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204
A meeting of the Federal Reserve Board was held in Washington on
PlIday, September 2, 1932, at 10:10 a. m.
PRESENT: Er. Janes, PresidingUr. Hamlinlifx. MillerVI'. MageeEr. Pole
Mr. T.orrill, Secretary
Er. Wyatt, General Counsel
Er. Siena, Federal Reserve Examiner.
The Board considered and acted upon the following matters:
Letter dated September 1, 1932, from the Assistant Secretary of the
al Reserve dank of Yew York, and telegram of the sane date from the
—an of the Federal Reserve Bank of San Francisco, both advising that
at rue eof the boards of directors on the date stated no changes were
1114cle in the banks' existing schedules of rates of discount and purchase.
80ara) to adopt a rate of C) on loans under the third para7iraph of section 13
Without objection, noted with approval.
Tele graphic reply, approved by three members of the Board on
3ePterriber
Alleuet --$ to a telegrari dated September 1, 1932, from the Chairman of the
Ilecler4-4 Reserve 3ank of San Francisco stating that the board of directors of
the ballk on that date voted, subject to the approval of the Federal Reserve
in accordance with the authority granted at the meeting on
the Federal Reserve Act, as amended by the Act of July 21, 1932; the reply
4.11,..) that the Board approves the rate of e6, effective September 2, 1932.
Approved.
Letters to the Federal Reserve Agent at Chicago, approved by five
lerrbe/..a of the Board on September 1, referring to Assistant Federal Reserveet
You.nets letters of August 22, 1932, regarding the deficiencies for six
laorths in the reserves of the Citizens Commercial and Savings
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Bank, Flint, Michigan,
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the Bank of Saginaw, Michigan., the Washington Savings
Bank, Washington, Michigan, the First National Bank, Avoca, Michigan, the
First National Bank, Hillsdale, Michigan, and the Millington National Bank,
--6'icnt Michigan; the replies noting that the Assistant Federal Reserve
4€ellt's letters do not contain a recommendation as to the action which should
be ta?0311 by the Board in these cases, and stating that it is assumed that the
Matter was considered by the executive committee of the bank and that it was
thoutinadvisable that the Board should take any action at this time. The
rep14__"6 requested that the agent confirm this understanding and stated that
on th le assumption the Board will take no action at this time other than to
Itc3rward copy of the Assistant Federal Reserve Agent's letter with regard
tO 41-
e deficient reserves of the national banks to the Comptroller of the
"--J, but requested the agent to keep in close touch with each of the
144titution3 referred to and, when in the opinion of the executive committee
or the Federal reserve bank action by the Federal Reserve Board is deemed
Millactble) to submit a recommendation to the Board.
Approved.
The Secretary then stated that he had received a request from
Strother, Administrative Assistant to the President, for copies of all
ataternents published by the Board during 1928 and 1920 indicating the policyO
ttitude of the Federal Reserve Board toward credit conditions. The
2eel'et'arY stated that the records of the Board disclose that statements were
d4rinC that period in the Board's annual reports, and the Federal Reserve
131111etilla' in Press statements, in public addresses by certain members of the
'fla in testimony given by members at Congressional hearings.
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At the conclusion of the ensuing discussion,
the Secretary was authorized to send Yr. Strother
marked copies of the annual reports and Federal
Reserve Bulletins for 1928 and 1929 and a copy of
an official press statement of the Board released
on August 8, 1929, all of the other material being
omitted because it did not come within the scope of
Yr. Strother's request.
Mr. Hamlin then moved that there be included in the material fur-
Strother the press statement given out by Governor Young on
november 20, 1929, following the visit of the members of the Advisory Council
at the White House.
Ybtion lost, nr. Hamlin voting "aye".
Reference was made to the discussion at the meeting on August 31,
1932with regard to compliance by the Guaranty-Plaza Trust Company, St.
1-411is2 ,;iIssouri, with the third condition of membership contained in the
Iloardteletter of August 19, 1932. The Secretary stated that the Federal
Reserv_Aat St. Louis had advised him that a further conference on the
1114tter orraising additional money with which to meet the charge-offs required
bY theconditions,had been without result and that Ia.. F. B. von Windegger,
Preid
r0r th
ent of the Guaranty BankL.. Trust Corgany, who had come to Washington
e Purpose, desired to appear before the Board with regard to the
4 The Secretary also read a telegram just received from the President
St. Louis Clearing House Association expressing the hope that the
vi°111d take a liberal view of the situation involved in the natter ofthe
clae°1idation of the Plaza National Bank and the Guaranty Bank and TrustCotDez
Y Of St. Louis to form the Guaranty-Plaza Trust Company.
von. Winde3ger was then invited into the meeting and he reviewedto,the".4ormation of the members present the organization and history of
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the Guaranty Bank and
that the question
ed to his bank on
that a satisfactory plan
Trust Company and the Plaza National Bank. He stated
of the consolidation of these institutions had been suggest-
four occasions, but that it was not until April of this year
was presented, which was discussed with the Federal
Reserve Agent at St. Louis, and Mr. von Windesser quoted the Elent as saying
that he thought it was the only thing to do in the circumstances. Be said
s180 that the plan had been approved by the State banking authorities and the
Chief National Bank Examiner.
