19330320_Minutes.pdf

482

A meeting of the Executive Committee of the Federal Reserve Board

waS held in Washington on Monday, Larch 20, 1933, at 11:30 a. m.

PRESENT: Ur. Meyer, GovernorMr. HamlinMr. MillerYr. Tames

Mr. Morrill, SecretaryMr. McClelland, Assistant Secretary

Mr. Harrison, Assistant to the Governor

Mr. 'iyatt, General Counsel.

The Secretary stated that Mr. VAlliams, Federal Reserve Agent at

Cleveland, had advised him over the telephone that it will be necessary to

ealPloY some additional examiners in the examination department of the bank

to takecare of the large increase in work in that department, and that,

because of the necessity for prompt action, he 'would like to have authority

rroM the Board to employ such examiners as may be required as soon as

suitable men can be found, and that if such authority is given he will ad-

Board promptly by wire of the appointments made.vise the

The Secretary was requested to advise Mr.Williams that the Board authorizes him to em!-ploy additional examiners in accordance withthe procedure suggested by him.

Governor Meyer then referred to requests that have been made in

sclms instances that State banking institutions which have filed applications

r°r membership in the Federal Reserve System be admitted to membership with-

co-I'Llance in all respects with the usual requirements of the Board, par-

tioularlY as regards capitalization and the charging off of losses and deprecia-

tion.The ensuing discussion developed the feeling of the members present that

the Board should be as helpful as possible in all cases and expedite the

COria

eration of applications, it should keep in mind that, if the applyingbEitke

'") net make the necessary corrections or adjustments in their con-

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

3/20/33-2-

483

dition before admission -to membership, suc.h corrections probably will be

difficult to obtain later, that it is particularly imPortant in present

circu:17-stances that there be no lowering of the standards that have been

5li°7111 by experience to be based on sound principles, and that therefore

there should be no relaxation from the requirements that have become

c48tmllarY in connection with admission to membership.

There was then presented a telegram prepared on the evening of

arch--/ 1933, at the suggestion of Under i3ecretary of the Treasury

Ellantine and dispatched by the Secretary of the Board after he had

°btained the a-o-:)roval of the appointive members of the board who were

474ilable• The tele,r9m stated that in response to requests, the Beard has

etenlied to March 27, 1933, the closing date fixed in its telegram of

114rch42, 1933, requestinF lists of the names arri addresses of all persons

1711° had. withdrawn gold frcaa the ederal reserve banks or member banks since

Pebrun,„,1933, and who had not redeaosited it in a bank by 1:_arch 17,

1933' 311(1 that it is suggested that the 7ederal reserve banks give such

rtirthey.-- Publicity to this 2mtter as in their opinion nay he appropriate.

Approved.

In co im.e cti on with the above tele gram the Governor stated that the

Secl'etarY of the Treasury is nor confronted with the question as to whether

Eulci when he should issue an order in accordance with the provisions of

3"ti°4 11(n) of the Federal Reserve _Act, requiring the return oil' ;old coin,

bullion and gold certificates. After a brief general discussion, it

111. ested that the a.n)ointive members of the Board meet again this

Etl'teril°0111 to consider further the various aspects of the gold situation.


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Accordingly, the meting recessed and reconvened at 2:45 p.m., the

4/al% members of the Board and its staff being present as attended the

41°111111g fleeting and, in add it ion, Messrs. Gold envie is er, , Riefler and

GE11'ciller of the Board's Division of Research and Statistics and. Er. H. H.

111141Y, special counsel to the Secretary of the Treasury.

There was a general discussion of the questions of policy involved

clea-ling with the g31.d situation in the country, in the light of tentative

drEttts of orders under consideration in the Treasury Department relating

to the return of gold to the Treasury and Federal reserve banks and

8°v6111111g the exportation of gold. Toward the conclus ion of the dis cus sion

111*. 13141141-Y left the meeting and shortly thereafter Messrs. Goldervieiser,

kterler and. Gardner also retired from the room.

The Executive Committee then. considered aid acted upon the follow-

illetatters:

Telpgram dated March 20, 1933, from Deputy Governor. Kenzel of the

l'ederel Reserve Bank of New York stating that since March 1'7, 1933, the

Lavestment demand for prime bankers' bills had increased both as to amount

414 in variety of source, with dealers unable to buy at quoted rates, andtam, in an endeavor to find a level of rates at which they could buy andsell) dealers reduced their bid and asked rates this morning, following

Ithiett the Federal Reserve Bank of New York established the following

"heckle or effective buying rates on bankers' acceptances:

1 to 90 days 2 1/2%91 to 120 days 2 5/8;rt,121 to 180 days 3(70Repurchase 2 1/2%

Without objection, noted w ith approval.


