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391 A. meeting of the Board of Governors of the Federal Reserve System was held in Washington on Thursday, Apri l 7, 1938, at 11:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak McKee Davis Draper Mr. MT. 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 Gove rnors of the Federal Reserve System held on April 6, 1938 , were approved unanimously. Letter to Mr. Fleming, President of the Fede ral Reserve Bank of Cleveland, reading as follows: "In accordance with the request containe d in your letter of April 4, the Board appr oves the appointment of C. Gordon Hieber as an examiner for the Fede ral Reserve Bank of Cleveland. Please advise us of the date the appointment becomes effective, and also of the date the serv ices of Mr. Reilender as an assistant examiner are terminated. "It is understood that it is agreeabl e with Chief Examiner Leyburn's office for Mr. Hieber to leave the national force and accept a position with the Reserve bank." Approved unanimously. Letter to Mr. Gidney, Vice Pres ident of the Federal Reserve Bank of New York, reading as follows: "There is inclosed a copy of a letter dated March 29, 1938, from the firm of Milbank, Tweed & Hope, attorneys for The Chase Bank, with regard to the change in location of the branches of The Chase Bank in Shanghai, Hongkong, and Tientsin, China. "In a letter dated July 30, 1931, the Board approved the establis hment of these branches to be located at 6 Kiukiang Road, Shanghai, China, at 6 Queens Road Central, 392 4/7/38 -2- "Hongkong, China, and at 1 Victoria Road, Tientsin, China. It will be noted from the inclosed copy of letter that the Shanghai branch was moved to 99 Nanking Road on February 21, 1938; that the Hongkong branch was moved to 15 Queens Road Central on December 16, 1935; and that the Tientsin branch was moved to 80 Victoria Road on May 31, 1937 . The Board approves these changes in location. "It is noted that the failure of the corporation to advise the Board of these changes at the time thereof was through oversight. "It will be appreciated if you will advise The Chase Bank and Messrs. Milbank, Tweed & Hope in accordan ce with the above." Approved unanimously. Letter to Mr. Sargent, Vice President of the Federal Rese rve Bank of San Francisco, reading as follows: "This refers to your letter of March 22, 1938, requ esting a ruling as to whether the board of directors of a national bank may delegate to executive offi cers of the bank the power to renew or extend loan s made to an executive officer prior to June 16, 1933 . "The pertinent provision of section 22(g ) of the Federal Reserve Act provides: "I* * * that loans made to any such officer prior to June 16, 1933, may be renewed or extended for periods expiring not more than five years from such date where the boar d of directors of the member bank shall have satis fied themselves that such extension or renewal is in the best interest of the bank and that the officer indebted has made reasonable effo rt to reduce his obligation, these findings to be evidenced by resolution of the boar d of directors spread upon the minute book of the bank * * "Similar requirements are contained in section 4 of Regulation 0. "The fact that the statute requ ires a 'resolution of the board of directors' spread upon the minute book of the bank as evidence that the 'board of directors' shall have satisfied themselves' as to the matters specified makes it clear that Congress contemplated acti on by the board of directors and not by a committee or officers of the bank. You are advised, therefore, that in order that a loan to an executive officer made prior to June 16, 1933 , may be validly renewed or extended within the limitations of the law, the board of director of a mems ber bank must itself by resolution make the findings required 393 4/7/38 -3- "by the statute and this duty may not be deleg ated by the board of directors to others." Approved unanimously. Letter to the Presidents of all Federal reserve banks, reading as follows: "At their conference held in Washington on February 28 and March 1, 1938, the Presidents of the Feder al Reserve banks considered the recommendation of Presidents Martin and Fleming that it be the uniform polic y of the Federal Reserve banks to favor the making of reciprocal arran gements between adjacent Federal Reserve districts which will allow a Federal Reserve bank, on request of membe r banks in its district or on request of a Federal Reserve bank in an adjacent district, to make shipments of curre ncy to member banks in adjacent districts without expen se to tAe member banks receiving the shipments. The Confe rence concurred in this recommendation with the understand ing that any request to a Federal Reserve bank to enter into such an arrangement should originate with the member bank which is to receive the shipments and should be made to its own Federal Reserve bank. "The Board will interpose no objection to a Federal Reserve bank's entering into the arran gements set forth above, BS approved by the Presidents' Conference. If and when your bank enters into such arran gements, advice thereof, including •the names of the cities in other districts to which your bank is requested to make currency shipments will be appreciated." Approved unanimously. Thereupon the meeting adjourned. Chairman.
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