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570 A meeting of the Board of Governors of the Federal Reserve Slistem was held in Washington on Friday, April 26, 1940, at 11:00 PRESENT: Mr. Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Davis Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Smead, Chief of the Division of Bank Operations Mr. Paulger, Chief of the Division of Examinations Mr. Dreibelbis, Assistant General Counsel PRESENT ALSO: Mr. Hugh Leach, President of the Federal Reserve Bank of Richmond There were presented telegrams to Mr. Young, President of the ?ederal. Reserve Bank of Boston, Mr. Sanford, Assistant Secretary of the Federal. Reserve Bank of New York, Mr. Hays, Secretary of the Federal Bank of Cleveland, Mr. Leach, President of the Federal Reserve 8alakof R ichmond, Messrs. Dillard and Stewart, Secretaries of the Fed— eN-Reserve Banks of Chicago and St. Louis, respectively, Mr. Ziemer, Vice Pl'esident of the Federal Reserve Bank of Minneapolis, Mr. Caldwell, Chairman of cletlt of the Federal Reserve Bank of Kansas City, Mr. Gilbert, Presi— "e Hale, Secretary of the?acieral Federal Reserve Bank of Dallas, and Mr. Reserve Bank of San Francisco, stating that the Board ap— Prc'ves the es tablishment without change by the Federal Reserve Bank of CO on April 23, by the Federal Reserve Banks of New York, 571 4/26/40 —2— Ueveland) Richmond, Chicago, St. Louis, Minneapolis, Kansas City, 4nd Dallas on April 25, 1940, and by the Federal Reserve Bank of Boston today, of the rates of discount and purchase in their exist— ing schedules. Approved unanimously. Mr. Leach was present in response to the invitation of the Board 'Ior the purpose of acquainting the Board more fully with the reason for the recommendation of the directors of the Federal Reserve Bank of Richmond, which was discussed at the meeting of the 13(3ard of Governors on April 15, 1940, that the Board approve the transfer from the Richmond head office territory to the Charlotte Branch t erritory of sixteen North Carolina counties and that ten other c°11ntiee in North Carolina be not so transferred. Mr. Leach reviewed bl'ieflY certain factors which influenced the determination of the Present t erritory of the Charlotte Branch and stated that, from the standP°int of banking services, the services rendered to the banks in the sixteen counties proposed to be transferred by the head office ol-b the Charlotte Branch would probably be equally good, but that :114:::::nties are in the Charlotte trade territory and are close to geo graphically, the bankers in these counties go to °hall-Otte more frequently than to Richmond, and the officers of the Branch caa have more frequent contact with them than the officers at the head c)ffice are able to have. He said that this does not apply to th e te1 c ounties which it is proposed to leave in the head office 572 4/26/40 —3— territory and that, while banks in Richmond which have correspondent relationships with banks in the twenty-six counties would not object t° the transfer of the sixteen counties they would want to raise Objection if all twenty-six counties were changed. Ur. Leach made the further statement that he knew that a Lielnber bank located in one of the ten counties did not desire to be transferred to the Charlotte territory, that, although he did not have allY direct information from the other member banks in those c°114ties, ar. Lassiter, Chairman of the Richmond Bank, had talked to w. u "' Wood, President of the American Trust Company of Charlotte and chairman of the committee which presented the transfer petition to the IQ; --Lehalond Bank, and as a result it is believed that the member banks in the ten counties would be satisfied if they were not transbut that it might be well for the Reserve Bank to obtain a statement from them to that effect. ar. LicKee raised the question whether, if the proposed transfer were a pproved, it would prompt suggestions for changes in other ecieral Reserve Districts and it appeared to be the consensus that if the change under consideration were justified it should be made reg`irctless of that possibility. Mr. Draper inquired whether it would be advisable to hold a hearing to determine if the change proposed by the board of directors the Richmond Bank would be satisfactory to the member banks in the 'erritory a ffected and i.r. Leach said that he felt certain that the 573 4/26/4o —4— sanle result could be obtained by giving the banks in the ten counties CIPPortUnity Mr. to submit a written statement of their views. Davis inquired of Messrs. Morrill, Smead, and