19340814_minutes.pdf

2485

I meeting of the &.ecutive Committee of the Federal Reserve BoardWas

he-Ld in Washington on Tuesday, August 14, 1934, at 4:20 p. in.

PRESEM: Mr. Black, GovernorMr. JamesMr. Thomas

the Tre4slar7 this afternoon the matter of the sale by Secretary Morgenthau

to the

tactOn Constitution Avenue between 20th and 21st Streets, N. W., described

4.11axes E-87 and E-88, and that Mr. Morgenthau had offered to sell the pro-

Mr. Morrill, SecretaryMr. Martin, Assistant to the Governor.

Shortly after the meeting convened, Mr. Wyatt, General Counsel, was

cell.ed into the room.

Governor Black stated that he had discussed with the Secretary of

Federal Reserve Board of the property owned by the Government and

l*tY to 41 41.,- -e Board for an amount equal to its purchase price plus interest

°11 that amount at the average rate paid each year by the Treasury on its

°11tat,,,--'11/1C,' obligations, for the period from the date of the acquisition

e Property by the Government to the date of its acquisition by the

Reserve Board.

The acceptance of Secretary Morgenthaulsoffer was unanimously approved, and GovernorBlack was authorized to transmit to the Secre-tary a letter reading as follows:

beg to advise that I have presented to the Federal Re-ser veit oard your offer to sell to the Federal Reserve Board fornew building in Washington Squares E-87 and E-88 facing

;0nstitution Avenue, between 20th and 21st Streets, Northwest,f°1* a sum equal to the purchase price paid by the Governmentr°12t the property sold plus interest on the same at the averageti e Paid each year by the Treasury on its outstanding obliga,-

for the period from the date of the acquisition of the'r°Perty by the Government to the date of its acquisition by

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

2486

8/14/34-2-

"the Board, and that your offer was accepted. Upon delivery°f deed conveying good title the consideration will be paid.

The descriptions contained in this acceptance are

Tnalsoriptions furnished us by Mr. Delano, Chairman of the

atio Capital Park and Planning Commission., "I am requested by the Board to express its appreciation(4 Your cooperation in the matter,"

It was understood that the details with respect to the transfer

iOf tit-0 of the property will be worked out in the office of the Board's

collttsfalupon receipt of certain information which is to be furnished by

'S. Settle, Secretary of the National CCapitalPark an Planning

Cortias .. 210n, with respect to the further description of the property to

be eallveYed.

The Committee then considered and acted upon the following matters:

Telegram dated Angist 14, 1934, from Mr. Curtiss, Chairman of the

'Reserve Bank of Boston, advising of the electionSewall' resident of the Bath 1Tational Bank, Bath, Maine

et°11 of the Boston bank for the unexpired portion of1)eoerb

oara,

to 11r. Curtiss, Federal Reserve Agent at the Federal Reserveot

-0stor,--, reading as follows:

ea .flReference is made to your letter of July 17, 1934, re-rdlnC the proposed plan of reorganization of the Worcester

fr and Trust Company, Worcester, Massachusetts, and the in-

thrmation which has been furnished the Board with respectthereto

including the information contained in a letter of

9, 1934, addressed to Governor Black by Mr. Ripley L.-"a, cvkinsel for the trust company, a copy of which, it is

of Mr. Arthur

, as a Class A

the term ending

er 31, 1936, to succeed Mr. E. S. Kennard, deceased.

Noted.

Letter dated August 11, 1934, approved by four members of the

Bank


2487

8/(1A/34-3-

Uunderstood, has been furnished to you, in connection with aPc)soible application by the trust company for admission tomembership in the Federal Reserve System. It is understoodthat the reorganization of the trust company will be effectedwith the consent of all of the holders of Classes A, B, and Ccert ificates issued by the Worcester Depositors' Corporationand with the approval of the Commissioner of Banks of the State°fUassadhusetts, and, on the basis of the information whichtas been submitted, the Board has no objection to offer to theProposed plan of reorganization.

