599 A meeting of the 2edera1,Leserve Board was hell in the office of the Federal wserve Board on dednesdv, June 25, 1930 at 11:30 a.m. 23E12: Vice Governor 2latt 1:ir. Hamlin :Tr. James lir. Cunningham Pole LT. McClelland,. -st. Jecretary The Vice Governor stated that special order of business for this meeting would be consideration of the matter on which action was deferred at the meeting of the Lxecutive Committee on June 20th, namely, request of the directors of the 2ederal ieserve Bank of lcew York that the Board reiuce to 1 3/4, the rate established by it as the minimum buying rate for the purchase of bankers acceptances by that bank. detailed discussion ensued daring which Hamlin moved that the Board approve a minimum buying rate of 1 3/4., for the 'ijew York Bank. At the conclusion of the discussion, Li'. Hamlin's motion was put by the Chair and carried, the members voting as follows: Vice Governor?latt, "aye" :7:r. Hamlin, "aye" 2ole, "aye" :17. James, "no" Cannin, an, "no" '2elegram dated June 24th from the Chairman of the federal Aeserve Bank of jan advisinf; that the,xecutive Committee of that bank today established a minimum buying rate of 1 3/4 for purchases of ban:ers acceptances. Upon motion by _r. Hamlin, it was votea to approve a minimum baying rate of 1 3/4,0 for the Jan Francisco bank, the members voting as follows: Vice Governor 2latt, "aye" ::..r. Hamlin, "aye" L:r. role,'aye' Mr. James, "no" r. Ounnin7;ha]i, "no"
600 6/25/30-2- The above telegram also reported the establishment at the Ban Francisco bank of the following schedule of effective rates for purchases of bankers acceptances: 1 to 90 days 91 to 120 days 121 to 180 days Repurchase 2*/ 2 1/8 2 3/8;b 2 li8;; Without objection, noted with approval. Memorandum from Counsel dated June 20th, with regard to application of the Chase National Bank of the 'City of New York for permission to operate a branch at Bush House, Aldwych, W. C. 2, London, England; the memorandum pointing out that prior to its consolidation with the Chase National Bank the Equitable 2rust Company of New York operated two branches in London but through inadvertence only one branch was covered by the application made by the Chase National Bank to the Board for authority to operate in London. He also stated that there is no legal reason why the application should not be granted. The Assistant Becretary reported that the Federal Reserve Agent at New York has recommended approval of the application. After discussion, upon motion, the following was ordered spread upon the minutes, -essrs. James and Cunningham voting "no": "WHEREAS, The Chase National Bank of the City of New York, has made application, pursuant to the provisions of Bection 25 of the Federal Aeserve Act for permission to establish an additionalbranch in the City of Landon, England, at Bush House, Aldwych, W. C. 2, and it appearing that this application is properly made under the law and should be granted; "NOW, THEREFORE, o 13 OED that the said application be, and it hereby is, approved and that The Chase National Bank of the City of New York be and it hereby is authorized to establish an additional branch in the L'ity of London, England at Bush House, Aldwych, d. C. 2." Memorandum from Counsel cl;,ted June 15th, with regard to the application
601 6/25/30-3 of the Second National Bank, Beloit, disconsin, for permission to exercise genral fiduciary powers; Counsel advising that there is no legal reason why the Board should not grant the application, but outlining a question of policy which is involved due to the fact that the capital of the Second National Bank of Beloit, disconsin is 450,000 while a new National bank organized in that city would be required to have a capital of at least 100,000 and the Board has been cooperating with the State banking authorities whose policy has been not to grant trust powers to a State institution with a capital less than that required for the organization of a new National bank in the same place. In his memorandum, Counsel pointed out, however, that in 1929 the banking authorities of jisconsin permitted the organization of a trust company in Beloit with a capital of only 450,000 and the present Commissioner of Banking states that under these circumstances he sees no reason why the Board should not now grant a right to exercise fiduciary powers to the Second National Bank of Beloit with its present amount of capital. During the discussion which ensued, 1.,r. Platt brought out the fact that the trust company was organized by the Beloit State Bank which has A considerably greater capital, for the purpose of handling its trust business. After some discussion, upon motion, it was voted to approve the application of the Second National Bank of Beloit for permission to exercise gemral fiduciary powers, Lr. Platt voting "no". Letter dated June 16th from dopes, Gray, Boyden and?erkins, attorneys for the Second National Bank of Boston, replying to letter addressed to them in accordance with action taken at the me3ting an.;une 9th and inquiring as to the minimum capitalization of a corporation organized under the laws of