Paulger Whether they saw any reason why the proposal of the Richmond directors should not be approved. Their reply was that they knew of none. Yr. 11°1 ' 1111 added that he felt it would be desirable for the Richmond Bank to ge a letter from Mr. Wood's committee and from the National Bank crLtutherton, which was the only bank that signed the petition that 17'9.8 not represented on the committee, to the effect that the banks in the +-"" counties would not urge the transfer of those counties to the Charlotte te rritory. Mr. Leach stated that he would suggest to Mr. Lassiter that he Isecille8t Mn, Wood to ascertain from the member banks in the ten counties 741Other they Would be satisfied with the recommendation of the Richmond dillectors and to advise the Reserve Bank in writing of their response. All of the members of the Board present agreed that if the member banks in these counties have no substantial objection to remaining in the head office territory, the Board would be willing to approve the proposed transfer of the six— teen counties to the Charlotte Branch territory. Leach said that if this transfer is made he hoped to have eretood in the district that the question of changes in branch territ it law. °I'les was settled for the time being at least. Up°11 inquiry from Mr. Thurston, it was understood that any cement of action taken with respect to the proposed transfer 574 4/26/40 would the -5- be made by the Federal Reserve Bank of Richmond rather than by Board in Washington. Mr. Leach called attention to the fact that the lease on the barliting quarters of the Charlotte Branch will expire on May 31, 1941, alld stated that the space occupied by the Branch is inadequate and verYunsatisfactory and that he had come to the conclusion that the best solution of the matter would be the erection of a building in which 4_ 'u house the Branch offices. He added that he did not want to go ahead with plans for the acquisition of a site and the erection (4 a build ing unless he knew that the Board would be favorable to 811eh a step. In 8Pee response to an inquiry from Mr. Davis, Mr. Leach said that in the building in Which the present offices of the Branch are 1°0ated ec/uld not be rearranged and renovated to suit the needs of thsBraach without the expenditure of a great deal of money, that the reelllting acc ommodations would not be nearly as satisfactory as a 41)al'ate building?, and that it was his thought that if a building were it should be designed so that it could be used for purposes other than banking quarters, which would give it a resale value, and l additiona stories could be added to afford additional space it riesded. a° that Dul'irkg the discussion which followed the members of the Board ilicLiosted that they would have no objection to the Richmond Bank lilt° the matter of the acquisition of a possible site and the 575 4/26/40 —6— Preparati n 0 of preliminary sketches and estimates of cost for submission to the Board for approval before any commitments are made by the With respect to the purchase of a site or the preparation of detailed plans and specifications. Before this meeting the attention of the members of the Board had b een called to a letter dated April 20, 1940, from Mr. Nardin, of the Federal Reserve Bank of St. Louis, extending an invitatio „ ' 4 to the members of the Board to attend a conference of the diof the head office and branches of the St. Louis Bank to be held on Thursday, May 23, 1940. It was agreed unanimously that Mr. Szymczak would attend the conference and that if it were possible for Mr. Davis and other members of the Board to arrange their plans they would be present also. belbis At this point Messrs. Thurston, Wyatt, Smead, Paulger, Drei- and Leach left the meeting and the action stated with respect to eac,_ " of the matters hereinafter referred to was then taken by the tOara: The minutes of the meeting of the Board of Governors of the Reserve System held on April 25, 1940, were approved unani- Lodi 0 1 L.0 3 Letter to the board of directors of "The Lodi State Bank", hic), stating Contain that, subject to conditions of membership numbered in the Board's Regulation H and the following special e'41ditio n, the Board approves the bank's application for membership the Fed eral Reserve System and for the appropr iate amount of stock 576 4/26/40 tithe -7- Federal Reserve Bank of Cleveland: "4. Such bank shall make adequate provision for depreciation in its banking house and furniture and fixtures." Approved unanimously, together with a letter to Mr. Fleming, President of the Federal