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1213 A meeting of the Board of Governors of the Federal Reserve ;retie was held in Washington on Thursday, August 19, 1943, at 11:00 8..ra. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak Draper 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 hereinatter r eferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Pe4eral Reserve System held on August 18, 1943, were approved unanitoue4 . Memorandum dated August 16, 1943, from Mr. Vest, Assistant Qerteral Attorney, recommending that Jerome W. Shay, an Attorney in the Legal D ivision, be granted leave of absence without pay beginning Alle43t. 20 1 ''943, so that he might enter active duty with the United States Naval the poljey Reserve, and that he be granted the benefits provided in 4.4. adopted by the Board on November 14, 1940, and amended Allgust 20, ttleill 1941, for all employees entering military or naval service, g Pursuant to his election, the payment of one month's une411/a4 salary, Approved unanimously, with the understanding that the payment of one month's unearned salary would be at the rate of basic salary plus overtime. 1214 8119/43 -2Memorandum dated August 18, 1943, from Mr. Morrill, recom- Irlencling that the temporary appointment of Mrs. Sallie K. Farrow as a cafeteria helper in the Secretary's Office be extended for the Period -AuGust 21 to 25, 1943, inclusive, at the end of which time her services will terminate. Approved unanimously. Letter to the board of directors of the "Peoples State Bank", Rocksprin _ ge Texas, stating that, subject to conditions of membership 11110bered ' -co 3 contained in the Board's Regulation H, the Board apProves the bank's application for membership in the Federal Reserve 8. 111 a„ "' for the appropriate amount of stock in the Federal Reserve 8ank of Dallas. . Approved unanimously, for transmission through the Federal Reserve Bank of Dallas. Letter to the "Farmers and Merchants Trust Company of Chambersuha mbersburg, Pennsylvania, reading as follows: all "The Board is glad to learn that you have completed pe-; c arrangements for the admission of your bank to the he eral Reserve System and takes pleasure in transmitting rel;th a formal certificate of your membership. It will be appreciated if you will acknowledge reof this certificate." Approved unanimously. Ati Letter to Mr. Turman, Counsel of the Federal Reserve Bank of reading as follows: 1215 8/19/43 -3-"This refers to your letter of August 6, 1943, with enclosures, addressed to Mr. Wingfield, Assistant General „Attorney, requesting an opinion by the Board on the question whether investments by a State member bank in bonds of the the 10 Alabama Bridge Finance Corporation are exempt from per cent limitation set out in Paragraph Seventh of Section 5136 of the Revised Statutes. The Board con?urs in your conclusion that a State member bank may not invest in such bonds in an amount in excess of 10 per cent of its capital stock and surplus. i, "In advising the member bank of the Board's opinion, suggested that the apparent intent and purpose of rtts exemption to Section 5136 be called to the bank's .ention. The Board construes this intention as exeinpt!.ng obligation s issued by governing bodies actually havthe sovereign 's power of taxation or powers derived meerefrom, including the incidental power to compel pay_216, and which are not payable only from the proceeds luol certain specific taxes or revenues. Thus, for example, f°11ds issued by the State itself but payable exclusively 1 the proceeds of gasoline taxes would not be 'general lgations, of the State. "In the instant case, the funds for the payment of Bridge bonds are derived from certain portions of the Proceeds of gasoline taxes, or from the collection of tolls u 013 ,?/1 default in the payment of such bonds; they are not suo-ILilgations of a political subdivision which has the me !reign's power of general taxation and may compel payt,n u. It is believed that an explanation of this situacaiinsitladispose of the matter without the necessity for tioriof the position taken by the member bank's di ?rneY that a definition of the term 'political subdirectdoes not require that it be 'vested with a power to tax or compel payment' but that such Power r may be Other units. exercised by one unit through another or tr 4T ber "This case has been discussed informally with a memcurrof the staff of the Office of the Comptroller of the bove encY who agrees with the Board's views as outlined a, • the "As requested, copies of the two Statutes passed at h recent session of the Alabama Legislature are returned ere with." Approved unanimously. 1216 8/19/43 -4Letter to Mr. Joseph G. Myerson, Assistant General Attorney of Universal C.I.T. Credit Corporation, New York, New York, reading a8 follows: "This refers to your letter of August 5, 1943, rePriding enforcement of compliance with Regulation W by bank3 and loan companies. "In order to avoid unnecessary duplication of exami 1t03 by supervisory authorities, the Board of Govors has made certain arrangements with other super"480rY agencies under which they will cooperate in ecking for compliance with the provisions of Regulat;'°11 W on the part of lending institutions coming under theirn supervision. Of course, these arrangements do 2,6 and were not intended to affect the responsibility of Board of Governors for enforcement of compliance With the Regulation by any institution subject to its Pr°visions. "It is possible that the manager to whom your letter refers may have received an incorrect impression from the officers of the Federal Reserve Bank with whom he disflcussed the matter and who apparently were endeavoring to describe the cooperative arrangement which has been made it isOther supervisory authorities. In these circumstances suggested that you send to us the name of the Federal Reserve Bank with which the matter was discussed so that we may furnish to the officers of the Bank copies urcorrespondence with you. It is also suggested thai Your manager communicate with the officers of the Federal a , Reserve Bank again for the purpose of clarifying misunderstanding that may have occurred, and if we 13e of any further assistance to you we shall, of course, ben , p_Leased to do so." Approved unanimously. Letter to Mr. Leland, Chairman of the Federal Reserve Bank of eago, reading as follows: er "At the completion of the examination of the Fed13,8.} Reserve Bank of Chicago, made as of May 29, 1943'. Board.?e examiners, a copy of the report of examit lIt rlj att ft for your information and that of the 1217 8/19/43 11di -5- rectors. A copy was also furnished President Young. 1, "The Board will appreciate advice that the report "as been considered by the board of directors. Any comTents You may care to offer regarding discussions with ct to the exapination or as to action taken or to D taken as preciateda result of the examination will also be ap." ,:spe Approved unanimously. Thereupon the meeting adjourned. Secretary. Chairman.
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