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1245 A meeting of the Board of Governors of the Federal Reserve 8Y.st,ein was held in Washington on Wednesday, August 16, 1944, at 11:00 PRESENT: Mr. Eccles, Chairman Mr. Ransom, Vice Chairman Mr. Draper Mr. Bethea, Assistant Secretary Mr. Clayton, Assistant to the Chairman The action stated with respect to each of the matters herein— after r eferred to was taken by the Board: Me morandum of this date from Mr. Thomas, Assistant Director of the Division of Research and Statistics, recommending that the basic sal— ar3r°f Robert Triffin, an Economist in that Division, be increased from to $5,600 per annum, effective August 16, 1944. Approved unanimously. Memorandum dated August 14, 1944, from Mr. Thomas, Assistant 134ect°1 'of the Division of Research and Statistics, submitting the res— igrtation of Mrs. Elizabeth Faulkner Brent as a clerk in that Division, tobee°111e effective as of the close of business on August 18, 1944, and ree°14rilerlding that the resignation be accepted as of that date. The resignation was accepted as rec— Memorandum dated August 14, 1944, from Mr. Thomas, Assistant krect„ °f the Division of Research and Statistics, recommending that the who "lgnation of Uiss Leila McLaughlin, a clerk—typist in that Division 114(1 infe'rmed the Division of Personnel Administration that she 1246 8/16/44 —2— Wished to resign to regain her health following an operation, be ac— cePted as of the close of business on July 31, 1944, with the under— standing that appropriate reimbursement will be obtained for 2 days erld 30 ' minutes of unearned annual leave. The resignation was accepted as rec— ommended. Letter to Mr. Rice, Vice President of the Federal Reserve Bank °144eiv York, reading as follows: "The Board of Governors approves the changes in the 8?nnel classification plan of the Buffalo Branch, in— the Your letter Office Service Division, as submitted with of August 10, 1944." IZ Approved unanimously. Letter to the board of directors of the "Fidelity and Columbia l'Irilte°1nPanY", Louisville, Kentucky, stating that riienabersT,4 " -L subject to conditions Pnumbered 1 to 6 contained in the Board's Regulation H and the following special condition, the Board approves the bank's applica— 1443r1 for inembership in the Federal Reserve System and for the appropriate Of stock in the Federal Reserve Bank of St. Louis, with the un— clerqancling that the bank will be allowed 90 days within which to corn— Pl'ste slembership: 117. Prior to admission to membership, such bank Shai have increased its capital to not less 4rn $3,250,000 and its surplus to not less ""an $4,750,000 and shall have effected the 1J0Posed absorption of the Citizens UnionNa— ttclnal Bank substantially in accordance with Alan submitted in connection with the ap— Placation for membership." 1247 8116/44 -3The letter also contained the following special comment: "It appears that the bank possesses certain powers 1 "lch are not being exercised and which are not neces: i;ar?-1Y required in the conduct of a banking and trust uslness, such as the power to issue bonds secured by collateral. Also in this connection it is understood tchat the bank's wholly owned affiliate, Fidelity and th °111131bia Insurance Company, exercises no powers which e.bank itself is not empowered to exercise. Attention i! Invited to the fact that if the bank, directly or ,Ifough the subsidiary, should desire to exercise any n the'wers not actually exercised at the time of admission bank to membership, it will be necessary under conof of membership numbered 1 to obtain the permission is the Board of Governors before exercising them. It. the.a8sumed, of course, that there has been no change In th- scoPe of corporate powers exercised by the bank or mee c°114PanY since the date of the bank's application for ber Bal hiP. The absorption of the Citizens Union National elp to be effected prior to admission to membership th,8tantially in accordance with the plan submitted with ch; aPPlication for membership, will not be considered a bariirtige.in the general character of the business of the the purview of condition of membership numberedwIthin 1.ft Approved unanimously, together with a letter to Mr. Davis, President of the Federal Reserve Bank of St. Louis, reading as follows: tent The Board of Governors of the Federal Reserve SysTrIlst ariPr'°11es the application of the 'Fidelity and Columbia Company', the p Louisville, Kentucky, for membership in scribecieral Reserve System, subject to the conditions prefork ed in the enclosed letter which you are requested to eopiard to the Board of Directors of the institution. Two such letter are also enclosed, one of which is for,i,a f; r -111 files and the other of which you are requested to weal+1 : 4 to the u of Director, Division of Banking for the Commonof K entucky, for his information. 1248 8/16/44 -4-has been noted that one of the directors of the .1°1.!lik is a partner in a firm of security dealers and addi— ' 1°nal information will be submitted in order to arrive at !. de termination as to whether such relationship would be 3:11 violation of Section 32 of the Banking Act of 1933. It 41.