Reserve Bank of Cleveland, reading as follows: "The Board of Governors of the Federal Reserve SYstem approves the application of 'The Lodi State 13aaki, Lodi, Ohio, for membership in the Federal Reserve System, subject to the conditions prescribed in ,rie enclosed letter which you are requested to forward to the Board of Directors of the institution. Two ?oPies of such letter are also enclosed, one of which ls for your files and the other of which you are reTlested to the State forward to the Superintendent of Banks for of Ohio for his information. i„ "Since the amount of estimated losses classified 11 the report of examination for membership is small, ille,usual condition of membership regarding the elima"di°11 of estimated losses has not been prescribed. mat, "It is assumed that your office will follow the 0 ,' ler of bringing the three savings accounts listed m'L Page 16 of the report into conformity with the '°4rd's regulations." Letter to the board of directors of the "Dupo State Savings 'pulp°, Illinois, stating that, subject to conditions of member84113 numbered 1 to 3 contained in the Board's Regulation H and the t°110wing special condition, the Board approves the bank's application for membership in the Federal Reserve System and for the appropriate a4.4°1111t, of stock in the Federal Reserve Bank of St. Louis: Sl h bank shall make adequat provisio n for depree c-Lation in its banking house and furniture and fiXtures." Approved unanimously for transmission through the Federal Reserve Bank of St. Louis. 577 4/26/40 -8Letter to the board of directors of the "Farmers State Bank & Trust Company", Cuero, Texas, stating that, subject to conditions of membership numbered 1 to 3 contained in the Board's Regulation H and the following special condition, the Board approves the bank's application for membership in the Federal Reserve System and for the appropriate amount of stock in the Federal Reserve Bank of Dallas: "4. Such bank shall make adequate provision for depreciation in its banking house and furniture and fixtures." The letter also contained the following special comments: "It has been noted that the bank is authorized to exercise fiduciary powers but is not doing so, and that it possesses certain other powers which are not being exercised and which are not necessary In the conduct of a banking business, such as the Power to guarantee bonds. Attention is invited to the fact that if the bank desires to exercise any Powers not actually exercised at the time of admission to membership, it will be necessary under condition of membership numbered 1 to obtain the Permission of the Board of Governors before exercising them. In this connection the Board understands that there has been no change in the scope of the corporate powers exercised by the bank since the date of its application for membership." Approved unanimously, together with a letter to Mr. Gilbert, President of the Federal Reserve Bank of Dallas, reading as follows: "The Board of Governors of the Federal Reserve SYstem approves the application of the 'Farmers State Bank & Trust Company', Cuero, Texas, for membership .578 4/26/40 -9- "in the Federal Reserve System, subject to the conditions prescribed in the enclosed letter Which you are requested to forward to the Board of Directors of the institution. Two copies of such letter are also enclosed, one of which is for Your files and the other of which you are requested to forward to the Commissioner of ng for the State of Texas for his informa- tt "In view of the comments contained in the report of examination made in connection with the application for membership regarding the need for capable supervision, and the comments made in the memorandum submitted with the application regarding the need for strengthened nlanagement and directorate, it is assumed that the Reserve Bank will follow the situation Closely and will use its influence in such manner as may be appropriate to bring about the desired corrections. "It is also assumed that your office will f?llow the matter of the bank's reducing to within statutory limits the excess balance with a nonmember bank." Letter to the board of directors of the "First State Bankti, D limas, Texas, stating that, subject to conditions of mernbershiP numbered 1 to 3 contained in the Board's Regulation H 411CI the following special condition, the Board approves the bellk's a pplication for membership in the Federal Reserve System fOr the appropriate amount of stock in the Federal Reserve 4-11k of Dallas: "4. -uch s bank shall make adequate provision for depreciation in its banking house and furniture and fixtures." Approved unanimously for transmission through the Federal Reserve Bank of Dallas. 