6/25/30 602 Massachusetts for the purpose of engaging in international and foreign banking in which the Board would authorize an investment by the :ational bank. 12he Assistant Secretary reported that an investigation of the Board's records discloses that the smallest capitalization of any corporation operating under an agreemmt with the Board in order to make its stoc eligible as an investment for irational banks is.fli500,000.. After some discussion, it was voted to reply to the above letter that before any definite answer can be made to the inquiry, the matter will have to be considered at a meeting of the full Board but that the minimum capitalization of any foreign banking corporation with which the Board heretofore has entered into an agreement is 4500,000. At the suggestion of Lir. Hamlin, the Chairman of the Committee on District l, who expects to be in Boston next weak, he was authorized to take the matter up informally while there..emorandum dated Juno 16th from Counsel, prepared in accordance with action taken b; the Board on ::ay 29th, and submitting a revision of Condition of Membership llo. 3, contained in Section IV of the Board's Aegulation H, reading as follows: "Such bank or trust company, except after applying for and receiving the permission of the Federal Reserve Board, shall not acquire more than 50,; of the capital stock of any other bank or trust company; and, except with the Board's permission, its total investments in the stock of other banks and trust companies shall not exceed 20,; of its own capital stock and surplus." In his memorandum, Counsel raised the question as to whether the limitation upon the purchase of stock of another bank without the permission of the Board should be placed at 5070 or at some lesser figure, in view of the fact that although technically 50.,; is required to exercise control, as a practical
603 6/25/30 matter a corporation may in many instances be actually controlled by the ownership of less than 50, of its capital stock. He also stated that he understood one of the purposes of the present revision of the condition is to relieve member banks of the burden and irritation of having to apnly to the Board for permission to purchase small amounts of bank stock and it would seem that a limitation on such purchases at l5;;; or 201; of the stock of the bank in which an interest is being acquired would be sufficient to accomplish this purpose. After some discussion, it was the consensus of opinion that this matter should be considered at a meeting of the full Board but it was voted, pending such a meeting, to submit the questions involved in the proposed revision of the membership condition to the Federal Reserve banks for comment. The,L.ssistant Secretary then referred to the matter which the Executive Committee at its meeting on June 18th voted to recommend to the Board, namely, report of Committee on Examinations suggesting an amendment to the Board's letter of January 26, 1929 (X-6223) on the subject of "Examination of L:ember Banks" so as to incorporate the ruling tentatively adopted by the Board on April 23rd as to entries of member banks which will not be considered examinations. He referred to the fact that Congress has adopted and there is now before the President for approval the bill making it optional with the Board as to whether charges for examinations shall be assessed against the member banks examined, in view of Which fact it may be desirable to further revise the Board's letter (X-6223) above mentioned. Upon motion, it was voted to defer further consideration of the matter panding approval by the President of the bill referred to.
6/25/30-6- 604 Telegram dated JUMB 25th from Deputy Governor Kenzel of the Federal Reserve Bank of New York, advising that after some days' hesitation, following the development of a demand from banking houses for bills, the last of the dealers today reduced their rates to 2;; bid, 1 7/870 asked on maturities up to 90 days, 2 l/8,4 bid, 270 asked on four months' bills and 2 l/410 bid, 2 1/8 asked on five and six months' maturities, with endorsed bills 1/84 less. Noted. Memorandum dated June 24th from the Assistant Director of the Division of Research and Statistics, recommending the temporary appointment for three months, of La's. Florence C. O'Hare to a stenographic position in the Division at a monthly salary of 4130, effective June 26th. Memorandum dated June 18th from the Chief of the Division of Bank Operations, transmitting statements of expenditures by the Federal Reserve banks for educational and welfare work, etc. during the month of Lay and. for the five months ending May 31st. Ordered circulated. Letter dated June 23rd from the Assistant Federal Reserve Agent at New York, advising of a pending merger of the Pacific Trust Company of New York City, a member bank, Into the Manufacturers Trust Company, also a member. Noted. Letter dated June 19th from the Federal Reserve Agent at Kansas City, recommending the appointment of Mr. H. H. Rhodes, as Acting Assistant