"The Board does not now have before it an application formemberdhip in the Federal Reserve System on which to pass, but1:1Pon the submission of such an application, together with theaetailed information usually required, it will be glad to giveT)nsideration to such an application. In this connection, it11,8 landerstood from the letter to Mr. Carrick by Mr. Dana, dated2134. 11, 1934, that the Worcester Bank and Trust Company has arilist department with assets aggregating approximately $28,000,000,

alla the Board feels that prior to action on an application for

rmbership by the trust company a thorough examination shouldmadof the trust department of that institution, as well as

Ire examination of the assets to be acquired from the national,anks and other sources, Which the Board is advised is now con-6erab1ated.,‘ "The Board has not been furnished with any information with'egard to the proposed management of the reorganized trust companyTmept that it is understood that the management will be satis-

ItactZrY to your office. In connection with an application by the

company for membership, the Board, in accordance with the:41a1 practice, should be furnished with full information regard-lugtnizcter of the pro posed management of the reorganizedt

,.., "It has been observed that directors of the trust companycontrrbute $350,000 as a part of the proposed plan of reor-

!allization in satisfaction of any and all personal liability on°'ecclant of certain transfers of the assets of the Worcester Bank

Trust Company to the Worcester County National Bank. Mr.a71;ais lettPr to Governor Black, dated August 9, 1934, contains

rief explanation regarding the character of the transactionsM the amount of the possible liability of the directors as a

'ste.sIllt thereof. In connection with any application for member-t4iP, the Board would like to have a statement of your views as

What bearing, if any, the action of the directors referred to448 on the question as to whether the management of the reorganized./Istitution may be approved.4., "It appears that the plan of reorganization will result inthe establishment of certain branches by the Worcester Bank and


2488

1%, 8/14/34-4-

"Trutt Company beyond the corporate limits of the City of Worcester,alld it is assumed that in connection with an application for member-shin

appropriate steps will be taken in accordance with the Board'sletter of February 9, 1934, X-7786, to obtain approval of the Comp-rollrr of the Currency for the establishment of any such branches.

sIt is also assumed that in working out the plan of reorgani-ation, appropriate steps will be taken to obtain any necessary votingpermits."

441': Of n-oston, with regard to the steps which should be taken to correct

the

Approved.

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

matters commented on in the report of examination of the "Union Trust

11* Providence, Rhode Island, as of February 26, 1934.

Approved.

Letter dated August 13, 1934, approved by four members of the Board,

to the ororthwestern National Bank in Philadelphia", Philadelphia, Pennsyl-

lilia, reading as follows:

a "7he Federal Reserve Board has given consideration to your

gTlication for permission to exercise fiduciary powers, and0,allt5 you authority to act, when not in contravention of Statez; loco. law, as trustee, executor, administrator, registrar off2elcs and bonds, guardian of estates, assignee, receiver,

Zilmittee of estates of lunatics, or in any other fiduciarytiPacitY in which State banks, trust companies or other corpora-

Which come into competition with national banks are per-in‘i,ed to act under the laws of the State of Pennsylvania, only

,the specific trusts in which The Northwestern National Banka74 ..Trust Corn-oany of Philadelphia had been appointed and wasw InC on the date the Northwestern National Bank in Philadelphia4411 authorized by the Comptroller of the Currency to commence busi-y'ss, the exercise of all such rights to be subject to the pro-

of the Federal Reserve Act and the regulations of the

ee. eral Reserve Board. Action has been deferred upon your appli-ce'ion for full fiduciary powers until after an examination has

en made of your bank and a report of such examination is avail-

"The Board feels that, if you are tendered any of the trusts


2489

Ii 8/14134

11ri0v7 held. by The Northwestern National Bark and Trust Company of

you should carefully scrutinize their condition andshould not accept any of such trusts which, through their assump-ti°11 Inv be detrimental to the interests of your institution."

-5-

Approved.