579 4/26/40 -10Letter to Mr. Gidney, Vice President of the Federal Re- serve Bank of New York, reading as follows: "Reference is made to your letter of April 17, 1940, submitting for the consideration of the Board the plan of the 'Bronx County Trust Company', New York, New York, for purchasing from The National City Bank of Nev York three branches located, respectively, at Crosby Avenue at Westchester, 184th Street at Third Avenue, and 212th Street and Mite Plains Avenue, all in the Borough of Bronx, City of New York. "It is understood that the plan contemplates that the Bronx County Trust Company will assume the deposit liabilities of the three branches, ?J!lounting to approximately $6,750,000, acquire a lake amount of acceptable assets, and pay to the National City Bank of New York $100,000 in consideration for the vaults, equipment, leaseholds, and good will. "In view of the information furnished, it does not appear that the transaction will involve a change 6 in the general character of the business of the Bronx County Trust Company or in the scope (1' . the corporate powers exercised by it within the meaning of standard condition of membership 1 to which the member bank is subject. Therefore, in accordance with your recommendation, thec Board will interpose no objection, under the trdltions of membership, to the acquisition of three branches. It is assumed, of course, that the assets acquired in the transaction will be tielt up on the bank's books at proper values and at anY Part of the purchase price which appro!_! j alatelY should be classified as payment for goodWill not be capitalized." Approved unanimously. Letter to The Sealy & Smith Foundation for The John Sealy 1-10 • alveston, Texas, reading as follows: G 580 4/26/40 -11- "Pursuant to a request made by Mr. Fred W. Catterall, President of The First National Bank of Galveston, Galveston, Texas, in his letter of April 1, 1940, the Board has given consideration to the status of your organization as a holding company affiliate of his bank. "The Board understands that your organization is a corporation, without capital stock, organized as a charitable undertaking to receive and admini ster property contributed to it for the construction, remodeling, enlarging, equipPing and furnishing of The John Sealy Hospital and other hospital buildings in connection with it in the city of Galveston, and the endowment thereof, for the use of the people of that city and to provide them with necessary medical care and attention therein; that such corporation owns 1,040 of the 2,000 outstanding shares of stock of The First National Bank of Galveston; that it 0Ans 1,205 of the 7,500 outstanding shares of Stock of Hutchings-Sealy National Bank of Galveston and , smaller amounts (in no case in excess of )Per cent of the outstanding shares) of the stock of a number of other banks; that it does not otherwise control a significant portion of the stock of, or manage or control, any other bank; and that all of the bank stocks owned by it were received as gifts. "In view of these facts, the Board has determined that your organization is not engaged, directly or indirectly, as a business in holding stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies Panies, within the meaning of section 2(c) of e Banking Act of 1933, as amended, and therefore it is not a holding company affiliate for any Purposes other than those of section 23A of the Federal Reserve Act. "If, however, the facts should at any time differ from those set out above to an extent 7.11ch Which would indicate that your organization u_1?-ght be deemed to be so engaged, this matter ervuld again be submitted to the Board. The rr ,rd reses the right to make a further de',7mination at any time on the basis of the then .4a.sting facts." Zr 581 4/26/40 -12Approved unanimously for transmission through the Federal Reserve Bank of Dallas. Telegram to Mr. Hays, Assistant Vice President of the Federal Reserve Bank of Cleveland, which was approved at the "6 of the Board on April 23, 1940, and revised at the suggestion of Mr. Bell, Under Secretary of the Treasury, to read as follows: "Referring your April 19 wire, understand that Treasury Department is giving consideration to availability of funds with which to reimburse Federal Reserve banks for expenses incurred by them as designated agencies under President's executive orders and recent regulations relatlag to transactions in foreign exchange, etc. Federal Reserve