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75" A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Thursday, April 23, 1942, at 10:30 PRESEaT: Mr. Ransom, Vice Chairman Mr. McKee Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters herefter referred to was taken by the Board Memorandum dated April 21, 1942, from Mr. Nelson, Assistant a"l'et f, recommending that James V. Minor, Jr., be appointed as a gi Ird. in the Secretaryts Office on a temporary basis for an indefiIlite period, with salary at the rate of $1,380 per annum, effective 48 of the date upon which he enters upon the performance of his duties after having passed satisfactorily the usual physical examinatioa with the understanding that if his work is satisfactory during the -dxst six months of his appointment a further recommendation 17111 be submitted asking that his salary be increased to *1,500 per 44411m. Approved unanimously. Telegram to Mr. Mercer, Vice President of the Federal Reserve of Richmond, reading as follows: "Board approves designations of Joseph L. Jenkins aald Roland E. Whitaker as special assistant examiners.0 Approved unanimously. 757 4/23/42 -2Letter to the board of directors of "J. P. Morgan & Co. In- cc '130ratedu, New York, New York, stating that, subject to conditions of m embership numbered 1 to 6 contained in the Board's Regulation H, the Board approves the bank's application for membership in the Fede1 Reserve System and for the appropriate amount of stock in the l'edsral Reserve Bank of New York. The letter also contained the following special comments: "At the request of the Federal Reserve Bank of New your bank has furnished certain information relat4ng to the question whether Morgan GrenfeLl& Co. Limited is engaged 'principally' or 'primarily' in the types of securities business described in sections 20 and 32 of the Banking Act of 1933. Upon the basis of this infor111at1cn, the Board has concluded that Morgan Grenfell , L'o. Limited is not now so engaged. "After careful consideration of the information submitted, the Board has concluded that, through the :?.owers which your bank has with respect to the liquida_!'ion of Morgan Grenfell & Co. Limited and the fixing of remuneration of its directors, your bank controls the election of a majority of the company's directors arld, accordingly, the company will be an affiliate of _ur bank upon the latter t s admission to membership. Board also is of the opinion that the company will ue an affiliate of your bank because your bank owns rlore than 50 per centum of the number of shares voted r4, 'or the election of directors of the company at the Preceding election. "The provisions of condition of membership numbered 1 are construed to apply to the operations of subsidiary affiliates of a member bank as well as to the operations °f the bank itself. Attention is drawn to this fact in °rder that, if any changes are made in the operations of Your subsidiaries, consideration may be given to whether °r not such changes come within the scope of condition of membership numbered 1." p Approved unanimously, together with a letter to Mr. Sproul, President 758 4123/42 -3of the Federal Reserve Bank of New York, reading as follows: "The Board of Governors of the Federal Reserve System approves the application of 'J. P. Morgan & Co. Incorporated', New York, New York, for membership in the Federal I sserve System, subject to the conditions prescribed in he enclosed letter which you are requested to forward to the Board of Directors of the institution. Two copies of T:Ich letter are also enclosed, one of which is for your tiles and the other of which you are requested to forward the Superintendent of Banks for the State of New York or his information. "Standard condition of membership numbered 6 has been ' l escribed in order that its provisions may be invoked at Y time in the future if necessary, but as in other cases 14 in accordance with the general authorization previously .anted by the Board, you are authorized to waive compliance the condition until further notice in so far as the 2Ildition applies to funds which are given statutory pref' 1'ence in the State of New York." P r Letter to Mr. Hays, Vice President and Secretary of the Federal erve Bank of Cleveland, reading as follows: 1942 "Receipt is acknowledged of your letter of April 9, n , enclosing two questions and the opinions of your vounsel regarding them. 111 "The first question is whether Group E of the Suppletrt to Regulation W includes materials and services used alter a room in the basement of a residence for use as ) s. photographic dark room; (2) a work shop; (3) a gage for the owner's car; (4) a laundry room, or (5) a genal storeroom for screens, etc. Its "Your Counsel points out that although the first three ree?, if viewed out of their setting, are not necessarily ofsldential in character, they are all conventional uses tlicjesidential basements. He feels that if a doctor reels a room in his home to use as an office, the altered room 1, would be designed 'exclusively for non-residential : al but he concludes that none of the five examples given to° ,11e are examples of 'non-residential' improvements or alThe Board agrees. aca "The second question relates to the business of landincluding the construction of driveways, sodding, of ZtIneht of lawns, construction of rock gardens, planting I'ees, and similar jobs. 4 759 4123/42 —4— "On the analogy of W-122 your Counsel concludes that m aterials and service used in these jobs would be included In Group E, assuming that there is an existing structure on the property which is not designed exclusively for non' l eeldential use, and the Board agrees." Approved unanimously, with the understanding that copies of the above letter would be sent to the Presidents of all the Federal Reserve Banks. Letter to Mr. Hale, Vice President of the Federal Reserve Bank Or on Fr ancisco, reading as follows: "This is with reference to your letter of April 6, 1942 „Inquiring about the treatment of gems added as dections on watches for purposes of applying the provin '10nsof Regulation W. The Board agrees with you that the provisions of ationT; apply to the entire cost of the watch includg the case and gems which are attached to the case, t ethsr the gems are added prior to the sale or at about he same time as the sale. This rule would also apply to in watchbands sold with the watches. "The Board also agrees that a replacement watch case i8 not subject to the regulation." N g Approved unanimously. Letter to Mr. Hale, Vice President and Secretary of the Federal erve *Dank of San Francisco, reading as follows: re "Receipt is acknowledged of your letter of April 6 Ivi rcling the question whether landscaping is included 1,,;uhin Group E'of the Supplement to Regulation W. The rinit includes sodding, planting trees, constructing 'lveways and similar jobs, and it is assumed, of course, &set there is an existing structure on the property which 11°t designed exclusively for non-residential use: di the Board is of the opinion that "Under these conditions ter 3 as indicated in W-1221 to which you refer, the ma' als and services are included in Group E." i Approved unanimously. 76't 4/23/42 -5Letter to Yr. F. J. Bailey, Assistant Director of Legislative Ileference, Bureau of the Budget, reading as follows: "Your letter of April 10, 1942, addressed to Honorable Ilarriner S. Eccles, Chairman of the Board of Governors of the Federal Reserve System, and enclosing a proposed rePort to the Senate Committee on Banking and Currency prepared for the signature of the Secretary of the Treasury on 2039, was received in the absence of Mr. Eccles from the City "S. 2039 is a bill 'To amend section 5136 of Revised . tatutes of 1873, as amended (U.S.C., sec. 24, title 12), 1.0 authorize the reimbursement of directors, officers, and emPloyees of national banking associations for expenses incurred by them in connection with the defense of actions, or proceedings instituted against them in their ofcapacity'. It would make rather minor changes in the onal Bank Act which are favored by the Comptroller of fle Currency and which are favored by the Secretary of the Treasury if certain suggestions made by the Secretary of the 4reasury to the Chairman of the Banking and Currency CommitZ” are included in the bill. If the changes suggested by ere Secretary of the Treasury are made, the Board of Gov4, 11crs of the Federal Reserve System sees no objection to 'Ile enactment of the legislation." Approved unanimously. Thereupon the meeting adjourned. OMNI/ Vice Chairman.
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