In connection with the above letter, consideraticn was given to

a raeraorandura dated August 10, 1934, from Mr. Wingfield, Assistant Counsel,

stati11C that the Northwestern National Bank does not have the common capi-

tal st"lc required for the organization of trust companies and State banks

41th trust powers in Pennsylvania, nor does it have the amount of surplus

4c1111red for the organization of such institutions, but that it does haves.4

-1-1.egate capital (including preferred. stock) and surplus greater than

the aCereeate capital and surplus required. for the organization of State

illetitlltions in Pennsylvania with trust powers. The memorand.-um stated. alsothat

is the Board's usual practice in passing on applications of national

eir permission to exercise trust powers to adhere strictly to the re-

its of the State law relating to capital and surplus applicable tothe

orearozation of State institutions with trust powers; that, however,the zoard.

a recent case (The Tradesmens National Bark of New Haven,

arising -under the laws of the State of Connecticut and., in

eirelZ18tances similar to those involved in the present case, took the

11°8iti°11 that it may properly grant fiduciary -powers to a national bank14

that State; that in that case the Connecticut authorities advised

the 1/"I'd that they felt the requirements of the State law were sub-

%tiallY complied with and that they had no objection to the granting

°t permit to a national bank. in Connecticut to exercise trust powers


2490

11

-6-

011thebasis described above; that in the present case the banking author-

la es 4 -411 Pennsylvania aloparently feel that the capital and surplus require-

te/ItsaPplicable to the organization of State institutions with trust powers

wolad11" be substantially complied with and they object to the granting

1118t Powers to national banks in that State, which do not have the

exilount of comn-.on capital

State ir.stitutions;

84thorities raises a

()Ilel'ation.: the Board

1344k adelphi a.

ba4lia with regard tothat

arrumber of applications

stock and

and that the

the amount of surplus required of such

position taken by the Pennsylvania State

question of policy as to whether, as a matter of co-

should grant trust powers to the Northwestern National

or to other national banks in Pennsylvania on a similar

capital and surplus. The memorandum stated further

for trust powers by national banks located

111PetriVivania involving the questions discussed above have been received11H-1,

-*Board, and the Board's

liati°110. Bank, therefore, involves

action on the application of the Northwestern

a decision of policy which will be ap-

1311eable to a number of national banks

tollows.

in Pennsylvania.

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

"In accordance with Acting Comptroller of the Currencyr i'tts reconmendation, the Federal Reserve Board approves aof iletion in the common capital stock of the 'National Bank

-11!f(aki, Suffolk, Virginia, from $500,000 to $250,000.It is the Board's understanding, in anoroving this re-

toc!i(In, that none of the released capital will be returned

Stockholders but will be used to eliminate approximatelye41'()00 of the least desirable of the bank's assets and toas alllish a reserve to provide for other losses and depreciation

aaft.,;IAY maY develop, all as set forth in Mr. Awalt's letter"e '. July 25, 1.934."

Approved.


2491

1 8/14/34

ii

-7-

Letter to Mr. O'Connor, Comptroller of the Currency, reading asrollows,

"In accordance with Acting Comptroller Awalt's recommenda-r'l°n, the Federal Reserve Board approves a reduction in the cora-

Ic3n capital stock of 'The St. Charles National Bank', St. Charles,

from $100,000 to $60,000, pursuant to a plan which pro-ides that the bank's capital shall be increased by $40,000 of

Preferred, stock to be sold to the reconstruction Finance Corpora-lc3n, and that the released capital, together with a portion ofthe bank's surplus and undivided profits accounts, shall be usedeliminate unsatisfactory assets and, securities depreciation

3:11 the amount of approximately $80,173, all as set forth in Mr.4ma,t'5 memorandum of August 4, 1934."

aer

Approved.

Telegram to Mr. Sargent, Assistant Federal Reserve Agent at the

al Reserve Bank of San Francisco, reading as follows:

411 "Retel August 8, 1934. As requested by you Board's11.CIGAR telegram dated April 7, 1934, regarding 'The McCloud13 17er Lumber Company', McCloud, California, is hereby amended

siabstitutirr October 1 for July 1 in Section D of suchee-rara.