banks should submit separate vouchers at end of month for reimbursement of such expenses, and the Treasury Department will review matter to determine whether means can be found to effect reimbursement." Approved unanimously, with the understanding that a similar telegram would be sent to the Presidents of all Federal Reserve Banks. Letter to Honorable W. L. Austin, Director, Bureau of the census, Department of Commerce, reading as follows: "Replying to your letter of April 23 in connection with the data on retail installment Paper held by State bank members of the Federal Reserve System recently furnished to you, You are advised that the Bureau of the Census " 14 . Publish such data in any form and at any that it desires, and that acknowledgement °I the source of such material may be made in anY manner that you deem appropriate." Approved unanimously. 582 4/26/40 Letter to the Presidents of all Federal Reserve Banks except Boston 3 Philadelphia and Richmond, reading as follows: "At the conference held in Washington on Larch 19, 1940) the Conference of Presidents approved in principle the proposal of the Standing Committee on Collections that the American Bankers Association bank numbering system be revised, and requested the Chairman of the Conference to ?',1313°int a committee of three members of the Conference to review, with power to approve in behalf of the Conference, Plan for the revision of the numbering system as may be r '3e ecommended by the Standing Committee on Collections. bank "If a revision of the American Bankers Association numberinE system is adopted that involves the printing checkS of numbers indicating the Federal Reserve bank or Iallen territory in which a bank is located, subsequent Changes in Federal Reserve branch territorial lines will Use considerable confusion in sorting and routing checks. will be appreciated, therefore, if you will discuss this matter with the Directors of your bank at the rst convenient opportunity and advise the Board whether t_! bank feels that any changes should be made in branch .rritorial lines in your district before a change, if any, — made in the American Bankers Association bank numbering sYstem.ft a Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, reading as fol , 4.4.0ws: "The Board of Governors concurs in the action taken the Conference of Presidents at their meeting held in : ITIgton March 19 1940 with respect to the Report of the )tarlding / 1 4 1 Committee on Collections dated February 19-20, -. by The Board has noted the action taken by the ConferfZe relative to the adoption of a uniform size of paper or re gulations, circulars and general letters of the Board 0vernors and the Federal Reserve banks. The Board may lat„,,,to take this matter up with the Reserve banks at a date.n 4 Approved unanimously. 583 4/26/40 -14Letter to the Comptroller ol the Currency, reading as follows: "It is respectfully requested that you place a special order with the Bureau of Engraving and Printing, supplement;Li t order requested June 14, 1939, for the printing of Reserve notes of the 1934 Series in the amount and c[enomination stated for the Federal Reserve Bank of New York: Denomination $5,000 Number of sheets Amount 100 $6,000,000" Approved unanimously. M emorandum dated April 17, 1940, from iiir. Bethea, Assistant Secl'ete-r3r, referring to the arrangements in effect during 1939 for maintaining a skeleton force on Saturdays during the summer months and suggesting that if the Board wishes to adopt the same plan during the coming summer season, it authorize the maintenance of a skeleton force on Saturdays fr°14 Saturday, may 25 to Saturday, September 7, inclusive, a period which illelUdes sixteen Saturdays. The maintenance of a skeleton force on Saturdays as suggested in Mr. Betheats memorandum was approved unanimously, subject to the same regulations as were in effect during the corresponding period last year. Memorandum dated April 19, 1940, from Ir. Paulger, Chief of the kiriaion of Ex aminations, recommending that the budgets for the year 1940 tol‘ the bank ex • ations departments of the respective Federal Reserve 1.1111:8, except Boston and San Francisco which are being held for further c)1181-cierati0n of certain matters, be approved as submitted as follows: 584 4/26/40 -15Budget F.R.Bank New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas $376,448 144,750 116,640 80,471 52,425 142,991 66,955 35,223 55,345 36,789 Approved unanimously. Thereupon the meeting adjourned. Secretary. IIPPrOved: Vice Chairman.
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