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A meeting of the Board of Governors of the Federal ReserveSYstem

r'as held in Vashington on Tuesday, August 10, 1937, at 11:30a, ais

PRESENT: Mr. Eccles, ChairmanMr. SzymczakMr. McKeeMr. Davis

Mr. Morrill, SecretaryMr. Bethea, Assistant SecretaryMr. Carponter, Assistant SecretaryMr. Clayton, Assistant to the Chairman

C°nsideration was given to each of the matters hereinafter

l'efel'red to and the action stated with respect thereto was taken bythe Board:

The lai:utes of the meeting of the Board of Governors of theRecePederai rv

System held on August 9, 1937, were approved unani-1104s1y.

Telegram to Mr. Sargent, Secretary of the Federal Reserve11/44k of &all F

rancisco, stating that the Board approves the establish-

14elit Itrithc)ut change by the bank today of the rates of discount and

in its existing schedule.

Approved unanimously.

. 11c1 There was submitted a recommendation from Messrs. Spurney

°I)Pang that Mrs. Katie V. Taylor, who had been selected intecol.,c1

e'llee with the authority`'ticl granted by the Board on July 12, 1937,

a 4° had Passed a satisfactory physical examination, be appointed

chEtr17c)raan in the Board's new building, with salary at the rate0

Or so

Per hour, effective as of August 10, 197.

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Approved unanimously.

Letter to Mr. Gidney, Vice President of the Federal ReserveBar Of New York, reading as follows:

, "Reference is made to your letter of July 23,-19 7, and Mr. Paulger's reply of July WI regarding

Pe application of the Hudson Trust Company, UnionNev, Jersey, for membership in the system,

linlch is pending at your bank."In view of the circumstances the Board con-

curs in your position that you continue to hold theacrlication in abeyance pending composition of theDlfferences between the trust company and the Federaleposit Insurance Corporation.

In this connection it is sufrgested that, sinceYou have participated with the Federal Deposit In-471rance Corporation in the last two examinations offle trust company, as of June 16, 197,6, and Februaryf0' 19Z7, it might be advisable for you to deferh'ther examination of the trust company until you.re reason to believe that the differences betweencue trust company and the Federal Deposit Insurancec°rPoration have been composed or are capable off°111Position on a program which you would feel justi-tIll'ed in recommending to the Board for incorporation ine conditions of membership."

Approved unanimously.

Letter to Mr. Young, Vice President of the Federal Reserve

Of Chicdgo, reading as follows:

"Receipt is acknowledged of your letter ofi-tst3 in which you referred to the Board's letter0;1g.82, advised that the Metropolitan Trust Companyha 'Illectgo, Ithich is primarily a trust company andfo: 110 deposit liabilities, has requested blanksre- Ille'king an application for membership, andqueFted advice ,hether, assuming that the trust

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Tt„"mPanY is in good condition, you can consider an applica-tion of such character.

"There has been no change in the Board's position regard-inT g such applications since the Board publicly announced inuulY 19.4 (X-7952) that it would give consideration to appli-

Tions for membership from trust companies which did sub-the no no commercial banking business. Since that time

Doard has approved the application for membership of abf,4” company which confines its activities to fiduciary4 8'ness and does no deposit banking business. Accordingly,"c'.'a mere fact that a trust company engages primarily in fidu-iel,arY activities and has no deposit liability is no reason4Y You should not consider its application for membership."

Approved unanimously.

Letter to Mr. Gidney, Vice President of the Federal Reserve Bankor xew

I0rk, reading as follows:

"Reference is made to your letter of July 19, 1937,,1,:!"

I -ative to the proposed transaction whereby the 'Bank of

es„ -Y Nutley, New Jersey, will purchase the assets andtrellMe the liabilities of The Franklin National Bank of

also of Nutley, New Jersey.ftlet

hat has noted your opinion that in view of the

m at both banks have the sae general type of assets:t01(1 are doing the same kind of business the transaction

asset not involve any change in the general character of

ex'set8 of the Bank of Nutley or broadening in the functionsbeercised by such bank within the meaning of condition num-Ilj:d 5 under which the bank was admitted to membership.t1„:,11e circumstances the Board likewise does not regard theco-"action as coming within the scope of the aforementionedislicition and the approval of the Board to the transaction

1*. erefore, not required.Bara, It is noted that after the proposed transaction theth-tq °I) Nutley will have a relatively low capital ratio and

a result of the acquisition of the assets of theillalcnal bank the investment of the bank in fixed assets

"her real estate will exceed its capital structure.PIZeht,circumstances the Board does not regard with favoror wflich provide for withdrawal of substantial amountsyou'aPital in cash. It is understood, however, that whilewitbu

uld greatly prefer that the transaction be accomplishedholder

the proposed cash payment to the minority stock-You are are satisfied that it can not be accomplished

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tt„anY other basis and that in view of all of the circum-

ic!ancas, it is advisable that the transaction be effected.u iS assumed, moreover, that the management of the bank

will devote its unremitting efforts to strengthening thecaPita] structure and disposing of its other real estate.

"It is noted also that among the assets of The Frank-National Bank of Nutley are certain securities and cor-

rata stocks which member banks are prohibited from pur-„asing under the provisions of sections 5136 and 5201 ofj'aetRevised Statutes of the United States and the Comptrol-

s regulation governing the purchase of investment se-tli,ritias. It is suggested that you advise the member bank

t such securities and stocks should be disposed of prioru the conclusion of the transaction or as soon thereafteras

practicable."

Approved unanimously.

Letter to Mr. Fenner, Chief Examiner, Federal Reserve Bank of

elPhia, reading as follows:

"In accordance with the recommendation contained in Y°11r letter of August 3, 1937, and pursuant to the authority!:ented to the Board of Governors by Section 9 of the Fed-l'al Reserve Act, as amended, the Board extends to September1' 1937 the time within which The Pennsylvania Company forp:s"ances on Lives and Granting Annuities, Philadelphia,0:1) shall file end publish the reports of its affiliates' Forms 220 and 220e, respectively, as of June 30, 1937.is orm 105b (Schedule '01), to which you also refer,tota Part of the bank's condition report. The law doesbe„emPower the Board to extend the time within which State

sermembers may submit their condition reports. It woulder) however, that all of the information called for by

ceDinle '0' can be supplied from the bank's records ex-

or--il:he figures of capital, surplus, and undivided profits

Et,e e affiliate. If the capital figures of the affiliatefi

40tEures available as of Tune 30, 1937, the latest available- the may be shown in Schedule '0', with a note givingr, d.

may

to which they relate and the reason why later-'eUres are not available."

Approved unanimously.

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Thereupon the meeting adjourned.

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