Approved.

Letter to Mr. Williams, Federal Reserve Agent at the Federal Tie-

e 33ailk of Cleveland, reading as follows:

20 "Receipt is acknowledged of Mr. Fletcher's letter of Julyze; 1934, submitting a request from The Union National Bank of

Inburg, Waynesburg, Pennsylvania, for an expression of theof71,''e views as to whether a national bank located in the State'ennsylvania which has received permission from the Federala serve Board to exercise trust powers is required also to obtain,i,,,13,ierrait from the Department of Banking of the State of Pennsyl-

to exercise such trust powers in that State.co .:The Federal Reserve Board has heretofore had occasion toriarvT.cler the question submitted by The Union National Bank ofstv,;esburg at the request of a national bank located in another

b;447: and, the following statement is quoted from a letter signed440 Governor of the Federal Reserve Board which the Board


2492

11

8/14/34-8-

"addressed to the national bank involved on February 14, 1930:"Your letter of February 4th addressed to the

Comptroller of the Currency with reference to the rightof the Bank of , to act as adminis-trator has been referred to the Federal Reserve Board forreply. In 1927, the Federal Reserve Board granted per-mission to the Bank to act as administratorand in certain other fiduciary capacities. It aopears thatthis national bank has now entered a suit as administratorfor a deceased coal miner and that the right of theBank to appear as administrator in this suit has been attackedon the ground that this national bank has never been granteda permit by the State of to act as administrator.You inquire whether it is necessary for the Bankto obtain permission from the State of to act inthis capacity.

"The right of a national bank to exercise trust nowersis derived from the laws of the United States and not fromthe laws of any particular State. In Section 11(k) of theFederal Reserve Act, Congress has set out at length the cir-

cumstances and conditions under which a national bank may

exercise trust powers. Congress, however, has not prescribedas one of such conditions that a national bank must obtainthe permission of the State in which it is located before it

exercises fiduciary powers. Under these circumstances I am

clearly of the opinion that it is not necessary for a nationalbank which desires to exercise trust powers in accordance with

the provisions of Section 11(k) of the Federal Reserve Act toObtain the permission of the State in which it is located be-fore it exercises these powers. The basic reasons which leadUp to this conclusion together with citations of authoritiesmar be briefly summarized for your information as follows:

"It is well settled by the decisions of the SupremeCourt of the United States that an act of Congress within afield covered by its constitutional power fully appropriatesthat field and is the sunreme law of the land (McCulloch v.

Jainrland, A Wheat. 316; Northern Pacific Railway Company v.

lr'tzlla_p_LqatLI, 250 U. S. 135; Smith v. Alabama, 124 U. S. 465;and Mod, u v. N. Y. N. H. and H. R. C. 223 U.S. 1.) It is

also well settled that Congress has complete constitutional

13°17er to establish and regulate national banks (McCulloch v.

liaryland, supra; Osborne v. Bank, 9 Wheat. 738; Davis v.ira Savinr:s Bank, 161 U. S. 275; Farmers Bank v. Dearinr,

91 U. S. 29; Easton V. Iowa, 188 U. S. 220; and Van Reed v.

Peoples National Bank, 198 U. S. 554). The Supreme Court of

.122.2_2/0.ted States, after carefully considerinr its decisions

92222.2_citea has further held that the Act of Congress grantir4


2493

8(14134 -9-

ttrust powers to national banks section 11 k of the FederalReserve Act is constitutional and cannot be nullified or con-trolled by State authorit- First 1Tational Bank v. Fellows,211, U. S. 416 and Burns 1Tetional Bank v. Duncan, 265 U. S.17.)