)

t 3/20/33

Telegrams dated March 20 1933, from the Chairmen of the Federal

Reserve Banks of Atlanta and Chicago, advising of the establidhnent at those

baaks today of the following schedule of effective buying rates on bankers'

a"ePtances; the schedule at Atlanta also including a rate of 2 1/25 for

Plrehases of bankers' acceptances under agreement to resell:

1 to 90 days 21/2%91 to 120 days 2 5/2%

121 to 180 days

Without Objection, noted with approval.

Telegram dated March 20, 1933, fran the Chairman of the Federal

Reserve Bank of Atlanta advising of the establishment at that bank, sabjectto the

approval of the Federal Reserve Board, of a rate of 55; on advances

121"15 in accordance with the provisions of section 10(b) of the Federal

aeserye Act as amended by section 402 of the Act of March 9, 1933.

The rate of 5% established by the FederalReserve Bank of Atlanta was approved, effectivetoday.

Memorandum dated March 16, 1933, from Mr. Goldenveiser, Director°r the n4

-J.vision of Research and Statistics, reconmending that the temporary

41/13cdaltmant of Mrs. Mildred Corder be continued one month to April 50,1933, Wit} salary at the rate of :,..;130 per month, and that Miss Caroline

1141111 who has been employed since May, 1930, by the Systen Committee

E*anchs Group and Chain Banking, be appointed as a stenographer in the

"1111°11 Of Research and Statistics, effective May 1, 1933, with salaryat the

rate of ::131,560 Per annuli'.

Approved.


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Telegram dated Larch 16, 193Z, from the Federal Reserve Agent at St.

Louis, requesting approval of the appointment of Llessrs. Wm. A. Chapman and

Ferne E. Willard as examiners in his department, each with salary at the

rate of '',,;3,000 per annum. The reply stated that the Board approves the ap-

P°ihtments at the salary rate named and requested advice as to the dates on

which the appointees assume their new duties.

Approved.

Telegramsto the respective Federal reserve agents stating that the

13°ard has approved applications filed by the following State banking

institutions for membership in the Federal Reserve System and for Federal

reserve bank stock, subject to certain conditions set forth in the telegrams:

Name of Bank

Washington Irving Trust Co.,Tarrytown, New York.

Cs P. Burnett & Sons, Bankers,Eldorado, Illinois.

Rc'ecoe State Bank, Roscoe, Texas.

Number of Shares F. R. Bank

120 New York

60 St. Louis

27 Dallas

Approved.

Telegram to the Federal Reserve Agent at New York referring to the

e'PPlieetion for membership of the West Side Trust Company, Newark, New'Terse

Y) and stating that the Board does not feel that the report of examina-tion

Of the applicant of February 27, 1(2;32, is sufficiently current to

afford a- Proper basis for consideration of the application. The telegram

ilEeest ed that the agent arrange for an early examination or credit

illvestir,n+4-.Ion for the purpose of developing the required information as to

the 1313licant'3 condition which when submitted to the Board should be

companied .by a new application in place of the one filed on May 18, 1932.


whether

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h r

The tele gram also referred to the agent's recommendation regarding the

ella.rDe off of depreciation in securities, and stated that the Board feels

that it should not modify its requirement that banks admitted to membership

in the Federal Reserve System shall before admission charge off, in addition

to depreciation on stocks and defaulted bonds, all depreciation on all

other securities classified beim the four highest grades.

Approved.

Telegram to the Federal Reserve Agent at Dallas stating that it

"ars that Palestine, Texas, has a population in excess of 6,000

illhabitants and that, since the Robinson State Bank and. Trust Company of

l'Et/eatine does not have the capital required far the organization of a

taticre,'444. bank in that place, it is not eligible for membership in the Fed-

Reserve Sy stem with its present capital of .)50,000, but that if thebeak ,

'"ould increase its paid-in capital to at least :60,000 and agree

to ine ease its paid-in capital to at least ,:i1.00,000 within five years after

Ita ar1,4_-"'Beion to membership pursuant to requirements of the Board's

1I861118.ti°11 Hs it would be eligible for admission to membership under the

111'°17-18-1°8 of Clause (b) of the tenth paragraph of section 9 of the Federal

ileaelsve Act. The telegram requested that the agent inform the bank in

hla 1114tter and that he advise the Board of the action the bank decides tot4kes

ectie

11C that in connection with applications for membership submitted

bY "re or mail, the Board should be advised in each case as to

the aPplicant has been licensed to reopen and if any restrictions

Approved.