-s also noted that in the case of an adverse determination, he hop, to serve is expressed that he may be permitted to continue until the next annual election. The Board would De unable to grant such permission if requested as the law a°es not authorize exceptions in individual cases. Please "Ise us as to the final disposition of this matter. "Prior to admission of the bank to membership, you satisfied that the absorption contemplated under the Plan submitted with the application has been approved e the appropriate authorities of the Commonwealth of _ rntuel— N, and that any and all charte amendments, contra r cts agreements incident to the transaction are in order and, effthe. opinion of Counsel for the Reserve Bank, legally yo,!etlye. It is requested that a copy of the opinion of ' of counsel given in this connection together with copies poran? agreem ents and amendments to the Articles of Incor— givatl°11, be furnished for the Board's files. Also, please thee the' corporate title in your telegram advising 13) 1lard of completion of membership. letter to the Trustees holding the stock of the iaTI relating to their status as a holding company affil— cloe upon the admiss ion of the bank to membership, is en— of and is to be transmitted to the Trustees. Two copies the file letter are also enclosed, one of which is for your 8 and the other is for transmittal to the bank." j The letter referred to in the last Paragraph of the above letter to the Trustees under Trust Agreement, Dated January 31, 1919/ aS Amende d July 30, 1920, and January 26, 1923, with Reference to Stocks in the Citizens Union National Bank of Louisville and Fidelity and Columbia Trust Company, Both of Louisville, Kentucky, was also approved unanimously in the following, a form: the : This refers to the Board's approval on this date of olliwe 1°43Pli h,cation of Fidelity and Columbia Trust Company, °11 St.Te, Kentucky, for stock in the Federal Reserve Bank °Ids, subject to certain conditions, and to the 1249 8/16/44 -5"status of your organization as a holding company affillete upon the admission of Fidelity and Columbia Trust °11113a4Y to membership in the Federal Reserve System. "The Board understands that your organization will al% substantially all of the shares of outstanding common ock of Fidelity and Columbia Trust Company and, accordappears that upon the latter's admission to meme_r?hiP, your organization will become a holding company ;Tliate of the trust company within the meaning of the m p 4. provisions of section 2(c) of the Banking Act Provisions ' I 1933: 'The term "holding company affiliate" shall include any corporation, business trust, association, or other similar organization— '(1) Which owns or controls, directly or indirectly, * * * a majority of the shares of capital stock of a member bank * * of "However, the Board also understands that at the time sh;adraission of Fidelity and Columbia Trust Company to member_P in the Federal Reserve System, such trust company will 7e absorbed the Citizens Union National Bank substantially a, .”cordance with the plan submitted in connection with the _4Jc-2-cation for membership and your organization will not own 7 ist?ntrol any stock of, or manage or control, any banking 2.1,ution other than Fidelity and Columbia Trust Company. in view of these facts, the Board has determined that Your as a or ganization will not be engaged, directly or indirectly, troill?usiness in holding the stock of, or managing or contrustlng, banks, banking associations, savings banks, or Companies „ Coman within the meaning of the following provisions Section 2(c) of the Banking Act of 1933: 'Notwithstanding the foregoing, the term "ho1dI company affiliate" shall not include except for the purposes of section 23A of the ederal Reserve Act, as amended) * * * any organization which is determined by the Board of 1 01-3overnors of the Federal Reserve System not to 4 e engaged, directly or indirectly, as a business ..,sa.1 holding the stock of, or managing or control;;Tig, banks, banking associations, savings banks, tit trust companies'. a result of such determination, your organization not be a holding company affiliate for any purposes r 1250 W16/44 -6- "other than those of section 23A of the Federal Reserve However, the Board reserves the right to make a r.urther determination at any time on the basis of the existing facts and, if there should be such a change ?II the facts as to indicate that your organization might be deemed to be engaged, directly or indirectly, as a ,!business in holding the stock of, or managing or control4o•omg, banks, banking associations, savings banks, or trust Panies, this matter should again be submitted to the Board.n Telegram to Mr. Clerk, First Vice President of the Federal Re— Bank of San Francisco, reading as follows: to "Retel August 16th. Board suggests that you reply ci bank to effect that Federal Reserve Bank of San Fran— resco cannot attempt to advise it as to legal rights or beZP°nsibilities of parties under a contemplated contract ween the bank's Of stockholders and prospective purchasers wh.tbeir stock but that there is no regulation of the Board stleib. restricts the bank's stockholders in a sale of their arirl' .• Board would like to have name of bank making inquiry 60 be advised of any further developments." Approved unanimously. Thereupon the meeting adjourned. Assistant Secretary. Chairman.
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