"If it is assumed that it is necessary for a nationalbank to obtain the permission of the State in which it islocated before it exercises trust powers pursuant to theprovisions of Section 11N of the Federal Reserve Act, theState could control or nullify the right of national banks toexercise such powers by refusing to grant its permission orby granting its permission upon such conditions as it saw fit.The Supreme Court of the United States, however, in the twocases last above cited has held that a State has no authorityto do this.

"I wish to call your special attention to the case ofBurns Uational Bank v. Duncan, which is cited above. TheBurns llational Bank of St. Joseph, Missouri, which had re-ceived permission from the Board to exercise trust powers,was appointed executor by a citizen of Missouri and after thedeath of the testator, the bank applied to the proper probatecourt for letters testamentary, but was denied appointment onthe ground that by the laws of Missouri national banks werenot authorized to act as executors. This rifling of the lowercourt was sustained by the Supreme Court of Missouri, butupon appeal to the Supreme Court of the United States, theState courts were reversed. The Supreme Court of the UnitedStates held that the Burns Uational Bank was entitled to actas executor, regardless of whether it was so authorized toact by the State of Missouri. In so holding, the SupremeCourt said:

"t" * * Whatev3r may be the State law, nationalbanks having the permit of the Federal ReserveBoard may act as executors if trust companiesCompeting with them have that power"

and.

"1" * * the State can not lay hold of its generalcontrol of administration to deprive nationalbanks of their power to compete that Congress isauthorized to sustain.""In view or this decision of the Supreme Court, it

iS clear that a national bank desiring to exercise trustPowers in accordance with the provisions of Section 11(k)Of the Federal Reserve Act need not obtain the permissionOf the State in which it is located before exercising suchPowers.

"The right of national banks to exercise trustPowers has also been considered by the Supreme Court of


2494

Approved.

siegram dated Aur.;ust 11, 1934, approved by four members of the Board,

-10-

"'the United States and courts of the various States in anumber of other cases. In the decisions of these cases,the right of a national bank to exercise trust powers hasbeen discussed by the courts at considerable length andI believe that the following cases would be of particularinterest and assistance to you:

First Nat. Bank v. Fellows, 241 U. S. 416;In Re Stanchfield's Estate (Wis.) 173 N.W. 310;In Re Mollineaux (U. Y.) 179 N. Y. S. 9;Hamilton et al. v. State (Conn.) 110 Atl. 54;

Car_penter v. Aouidneck Nat. Ban': (R. I.) 125 Atl. 353;In Re Turner's Estate (Pa.) 120 Atl. 701.1

The Board knows of no reason to make any change in its viewslleretoJ.ore expressed and al-toted above, and you are accordingly

cirsed that the Board is of the opinion that a national bank located13, the State of Pennsylvania lilf,ich has obtained permission from the

Vd to exercise fiduciary powers under the provisions of sectionof the Federal Reserve Act is not required to obtain a permit

,2"1 the Department of Banking of the State of Pennsylvania before

Zeising trust powers in that State. Please advise The Unionezalonal Bank or Waynesburg of the Board's views in this connection,of: if you deem it advisable, the Board has no objection to a copyst 'his letter being furnished to the Department of Banking of thetat

letterPennsylvania for its information. Since a part of the

'8a:41's of Pennsylvania lies in the district of the Federal Reserve

thIL:f Philadelphia, a copy of this letter is being forwarded to

fo: eaeral Reserve Agent at the Federal Reserve Bank of Philadelphia' las information."

to 4r.

17°°(1, Federal Reserve Agent at the Federal Reserve Bank of St. Louis,

"C as follows:

111.0 "Yollr wire kagust 8, 1934, re definition of working capital170—ler. section 13b Federal Reserve Act. The question of what is

aeri.4-111C capital is essentially one of fact which depends for itsof

jh

'ermination upon a consideration of all the material circumstancesor e case. The Board feels that the Federal reserve banks are

tzlIllarilY in a better position to determine such questions as they

13onse in particular cases than is the Federal Reserve Board. The

suCgests therefore that the question whether the proposedCe described in your telegram is one for the purpose of furnish-

serv"I'kinP.; capital be determined in the judgment of the Federal re-

'e bank upon the basis of all the material facts and with the


2495

8/14/34

,assistance of its counsel. If, however, after considering thematter with its counsel, the bank still feels that it shouldhave a formal ruling of the Federal Reserve Board on this ques-zen, it should submit to the Board a statement in detail of allthe material facts which may have a bearing upon the determina-lon of the question, together with a copy of the opinion of itscounsel."

