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1393
ederaa
Minutes of
actions taken by the Board of Governors of the
Re
sIe
System
on Friday, August 27, 1948.
PPESENT: Mr.
Draper, Chairman pro tem.
Mr. Clayton
Mr.
Mr.
Mr.
Mr.
Carpenter, Secretary
Hammond, Assistant Secretary
Morrill, Special Adviser
Thurston, Assistant to the Board
Telegrams
to the Federal Reserve Banks of Boston, Richmond,
lie
40) St.
LOIliS) Minneapolis, Kansas City, Dallas, and San Franciko
atating that
the Board approves the establishment without
hNe b
Y' the
Federal Reserve Bank of San Francisco on August 24,
el'al Reserve
Bank of St. Louis on August 25, by the
Re
City
"I've Banks of Richmond, Chicago, Minneapolis, Kansas
Elaid Do
On August 26, 1948, and by the Federal Reserve
O
$,
130st
Nett e
"°1/4-kay of the rates of discount and purchase in
4atirle;
schedules.
Tele
01 cle graza
Approved unanimously.
to Mr. Gidney, President of the Federal Reserve
176141:11:
1) reading as follows:
191i,l'el August 26, Board approves effective August
nlinimum buying rate of 1-1/2 per cent oncent
tAll,c,Lacceptances and buying rate of 1-1/2 per
lp l'eez.;:ses of Government securities under resale
as authorized by the Federal Open Market
'
ee• Otherwise Board approves establishment by
-vithout change, or rates of discount and
which
itt4 1-1.e
„
1!
II Bank's existing schedule, advice of
44e
-d- 411ed in your telegram dated August 26. It
'
- that executive committee voted that discount
'
41/4j)
1394
8/20
, 4
-2"rat
r
-or advances to and discounts for member banks
er Section 13
and 13a of the Federal Reserve Act are
rlot
:aPPlicable to rediscounts for and discounts of
8 Payable to
Federal Intermediate Credit Banks."
um 8-
Approved unanimously.
Letter to Mr.
Earhart, President of the Federal Reserve Bank
44' ‘I‘E'ricisco, reading as follows:
Board approves the payment of salaries to
4ttinatR. Sandstrom
as Assistant Manager at the SeR, R- t7anch at the rate of $5,500 per annum and to
07.°rill as Assistant Cashier assigned to the
Pitzto ies at the rate of $7,000 per annum for the
1949-11,ueginning September 1, 1948 through April 30,
rectm",4ch are the rates fixed by your Board of Di1948."
'
- 8 RS
reported in your letter of August 24,
Approved unanimously.
Letter
to the "American Trust and Banking Company", Chatta-
llaeesee, reading as follows:
ttin,
'Iste,„.
,
4ie Board of Governors of the Federal Reserve
to ex- "as
of
considered the application for permission
the Arilrocise fiduciary powers made by you on behalf
4000. '1,,Illean
National Bank and Trust Company of Chatta
Tennessee, the national bank into
'toog4
"T'e AraericanTrust and Banking Company, Chattasuch
ieh'+17attanoogaP
e
8
grants
l,___ see, is to be converted, and
IL4 toheienzi
i;,,"k authority, effective if and when it is
ceti
hor'
;in
ei,,,bY the Comptroller of the Currency to COM—
te 0,,,T4eSSI to act, when not in contravention of
3.") re ,,,-"°cal law, as trustee, executor, administraiutLttt -6-Lstrar of
stocks and bonds, guardian of esa,,seignee receiver, committee of estates of
te
cir inany
' other fiduciary capacity in which
7
r 48) trust companies or other corporations
°171°
4 into competition with national banks are
;l'alitif,,,.
t'!Else :
-. Lto act under the laws of the State of
subject
Tenbile exercise of all such rights to be
pro
viion
f the Federal Reserve Act and the
s o Board of Governors of the Federal
" 11,-;;12r18 of the
oYstem.