Telegram to the Federal Reserve Agents at all Federal reserve banks


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been imposed upon its usual or normal operations, using the symbol

'7" in accordance with the Board's telegram of March 12, 1933 (Trans 1628).

Approved.

Telegram to the Federal Reserve Agents at all Federal reserve banks

'11111e8ting that, in order that State banking authorities may be definitely

414 ProzPtly advised regarding admission of State banks to memberdhip in

the Federal Reserve System and voluntary withdrawsls of State banks from

111511bership, advice be sent to the appropriate State banking authorities

13/*(3173Pt1Y in each case when adnission to or withdrawal frommemberdhip has

been effected, and stating that in any case where immediate voluntary with-

(1.1s1/74-1- is effected State banking authorities should be advised that the

4eent will be glad, if desired, to furnish information as to the reasons

aclIeanced by the State institution in support of its request for waiver

or the usual requirement of six months notice of intention to withdraw. Thetele

6'wa also requested that, in submitting any case of voluntary withdrawal

t° the Board the agent advise as to whether the applying bank has complied

111t4 411 requirements of section VIII of Regplstion H; whether the Federal

l'e381*ve bank's counsel has passed upon resolution of the directors; WWat

the bank offered far desiring to withdraw; and a full statement ofthe cir

cluaztances and reasons far the agent's recommendation.

Approved.

Telegram to the Federal Reserve Agent at Chicago referring to his

'4-4111e and letters of March 18, 1933, with regard to the applicationsc't the

13ellk of Baraboo, Baraboo, Wisconsin, and the State Bank of Plymouth,1YMouth

4isconsin, for permission to withdraw immediately from member-

•


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489

8111P in the Federal Reserve System, ilad requesting that the agent transmit

tO the Board by wire more detailed information with regard to the banks"

l'easone for desiring the waiver by the Board of the usu.al six months notice

at intention to withdraw fran merabership and a full statermnt of the

el•l'ellinstances and reasona for his favorable recommendation.

Approved.

Telegram to Assistant Federal Reserve Agent Bailey at lameapolis

requestine him to advise the Superintendent of Banks of Montana of the

withdrawal from membership in the Federal Reserve System of the Belgrade

State Bank, Belgrade, Montana, the Ravelli County Bank, Hamilton, Montana,

424 the Miners Savings Bank and Trust Company, Butte, Eontana, when with-

druln,of each of the institutions is effected, stating that he will be

elesd o if desired, to furnish to the Superintendent information as to the

l'ea.41°Ias adVanced by each bank in support of its request for waiver of the

1131411 l'eq.1-Urement of six months notice of intention to withdraw from

Illetaberaia

Approved.

Telegram to the Federal Reserve Agent at Kansas City referring to

telegrara of March 16 and the Board's reply of March 17, 1933, and

4te:bil that before the Federal reserve bank stock ismed to the Saline00114

cottria-4 for the Federal reserve bank that the notice of intention to with-

al. .0-43-ed with the agent complies substantially with the requirermnts

-Ian of the Board's Regulation It, prescribed pursuant to the

1*".81°118 of section 0 of the Federal Reserve Act.

Approved.

Bank, Western, rebraska, is canceled he should obtain advice from


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Telegram to the Federal Reserve Agent at Dallss, referring to his

telegram of March 11 and the Board's reply of 'larch 12, 1933, and stating

tiUlt it is assurnd that the State Bank Commissioner is aware of the with-

Of the First State Bank of Sacksonville, Texas, from membership in

the Federal Reserve System and suggesting that, if such is not the case,

tbe agent advise the Comraissioner promptly, stating also that he will be

@Ms if desired, to furnish information as to the reasons advanced by the

State'Junk in support of its request for waiver of the usual requirerent

r etc months notice of intention to withdraw from membership.

Approved.

