrease in surplus)

1)4trict No. 9.41.nt National IT , Park Rapids, idinnes°ta(Insolvent)

4- 1;ational Bank, Marmarth, North Dakota

NEkt 1141°1"vent)

6t1oattn )of Anaconda, Anaconda, Montanarst

National Bank, Hayti, South Dakota(Ila"lvent)

bistr•cri let 11-0, 11.LationalBank, Clyde,pi

(Incolvent) Texas

B Meadow,ansolvent)

Texas

-12-

Approved.

Shares

150

90

54

240

45

60

120

102

12

39

30

81

18

18

18

552

105

234

168

36Total 1,884


Thereupon the the meeting adjourned.


19331221_230p_minutes.pdf

Documents

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federal reserve system

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pcdoral reserve system

proposed united bank

assistant secretarythe