n
kttn
3
8/27/48
_3_
in
"After the conversion of the American Trust and BankNagtiCn°mPanY1 Chn ttanooga, Tennessee into the American
eff;r1
+.11
,1 Bank and Trust Company of Chattanooga becomes
the
and the Comptroller of the Currency authorizes
to ha
naticxial bank to commence business, you are requested
re ve the board
of directors of the national bank adopt
exerr,luticn ratifying your application for permission to
re8014-se fiduciary
powers, and a certified copy of the
Reaerv
iltion so adopted should be forwarded to the Federal
of Atlanta for transmittal to the Board for
its re
:Bank_,
recei„Irue• When a copy of such resolution has been
bY the Board, a formal certificate covering the
be ft.:4.4' bank's authority to exercise trust powers will
'
rwarded.n
Approved unanimously, for
transmission through the Federal Reserve Bank of Atlanta.
Letter to "The Pontiac National Bank", Pontiac, Illinois,
e.B follows:
ttn
The
Board of Governors of the Federal Reserve Sysricluhe
ci given consideration to your application for
1/hell n-ArY
and grants you authority to act,
trlAs ;t
,,,
contravention of State or local law, as
c)powersl
-2 executor administrator, registrar of stocks
bt,
' of estates, assignee, receiver,
guardian
rititicii`'ee of estates of lunatics, or in any other
P4.8411. s-arbY Capacity in which State banks, trust col/1'40:,
1 4(2r other corporations which come into competithe in.,,""411 national banks are permitted to act under
1 18
7
, of the State of Illinois, the exercise of
,
the ?
s,,,e"
l rights to be subject to the provisions of
"041.,Ceol'al Reserve Act and the regulations of the
orr°1,4",Governors of the Federal Reserve System.
'ept$, ,
ci44"1-6 letter
will be your authority to exercise
4,,
1)Itelpai-t.
t1c4ia-17 powers granted by the Board pending the
°11 cf a formal certificate covering suchdue
-4tho%44.
°Ilreet
ol ic)11, which will be forwarded to you in
'
. Approved unanimously, for transthrough the Federal Reserve
Bank of Chicago.
iT-J6
1/Z7/48
-4Letter to the
Presidents of all Federal Reserve Banks readloilowe:
4q
tt
"There is enclosed for your information a copy of
bypl
theBoard interpreting section 17(0(5) of
dealing with limitations upon investments
4ezei.atrcnion trust funds,
which will be published in the
of the Federal Reserve Bulletin."
iSSue
Approved unanimously, together
With the interpretation referred
to, which read as follows:
"Common Trust Funds
"Limitations on Participation
itAtior, •
17(c)(5) of Regulation F, dealing with urnuPon investments in common trust funds, provides
- u as
follows:
'No funds of any trust shall be invested in
)
,Participation in a Common Trust Fund if such
;°restment would result in such trust having inin the aggregate in the Common Trust Fund
of nount in excess of 10 per cent of the value
assets of the Common Trust Fund at the
1.4,,e of investment, as determined by the trust
Iihiestment committee, or the sum of $50,000,
tif,chever is less. * * * In applying the limitamr,-118 contained in this paragraph, if two or
trusts are created by the same settlor
or Set
settlors and as much as one-half of the inablie °r principal or both of each trust is paypere °r aPplicable to the use of the same
sifleml or persons, such trusts shall be conHigered as
one.'
B°ard of Governors has considered an inquiry
''qiiolas".''ect to the application of the above-quoted prothe Regulation in the following situation:
tiro, 'Two trusts are created by the same setlir'. The first trust is for her benefit for
se(Lthen for the benefit of the life of a
pari;" Party with remainder over to a third
fit" The second trust is for the life beneth°f the second party with remainder over to
ker. ird party. The beneficial interest might
thege for a time for the remaining period of
life of the second party if he should
1397
8h7/48
urvive the settlor, and then upon the sec—
party? s death there would be an ultimate
Inerger upon vesting of the principal of both
trusts in the third party.'
