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410 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Tuesday, April 12, 1938, at 3:30 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Draper Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter referred to and the action stated with respect thereto was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on April 11, 1938, were approved unanimously. Memorandum dated April 11, 1938, from Mr. Smead, Chief of the Division of Bank Operati ons, submitting a letter dated April 8, 1938, from Mr. Martin, President of the Federal Reserve Bank of St. Louis, which requested approval by the Board of changes in the personnel Classification plan of the Little Rock Branch of the St. Louis bank occasioned by the transfer of certain accounting functions from the Transit to the Account ing Department of the branch which involved a Change in the description of work for the positions of Heads of the Transit and Accounting Departments. Approved unanimously. 4/12/38 - Letter to Mr. Merritt, Chairman of the Federal Reserve Bank Of Dallas, reading as follows: "Reference is made to the Board's letter of January 11, 1938, advising you that pending the completion of the current examination of the Federal Reserve Bank of Dallas by the Board's field examiners the Board was deferring detailed consideration of certain matters in Mr. Walsh's letter of December 27, 1937, relative to the report of the survey of the Auditing Department of your bank. "It is understood that during the course of this examination the Board's examiner reviewed with Mr. McKinney the various matters with respect to auditing procedure referred to in Mr. Walsh's letter and that as a result no further consideration of such matters by the Board is deemed necessary." Approved unanimously. Letter to Mr. Hill, Vice President of the Federal Reserve Bank of Philadelphia, reading as follows: "This refers to your letter of March 12, 1938, inClosing a copy of a letter from Mr. Elwyn Evans, Executive Vice President, of the Wilmington Trust Company, Wilmington, Delaware, and asking that the Board pass upon the question whether Mr. Pierre S. duPont, as Honorary Chairman of the board of directors of the trust company, Should be regarded as an executive officer for the purposes of section 22(g) of the Federal Reserve Act and the Board's Regulation 0. "It is noted that the by-laws of the trust company provide that the 'office of Honorary Chairman of the board of directors shall be purely an honorary one and the incumbent thereof shall not be ex-officio an officer of the Corporation, nor shall he possess any powers nor be burdened with any duties.' It is also noted that this office was created in January 1935 and has been held by Mr. duPont since that time. "As you know, the Board has consistently taken the Position that it would not be justified in excluding inactive officers from the provisions of Regulation 0 for 412 4/12/38 "the following reasons which were contained in the Board's letter of December 30, 1937 (S-59): (1) It appears that the principal purpose underlying the enactment of section 22(g) of the Federal Reserve Act was to prevent the exercise of undue influence by executive officers of member banks in obtaining credit from the banks they serve and it is the Board's view that the exercise of such undue influence may be present in the case of inactive or honorary officers; (2) Congress did not make a distinction in section 22(g) between active and inactive officers and the legislative history of the section indicates that the chairman of the board of directors and the president of a member bank should appropriately be regarded as executive officers for the purposes of the law in question even though they may be inactive; (3) From the standpoint of the public, persons having the usual titles of executive officers in member banks are considered as executive officers whether or not they are active, and the Board does not feel that it should give encouragement to the employment in an inactive capacity of persons who are given the titles of executive officers and held out to the public as such. "These reasons are believed to be applicable also to the case under consideration. "Moreover, the fact that the powers and duties of the Honorary Chairman are restricted by the by-laws of the bank does not alter the situation. In this connection, the Board has heretofore considered the suggestion that a provision be included in Regulation 0 to the effect that a person, even though he holds one or more positions specified in the regulation, should not be considered an executi ve officer of the bank if his duties were restricted by a resolution of the board of directors or provisions of the by-laws of the bank. The Board stated, however, that it did not feel that it Should make such an exception (See X-9478, January 31, 1936). "In the circumstances, you are advised that it is the Board's opinion that Mr. duPont, as Honorary Chairman of the board of directors of the Wilmington Trust Company, is regarded as an executive officer for the purposes of section 22(g) of the Federal Reserve Act 4/12/38 -4- "and the Board's Regulation 0." Approved unanimously. Letter to Mr. Paul P. Cret, architect for the Board's building, prepared for the signature of the Chairman, and reading as follows: "I have had the pleasure of bringing to the attention of the Board of Governors your letter of March 28 to Dr. Miller, together with your letter of April 5 to Mr. Morrill, in regard to the Board's new building. We have noted with appreciation your expressions regarding your relations with the Board, Dr. Miller, and the others who have been directly connected with the plans for and the construction of the building. "In a competition of a group of the leading architects of the country, who were selected for the purpose in consultation with the Fine Arts Commission and the National Capital Park and Planning Commission, your designs were awarded first place by unanimous vote of a jury composed of three prominent architects together with the Chairman of the National Capital Park and Planning Commission and the Chairman of the Board's Building Committee, and this award was approved unanimously by the Federal Reserve Board. "The conditions of the competition with respect to the type of building to be designed were such as to call for the exercise of unusual ability, and proof of your success is found in the ready approval given to your plans by both the Fine Arts Commission and the National Capital Park and Planning Commission, as well as by the Board of Governors, and, I may add, the favorable expressions of innumerable visitors to the building since its completion. "The exhaustive attention which you gave to details and your patience in considering numerous suggestions were an outstanding feature of the relations which have brought to a most satisfactory conclusion a project which has resulted in a building generally regarded as ranking among the foremost of the Capital's architectural achievements. "The Board extends to you its congratulations and its best wishes for your good health and for your continued success." Approved unanimously. 414 4/12/58 Thereupon the meeting adjourned.
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