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1176 A meetin of the Board of Governors of the Federal Reserve Sys- tea was held in Washington on Mondays August 19, 1946, at 10:30 a.m. PRESENT: Mr. Eccles, Chairman Mr. Szymczak Mr. Draper Mr, Evans Mr. Vardaman Mr. Carpenter, Secretary Mr. Morrill, Special Adviser Mr. Thurston, Assistant to the Chairman The action stated with respect to each of the matters hereinaftcr "ferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Pederal Reserve System held on August 14, 1946, were approved unanikolasly. The minutes of the meetings of the Board of Governors of the 41 "al Reserve System held on August 15 and 16 were approved and the recorded therein were ratified unanimously. Letter prepared for the signature of Chairman Eccles, to The ent, The White House, reading as follows: "In accordance with your letter of August 13, the Boa. rd has approved a further extension of leave until ' line 30, 1947, for Mr. A. C. Bunce in order that he return to Korea under the auspices of the State eePartment to advise and assist General Hodge on t2 ( Inomic and financial matters and in connection with "e Joint Commission. "The Board appreciates the importance of this .Ti ssion in Korea and therefore acquiesces in the furextension of Mr. Bunce's leave." Approved unanimously. 1177 8/19/46 -2Letter to Mr. Peyton, President of the Federal Reserve Bank of eapolis, reading as follows: "This letter is in reply to yours of July 18, 1946, advising that the over-all costs of the construction of the second floor of the Helena Branch building had reached a total of $74,031.60. The letter also states that, on the basis of the amount in excess of the :60,000 approved by Your directors and the Board of Governors for the addition r?presenting legitimate and necessary expenditures, your directors had approved the additional costs. "In these times of increasing prices of labor and materials, the Board can readily understand why the actual cost of the addition exceeded the original estimates, but regrets that the matter was not brought to its attention before the commitments for the additional costs were made. The Board has felt that because of its responsibility for pneral supervision of the Federal Reserve Banks it has a 41ty to supervise the building programs of the Reserve 'anks and the expenditures authorized for building con?truction, and that for this purpose it stands very much In the sane position in relation to the Reserve Banks as the General Accounting Office to other agencies of the Government. Recent developments in connection with the activities of other Government aencies have emphasized the Possibility that if this responsibility is not effectively discharged--as would be re4uired if the expenditures the Reserve Banks were reviewed by the Bureau of the :Ildget and the General Accounting Office or if the money -1-?r the construction were appropriated funds--Congress Tlght see fit to subject the expenditures of the Federal Reserve Banks to such a review. "The best evidence that the Board is exercising such suPervision is for the Federal Reserve Banks to give exPenditures specifically authorized continuinj attention °0 that commitments at no time will exceed the authorized aillounts. This would make it clear that the expenditures ?tually made were incurred only after careful considera,',:°11 bY the board of directors of the bank and the Board Governors and that expenditures under that authority were being carefully watched. Another point referred to the this matter was discussed by the Board was that the residual interest in the assets of the Federal Reserve panks is in the Federal Government and that it is necessary ;or the system to be in a position to demonstrate that this Interest is being adequately protected. Z 1178 8/19/46 —3— "In the circumstances, the Board has approved the increased expenditures outlined in your letter but has asked that in the future your Bank keep in mind the importance °f conforming to the understanding that obligations in conwith expenditures approved by the Board should not ue incurred by the Federal Reserve Banks in excess of amounts authorized." Approved unanimously. Letter to the board of directors of "Polithania State Bank", Pitts , blugh, Pennsylvania, stating that, subject to conditions of memberv , numbered 1 to 3 contained in the Board's Regulation H, the board aPproves the bank's application for membership in the Federal -sew"e System and for the appropriate amount of stock in the Federal Ilea e Bank of Cleveland. The letter also contained the following ePeciai c omment= . "It appears that the bank may possess certain poers which are not being exercised and which are not necessarily required in the conduct of a banking business, such as the 1?0wer to act as surety in certain circumstances. Attention ls Invited to the fact that if the bank desires to exercise .?:IV powers not actually exercised at the time of admission ' 13° membership, it will be necessary under condition of mem?ship numbered 1, to obtain the permission of the Board ?' Governors before exercising then. In this connection, the Board understands that there has been no change in the ! ,c_ope of the corporate powers exercised by the bank since ' 41e date of its application for membership." Approved unanimously, for transmittal through the Federal Reserve Bank of Cleveland. In connection with the above matter unanimous approval was also given to the following letter to Mr. Gidney, President of the Federal Reserve Bank of Cleveland: 1179 8/19/46 —4— "The Board of Governors of the Federa1 Reserve System has considered the recommendation of the Executive Committee of your Bank contained in Mr. Fulton's lettcr of July 26, and pursuant to the provisions of Section 19 of the F4' tederal Reserve Act, grants permission to Polithania State ' ank, Pittsburgh, Pennsylvania, to maintain the same re— serves against deposits as are required to be maintained bY banks located outside of central reserve and reserve cities, effective as of the date of its admission to mem— bership. "Please advise the member bank of the Board's action ia this matter, calling its attention to the fact that ?lach permission is subject to revocation at any time by the Board of Governors of the Federal Reserve System." Thereupon the meeting a Secretary. Chairman.
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