"The Board
pointed out that this situation was very
the lax' to the one
considered in a ruling published in
941 Federal Reserve Bulletin at page 618, the only
:
dirp4
eieFreace being in the possible merger of the benefi—
(lilt
interests for a time in one of the two life ten—
pri
:before
ultimate merger upon vesting of the
1304,ed iPal of both
trusts in the remainderman. The
aeon
:e°11eluded that this situation came within the
comr °f the 1941 ruling and that investments in a
the trT, trust fund
might be made without considering
the 1:0 trusts as one for the purpose of applying
'Jan itations
of section 17(c)(5) quoted above.
beneti The
Board also stated that the merger of the
Pere,:cial interests through vesting thereof in one
EilleC4 at some
future date would not necessitate at
tion, btielte w
ithdrawal or reduction of the participa—
Becti 3r ither
trust in the common trust fund, as
Itet or,
17(c)(5) is intended to deal only with the
NAcie J-avesting in
participations in common trust
tioli arid does
not require the withdrawal or reduc—
°f Participations once legally acquired."
Lett_
zr to Mr. Latham, Vice President of the Federal Reserve
13,
.sto
4) reading as follows:
Na "Reference is made to your letter of August 18,
4oiriciallbmitting the request of the Union Trust Company,
0es
41
1164
,26) Rhode Island, for approval of an additional
19,
2Vit of t42 489.44 in banking premises expended
4Elk
c
d. onnection with alterations made in the
Of th,
the
. bank.
42°4rci n7f; Etecordance
with your recommendation, the
(.7 10—,„- G°verflors approves the additional investment
414,./h.'-','*/#4 in banking premises by the Union Trust
the purpose above indicated."
Approved unanimously.
Ott
Letter t
tet,
Mr. McLarin, President of the Federal Reserve Bank
"
'ding aB follows:
3?;
e '1
8/27/48
-6A112
,:This will acknowledge
receipt of your letter of
1948, in which you advised that actual exy
-8
.ear
4_ fOr 1948 will exceed budget estimates for the
bran, 44 various
functions at the head office and
°les) in the total amounts shown below:
Amount
Head Office
$1,;71
Birmingham Branch
Jacksonville
11,627
Branch
Nashville Branch
3,856
ew Orleans
Branch
27,203
hair'
lit liould appear from the statements made in
tece J-etter
that these increased expenditures are
ars 88
be,Y and
appropriate notations to this effect
lag made on the Board's
records."
Approved unanimously.
°{' the Meraorandula dated August 26, 1948, from Mr. Bethea, Director
Di..v.ision of
toEi
Administrative
strative Services, recommending that the
l'cl auth°11-ze PaYment in the amount of $144.10 to Hart, Aldert,°4)11°C4be
ovez, theand
cost
of
Harkins
and $159.50 to Columbia Reporting Company
stenographic transcripts of testimony of
tiCeabe) p
-ccles, Sproul, Young, Leedy, and Willis
am be,1 4 the
bate
and House Committees on Banking and Currency on
t1494141
30and August 2
and 3, 1948' The memorandum also
kkliliti
7-bed tha.t the
appropriate classification in the 1948 nonIN d
t4th
of the Division of Administrative Services be
v4,3 ildget
_
t4 bY Al
—03.60 to cover the expense involved.
Approved unanimously.
Mernorn.,
—"warn dated August 27, 1948, from Mr. Hooff, Assistant
reeottize,,
,
I
-`44-ng that, in addition to material previously
"N) t
laere be published in the law department of the
'N
1:39
8/27/48
—7—
SePterlbel" issue of the
Federal Reserve Bulletin a statement in the
toh,
-.4
attached
tinder
to the memorandum regarding the status of previous
Regulation W.
Approved unanimously.
ki?Prorired:
Chairman pro tem.
@FedFRASER