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2027 Mialltes of actions taken by the Board of Governors of the ,,rtti Res_ erve System on Thursday, December 2, 1948. PREsENT: Mr. Mr. Mr. Mr, Mr. Mr. Mr. McCabe, Chairman Eccles Szymczak Draper Evans Vardaman Clayton Mr. Mr. Mr. Mr. Mittrties Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board of actions taken by the Board of Governors of the Fed— .,ees,... " e SYstem on December 1, 1948, were approved unanimously. N4 kilalltes of the meeting of the Board of Governors of the Fed— ' Reserve 4 b_ 'etem with the Presidents of the Federal Reserve Banks ' oa b.._ e te tber 1, 1948, were approved unanimously. 'Mete,. to cr, 'thstiv the t, ision of Research and Statistics, recommending that „ter II13r°Ire an advance of funds in the amount of $10500 to Ncomi 44 El t hees rire— . iIh i Titan rei t:aho : Pi itiralaePrIcotitliodo ;o; : vt r:;o:::m erit acomed annual leave to provide security for the etd atIttit kr4041e 4, -N. tilat in addition he would pledge his funds in the - ve rev 4rement system. Approved unanimously. 2028 121248 Memorandum dated November 30, 1948, from Mr. Millard, Directarqthe Division of Examinations, recommending, effective Deceitber12, 19 48, (1) that the basic salary of George S. Sloan, Assistett Director of that Division, be increased from $10,080 to $11,000 tel'alnra, (2) that Clarence C. Hostrup, a Federal Reserve Examiner, 1) aPPointed A ssistant Director of the Division of Examinations and that hie basic salary be increased from $8,389.80 to $9,500 per an4141; (3) that Keruieth A. Kenyon, an Assistant Federal Reserve Exaz441er in that Division, be appointed a Federal Reserve Examiner 41cithalt his basic salary be increased from $4,981.20 to $5,482.80 4111411; and (4) that J. Earle McGeary, en Assistant Federal Re41,17e -.Ler er in that Division, be appointed a Federal Reserve 411(1 that h • basic salary his ry be increased from $4,228.80 to 0 Per annum. Approved unanimously. tetter to Mr. ot New Sheehan, Chief Examiner of the Federal Reserve °I1c, reading as follows: / 1 48 %Terence is made to your letter of November 26, ' 1711.4 8111itting a request by Manufacturers and Traders g1Y Buffalo, New York, for approval of a the location of its Cheektowaga Branch from rarY quarters now occupied to permanent guaras Stores 6A-7-8 Airport Plaza, Cheekf eV. YC)rk• eft IQ 18 noted that the new location is about proposed 140 ' 40Nre e-41 the old and it does not appear the thkeaki),(Inetituortes establishment of a branch within the tts_ aPPlicable provisions of Section 9 o e--4- Reserve Act. Therefore, the Board will h)4.41. )(1 i411,J, Lf,44-0 1?i12/413 "inter,,„ tiote,l'vse no objection to the change in location. It is been`4 that approval of the New York State authorities has obteined." Approved unanimously. Letter to Bangert & Bangert, 404 Black Building, Fargo, North ,qa, re . adlng as follows: 44_ J. N. Peyton, President of the Federal Reserve lett:4 ninneapolis, has transmitted to us a copy of your tllat-r to the Federal Reserve Bank in which, after stating tee You r epresent the North Dakota Par Clearance CommitY°11 present the question whether the practice of demand cer-. (IE corre spondent banks in soliciting country bank cz4la - tr8) with an understanding that checks drawn on the ellch;L!)anks will be routed in such manner as to permit Offlk8 to remit at less than par, involves a payment erest on demand deposits in violation of the Board's g'llation Q. c4118 nt are glad to be informed concerning this matter beand eefc', °ur interest both in par clearance of checks ezt eement of the prohibition against payment of interetse aTembsr banks on demand deposits. However, the prelearrii.,'Ilre of the practice to which you refer is not 'tie us and, also, we have found from experience that gtlesti,,!st 88 e general policy not to attempt to rule on Nrzent 's es to whether particular practices involve the ! tlicte -Z,°f interest except after consideration of the the circumstances of particular cases as developed involved. re,,e° ,11rse ef examinations of the member banks ' 601e e-e6, t herefore th-it in the circumstances we are un°Ilertt° 1. give You a definite answer but ve trust that some 0 obse rvations may be helpful. 118(Z°11 know, banks which are members of the Federal ,-4rvee 48Tem are prohibited by section 19 of the Federal o tet and the Bcard's Regulation Q from paying inter' .tor,-elaland deposits. In administering the law and reg0 the Board has taken the position that the ; °4 hY member banks of exchange charges as compen'°11re' c'r the use of funds constituting a deposit initi,1‘°}11.1)1.,., 13.11Yzent 0 of interest within the meaning of this cheirl n the other hand, if a member banks passes charges back to its customers, there is of /'8.Yment of interest by the member bank. 2030 1V2/481 - 7 rhe prohibition against the payment of interest on ti.l.r101 deposits applies to nonmember insured banks as well Grat t? member bank-s, but the Federal Deposit Insurance Corp1308.,1°11 has adopted a different position from that of the ehtTI with respect to the treatment of absorption of excorngs charges as a payment of interest. Therefore, if the to4resPondent banks are nonmember insured banks, they are r,4 subject to the same restrictions as member banks with oir let to absorption of exchange charges. Also, in view !'act that there is no restriction upon the manner in taell1C enecks are routed, it is possible that in some cases to ter banks may route checks drawn on nonpar country banks ter ° 111111 er insured banks for collection and that the latik8 IllaY absorb the exchange charges on such check. abilit^Te sYmpathize fully with your views as to the desirbeor °I Par clearance and we hope that our comments may rel °Lrie assistance to you in your consideration of the Of1:11BhiP of the statutory prohibition upon the payment : tOt rest to par clearance. We have from time to time '2ast suggested that an effective solution of the 1414 c°011ce nce problem lies in the education of the public ellEtctittg the unsoundness of exchange charges and in the ent of statutes such as those in Iowa and Nebraska di rectly prohibit the charging of exchange." Z 4, Approved unanimously. Tele mm to Mr. Smith, Assistant Vice President of the Federal f Cleveland, reading as follows: hRe 14q'tI lIrtel November 28, 'applicable sales taxes' in b4ed 04 of the supplement to Regulation W refer to taxes actual sales price." # _APproved unanimously, with the under!,nding that the same information would transmitted to Mr. Phelan, Vice President of the Federal Reserve Bank of New York, R Letter to Mr. Smith, Assistant Vice President of the Federal 14tnk of -Leveland, reading as follows: 2031 iZ/z/48 -504 4:This will acknowledge your letter of November 12, 1948, vhiTs subject of the Regulation W enforcement program, in itornen You suggest that the Board arrange with the Federal e; itoritail °E111 Bank Board to have its regional offices submit -1-Y summaries of investigations to each Federal Reserve similar to the practice of the Federal Deposit Insurance 'Pc)rstion. tot b"t41-14 such monthly reports would be informative, we do the ' isve that they are essential at this time. In view the Lie eleas of registrants involved and the discussions with retr,"°/ile Loan Bank authorities here in Washington when the arDrilsrterrients were made, we do not feel that it would be approcourse llow to ask for such reporting on a national basis. Of bEteises we have no objections to your working out on a local ree1'41,412A7 Eatran.gements mutually satisfactory to you and the offices of the Home Loan Bank. 'et 211e Board appreciates your desire for complete and cur' °Cords in the administration of the regulation." Approved unanimously.
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