-11-

Approved.

Letter dated August 11, 1934, approved by four members of theBsw.

to an applicant for a permit under the Clayton Act, advising of

'111)roval.of his application as follows:

Itr. Nesmith Ankeny, for permission to serve at the same timedirector of The First National Bank of Walla Walla, Walla

;:alla, Washington, and. as a director and officer of The ColumbialTational Bank of Dayton, Dayton, Washington.

130.a.ra,

loproved.

Letter dated August 13, 1934, approved by four members of the

to an applicant for a permit under the Clayton Act, advising of

474rsvpiof his application as follows:

113. Arthur Sewall, for permission to serve at the same timeas a •Ifam_ director of the Federal Reserve Bank of Boston, Boston,, QaChusetts, and as a director and officer of The Bathklatlonal Bank, Bath, Maine.

Approved.

Letter to Mr. McClure, Federal Reserve Agent at the Federal Re-zerve

allk of Kansas City, inclosing the Clayton Act permit referred tobeio

7r. and requesting that, when the agent submits his recomendation asa re

stilt of his annual review of the permit, he report fully as to Mr.

4,e4F"'>ie s attendance at directors' meetings:

Mr.aa Bert L. McKenzie, for permission to serve at the same time

director and officer of The First National Bank of Otis,


2496

8/14/34-12-

(3t10, Colorado, and as a director of The First National Bankof Wray, Wray, Colorado.

Approved.

Letters to applicants for permits under the Clayton Act, advising

or aHPIP/ma of their applications as follows:

Ur. Prank L. Gardner, for permission to serve at the same timea! a director of The Farmers and Manufacturers National Bank21 Poughkeepsie, Pouchkeepsie, New York, and. as a director of40 Savings Banks Trust Company, New York, New York.

Ur. W. N. Jasper, for perma director and officer ofRoneeverte, West VirginiaNew River Banking &Trust

,ission to serve at the same time asthe First National Bank in Ronceverte,, and as a director and officer of theCompany, Thurmond, West Virginia.

Approved.

There were then Presented the following applications for changes1/1 sto of Federal reserve banks:A

ztrict No. 2.411e Little Pails National Bank,Little Falls, New Jersey'le isal,:e Shore National BankDu*lric, New York

1/11illstriet No. 7e eozzaercial National BankCity,

Charles City, IowaDrntiastrict

441e Pirst National Bank of Menahga,111„Itnallea, Minnesota

-„ullion National Bank ofTia -rmehester,

ochester,Minnesota

.7t

e Pirst National Bank of Ellendale,1.1endale, North Dakota

lications for ADDITIONAL Stock;

.1111112trict No. 1,Ilirst National Banl, of Easthampton,

sthampton, Massachusetts

lieatlorls for SURRENDER of Stock:

of Dunkirk,

of Charles

Shares

75

84 159

3

18

27

6

3

51Total 213

45 45


2497

8/14/34-13-

lications for SURRE:TD—Districto. 7.

EP of Stock: (Continued.)

71Ie Citizens ilational Bonk of Paris'Paris, Illinois

District No. 10.tie /lerchants irational City,

ll'ebra.siza City, NebraskaBank of Nebraska

• Pirst National Bank ofScribner, Nebraska Scribner,

• Denver National Bank,Deliver, Colorado

District No. 11.711e kaerican National BankIteLean, Texas.

41)1)1,o/red,

of McLean,

Approved..

Thereupon the meeting adjourned.

Shares

30

54

42

60

18

30

156

18Total 249


19340814_minutes.pdf

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