Reply on March 18, 1933, approved by four members of the Board,to .

letter dated Larch 16, from the Secretary of State, stating that he

18 ill-toximed that the Federal Reserve Board will proceed in the near

tlIttlre to the formulating of decisions and the making of regulations

Icrveriling the treatrxInt to be accorded to gold that may be held in this

e.°144tr71 under earmark or otherwise, by fareigi central banks, foreign

861111-*°tricia1 banks of different varieties, anl ordinary foreign banking

t It---ons, and requesting, since these decisions may become matters

4r1'"tirig the general relations between this Governmnt and foreign

eovernzaents and since the State Department is likely to be approached by

l't)rei Ll governments in regard to them, that the department be inforned in

ettTranee of the main lines of decision so that it may have an opportunityto

consider them. The reply stated that it is understood that this

14atter has been dismissed with Lir. Fels of the State Department, that heis

4411iar with all the developments in connection therewith, that the


3/zo/33 -10-

l'reassurY Department now has under consideration the issuance of certain

carders or regulations relating to gold, and that before any action is

taken thereon they will be further discussed with representatives of the

3tate Department.

Appr ov ed.

Reply, prepared in accordance with action taken at the meeting

Of the Board on. January 19, 1933, to the letter dated January 18, 1933,

fl'0111 Governor Harrison of the Federal Reserve Bank of New York with regard

to ths continuance of the deposit account maintained by that bank with the

aztiliz for International Settlements. The reply stated that Federal reserve

b 4114 are authorized to establish and maintain accounts in foreign

cicitintries only with the consent of the Federal Reserve Board, and subject

t° 81/ell reGllations as the Board may prescribe, and that it is the Board's

levi that such accounts may be opened and maintained only for the purposeor

taei lit at in3 the purchase, sale and collection of bills of exchange

(114 tile conduct of the open rarket transactions of the kinds specified in

13. 34 of the Federal Reserve Act. The reply invited attention to the

telee:raill addressed to Governor Harrison on Xuly 30, 1931, advising that the

ea'ercti Reserve Board had. considered the changes suggested with regard tothe t

"1718 of the deposit in the Bank for International Settlerents referredto

G°vezior Harrison's telegrEci. of Tull?. 28, 1931, and approved the

Aroposal to rake a dexand deposit with the Bank for International Settle-

ail canotuit not to exceed :;10,000,000, with the widerstandinC thatthe

klade were to be invested, as might be determined and arranged fromtitle

to tae, in prime commercial two-name paper guaranteed by the Bank


492

3/20/33 -11-

for International Settlements. The reply also stated that it is not

entirely clear to the Board what is meant by the suggestion that the Fed-

eral Reserve Bank of New York might now consider the maintenance of the

Etecount "under more usual conditions as other banks of issue do", and

tilat the Board will be glad to have more definite advice as to the terns

44a' conditions under which it is proposed to continue the account, the

1111Plosee for Which it is to be used, and the length of time which it is

eolltempl ated that it will be maintained.

Approved, rr. Miller stating that in hisOpinion the account in the form proposed by theNew York bank is both inadvisable aid illegal.

The following regulations issued by the Secretary of the Treasury

/141ar the authority conferred upon him by the President's Proclamations of1100,

u and 9, 1933, previously brought to the attention of the individual

„kettb._-4'6 of the Board, were presented for the record:

(27) "Any State banking institution which is amember of the Federal Reserve System and mhichis not licensed by the Secretary of the Treasuryto reopen for the performance of usual bankingfunctions may, with the approval of the appropriateState authority having innediate supervision ofsuch banking institution, permit withdrawals bydepositors and make Payments to creditors of suchpercentage of the amounts due to them (not exceeding5,;) as it may determine, provided that at or beforetin time of such withdrawal or payment it shall setaside and make available for such purpose a fundfor the benefit of and sufficient to pay to alldepositors and creditors the percentage so deter-mined.

"This regulation shall not in any way affectany right created by Regulation NO. 7 nor limit orrestrict any payment thereby authorized.


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(28)

cu JY\O1Secretary.

"Any right to authorize withdrawals or payrentsunder the terms of this ret.ilation shall terninateupofl. the anpointrent of any conservator, receiver orother appropriate State official tclziw; charge of theaffairs of such bankiry: institutions."

"After the close of: business'on March 18, 1933,Treasury 2eguIation No. 6 and Treasury Regulation ro.10, as amended, shall be without force or effect toauthorize any bankinc transaction therein referred to.

Thereupon the neetin7, adjourned.

t,

. -Governor.,


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19330320_Minutes.pdf