When the negotiations for the consolidation were under way, 'Tr. von
111144sCger stated, it was suggested by counsel that it be ascertained definite-
17 tram the Federal Reserve Bank of St. Louis that the membership of the
(prlisolidated bank would continue.eral R
°serve Agent at St. Louis, hr. von Windesgerthat
the application would go through and would meet the approval of the Fed-
Reserve Board.it Was not until
174s received,
11°4(1' Prior
tohe
publi
'IlternativeStEcted that
it 18 the de
eraa Re8erve
Upon communicating with the Assistant Fed-
said that he was assured
On that assurance the negotiations were continued, and
August 23,
that
to
c,
the
1932,
banks were
which time
when the Board's letter
advised of the
of August 19, 1932,
conditions
the contemplated consolidation
imposed by the
had become known
leaving the banks, Mr. von Windesger said, with no other
than to complete the consolidation. lir. von Windegger further
the consolidation is to be effected tomorrow, September 3, and
sire of the bank to have its admission to membership in the Fed-
System
l'es1 that after
at 2.t. Louis, it
completed at that time. He also said that his directors
having secured a commitment from the Federal Reserve Agent
is unfair to them. to enforce the conditions of membership
"which the directors were not advised until August 23, 1932; that this is
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6771 C.;f
not the time to start to clean up the situation in the two banks; and that
they uu ,....
not see any necessity for the contribution of further money to pro-
the depositors. Er. von Vindegger also stated that he feels very
etl'ongly that the consolidated bank should be opened as a member of the
Federal Reserve System.
It was then explained that while the Board is sympathetic and
cles res to be helpful in the situation, the conditions imposed were based
143°11 ita general policy with respect to criticized matters. Mr. Pole pointed
ollt that, on
c°ntributing to the consolidated institution net assets in the amount of
the basis of the last examinations, the Plaza National Bank is
U75 000 after charging off all known losses and depreciation, while the
entire capital account of the Guaranty Bank and Trust Company had been wiped
cUt 10,, depreciation in investments.
L. von WindeL;ger then referred to the recommendation of the Federal
Rese,Agent at St. Louis which had been made orally, that the bank be
ilren until November 1, 1932, to comply, with the third condition of member-
344 requiring the charge-off of depreciation in invesLments, and asked that
thl e°11r8e be adopted so that Lir. von 'Andegger could have more time to
1"1188 the natter further with his board of directors.
4 general discussion followed during which it was suggested that thedirectora
) instead of making a cash contribution in the amount of approximate-
lYuu which would enable the consolidated bank to comply with all of
the collaitions
imposed by the Board, might execute a guaranty to remove fromthe bank
any depreciation remaining in the investment account at a later date.
It Was also sua;ested that, in the event admission to membership iseom
--Pletod at the time the consolidated bank is opened for business, the
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new institution
Reserve Bank of
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could maintain a nonmember clearing account with the Federal
St. Louis until a decision is reached upon the compliance by
the bank with the conditions of membership.
Further discussion followed with regard to a guaranty by the directors
&1412% von Windegger requested that the Board furnish him with a statement
17hich he might present to his board of directors.
IJr. von Windegger thensome further discussion thesend the following telegramat St. Louis and to furnish
left the meeting, and after
Secretary was authorized to
to the Federal Reserve Agent
T.Ir. von -,/indegger with a copy:
"Re membership of Guaranty-Plaza Trust Company, St. Louis,cn.basis of ,,200,000 capital and .;50,000 surplus, Board willwalve cash contribution to provide for depreciation in un-defaulted bonds classified below four highest grades, if before
Mlnission to membership directors guarantee to make good thenet amount all loss and depreciation on such bonds at end ofsix months from admission to membership. Board has therefore
Flended condition number 3 set forth in letter of August 19,1932, to Guaranty-Plaza Trust Conpany, St. Louis, by adding at17nd thereof the following: Quote Provided that depreciation in
2n ds classified below the four highest grades but upon whichthere has been no default need not be charged off or a reserve
12rc'fided therefor prior to admission to membership if directorsOf consolidated institution whose financial responsibility issatisfactory to the Federal Reserve Agent at St. Louis execute
)111c1 place in the custody of the Federal Reserve Agent, Prior to
4.44111kt3 admission to membership, an agreement in form satisfactory0 the counsel of the Federal Reserve Bank of St. Louis guarantee-"k the bank against loss on such bonds and undertaking to pay the
bialqk at the end of six months from the date of admission to MBM-
,ershiP the net amount of (1) all losses actually incurred on!Ich bonds and (2) all depreciation on such bonds appearing as a-L'oeeUlt of an appraisement thereof at the end of such six months
aitthethbeasis of the market valumat that time, provided, however,
maximum amount which the directors shall be required to
TT Y may be limited by the terms of such agreement to .79,000'11-qtlote.n
Reports of Standing Committee dated August 31and September 1, 1932,
l'eecrir nd.bctIlk:---inC approval of the following changes in stock at Federal reserve
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ca.tion for ADDITIONAL Stock: Shares
15
District No. 2.Citizens and Farmers Trust Company, Adans,(Increase in surplus)
A. lications for SURRENDER of Stock:2,1 1 It ..ct
15
15
No. 1. ----- -1TillerS-Til7V717-Rational Bank, Athol, ilass.(Decrease in surplus)
Strafford National Bank, Dover, New Hampshire.(Decrease in surplus) 60 75
rational Bank, Coal Creek, Tennessee.
....••••••••••••
(Decrease in surplus) 7 7
Zirst National Bank Eldora, Iowa. (Insolvent) 60
t National Bank: Indianola, Iowa. (Insolvent)
apples National Bank 6,L Trust Co., Sullivan, Ind.(Insolvent)
42
120
102
120
e PIUMelaw National Bank, Enumclaw, Washinton.6r4I.Alos, by First National Bank of Enumclaw) 43
Total
413Prevea:
Approved.
Thereupon the meeting adjourned.
•Cha.irrian, Executive Committee.
Megibm.:414-6-1
48352
- Secretary.
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