6/25/60-7- 605 Federal deserve.agent; the letter nointin,7 out that authority to exercise the Feleral keserve Agents' control in connection with unissued Federal deserve notes, etc. has been lodged heretofore in only the Federal deserve 2,gent and his Assistant and some occasion mip:ht arise when both would be temnorarily absent from the bank. Upon motion, the desif7nation of L.r. ahodes as Acting Assistant Federal deserve Agent was approved. :emorandum from Counsel dated June 20th, submitting draft of letter to the..,.ssistant Federal Aeserve Agent at 1:ew York, with reference to the service of Lr. Charles E. ::_itchell as officer and director of the 1:ational City Bank and as director of the Corporation 2rast Company, both of iiew York City; the reply advising that after consideration of information furnished, the Board is of the opinion that the Corporation?rust Company, canes within the exception to the Clayton Act applicaule to banking institutions which do no can:nercial uankin&. business, as also does the Bank of Haiti, -inc. Upon motion, the ietter submitted by Counsel was approved. Lemorandum from Counsel uated June 20th, submitting draft of letter to the Assistant Cashier of the lational Bank of Commerce of jeattle, with regard to permits issue). by the Board to certain directors and officers of that bank to serve as officers or directors of certain other banks. 1.:emorandum from Counsel dated June 16th, submittin draft of letter to all Federal wserve Agents on the subject of the effect of consolidations on Clayton Act permits; the letter referrin to a ruling on the subject made by
606 6/25/30-8- the 3oard in Oanuary 1925 at which time the question whether a Clayton Act permit would oe issued depended primarily on whether the oanks involved were in substantial co7.oetition but th t in view of the amendment of the Clayton Act since, the iederal _teserve 2,p.ents when roeortinc to the 3oard whether or not a permit should be revoked on account of a consolidation should consider, in addition to the question whether com7,etition between the banks involved has been effected by the consolidation, whether the public inter,st requires the revocation of a permit. Upon motion, the letter submitted with 3ounsel's memorandum was approved. :.emorandum from Counsel dated,-une 17th, submitting for the Board's information copy of the minutes of the Conference of Counsel of all iederal _Leserve banks held in.asifincton on June 9th and 10th. Ordered circulrlted. 2he,tssistant Jecretary then presented the regular report of the Chief of the Jivis ion of Bank Operations, relative to deficiencies in reserves of member banks during the first -uartar of 1960, submittinc: a list of bans su ject to maximum penalty on account of deficient reserves. :et called attention to a notation by Lr. James that the Board should take some action on the statement contained in the report that of the sixty-seven banks listed as subject to the maximum penalty, nineteen were reported to the Board in December 1929 as beinr: in an unsafe or extended conctition and two were called to the 3oard's special attention by the,7elera1 -eserve Agents because of a continued deficiency for six months. L detailed discussion followed, at the conclusion of which it was vote,l to request the Comptrol]er of the
6/25/30-9_ 607 Currency to report to the Board relative to the condition of the National banks included in the list referred to and the efforts being made by their management and his office to improve that condition and also to make a similar request of the appropriate Federal deserve Agents regarding the State member banks listed. Application of the First National Bank of Greenwood, Indiana, for permission to exercise general fiduciary posers, together with a divided report thereon by the Law Committee; Lr. Hamlin recommending approval, and r. Platt, disapproval, because of the fact that the capital of the bank is but y25,000. Upon motion, the application was approved,. Platt voting lqio". The minutes of the meeting of the Federal Reserve Board held on June 16th were then read and approved. The minutes of the meetings of the Executive Uommittee of the Tederal deserve Board held Juma 18th and 20th were read and, after amendment to the latter, the actions recorded therein were ratified. The minutes of the meeting of the Federal deserve Board held an June 23rd were read and approved as far as they relate to the proposed Pittsburgh building; that portion relating to the meeting with the Executive Committee of the Open larket Policy Conference being referred back to the Assistant Secretary for amendment and resubmission to the Board. The minutes of the meeting of the Executive Uommittee of the Federal Reserve Board held an June 23rd were read and, upon motion, the actions recorded therein were ratified. REPOTS OF STAUDE TG CO=ITTEES: Dated, June 24th, ecommending changes instock at Federal eserve banks 25th, as set forth in the Auxiliary Linute Book of this date. Recommendations approved.
608 6/25/30-10- REPORTS OF STANDING COMIITTEES: (0ont e d) Dated, thine 23rd,.ecommending approval of the application of Mr. Edward B. Leisenring for permission to serve at the same time as director of the Philadelphia National Bank of Philadelphia, Pa., and as director of the Girard 2rust Company of Philadelphia, Pa. Dated, June 23rd, liecammending approval of the application of -r. C. J. Berry for permission to serve at the same time as director of the,jiglo & London Paris National Bank of San Francisco,.;alif. and as director of the īirst National Bank in Bakersfield, Calif. Dated, :June 23rd, Aecommending approval of the application of Lr. Geo. L. atthius for permission to serve at the same time as director of the South Shore 3ank of Staten island, New York City, N. Y., and as director and officer of the Staten Island National Bank & Trust Company of New York City, N. Y. Dated, June 23rd, Aecommending approval of the application of r. F. w. Reimers for permission to serve at the same time as director of the Citizens National Bank of Hammond, La., and as director of the Interstate 2rust & Banking Company of New urleans, La. The meeting adjourned at 1:15 p.m. aw Vice Govern or aaff,9 Assistant Secretary.