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2051 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Saturday, December 29, 1945, at 11:00 PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman McKee Draper Evans Mr. Carpenter, Secretary Mr. Connell, General Assistant, Office of the Secretary Mr. Morrill, Special Adviser Mr. Thurston, Assistant to the Chairman The action stated with respect to each of the matters herein— after referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on December 28, 1945, were approved unanimously. Memorandum dated December 26, 1945, from Mr. Bethea, Direc— tor of the Division of Administrative Services, recommending that the salary of Miss Elizabeth L. Carmichael, Supervisor, Publications Sec— tion, Division of Administrative Services, be increased from $2,980 to $3,200 per annum, effective December 30, 1945. Approved unanimously. Memorandum dated December 17, 1945, from Mr. Paulger, Direc— tor of the Division of Examinations, recommending that the salary of Mrs. Nancy R. Porter, Supervisor, Recording and Stenographic Section, Division of Examinations, be increased from $2,496 to $20650 per 2052 12/29/45 —2- annum, effective December 30, 1945. Approved unanimously. Memorandum dated December 27, 1945, from Mr. Thomas, Director of the Division of Research and Statistics, recommending that the sal— aries of the following employees in that Division be increased, as in— dicated, effective as of the beginning of the first pay roll period following approval by the Board: Name Title Mary Jane Harrington Lillian H. Schiller Research Assistant Clerk—Stenographer Salary Increase From To $2,760 2,166 $2,980 2,298 Approved unanimously, effective December 30, 1945. Memorandum dated December 27, 1945, from Mr. Smead, Admin— istrator for War Loans, recommending, for the reasons stated in the memorandum, that Mrs. Catherine H. Fields, a secretary in the Office of Administrator for War Loans, be granted an extension of leave with— out pay for six months beginning January 1, 1946, and that the Board authorize continuance of the death benefit provision of the Board's Retirement Plan for Mrs. Fields. Approved unanimously. Memorandum dated December 28, 1945, from Mr. Thomas, Director of the Division of Research and Statistics, submitting the resignation of Mrs. Kathryn Stevens Faulkner, a clerk in that Division who has been on leave without pay since May 21, 1945, and recommending that the 2053 12/29/45 -3- resignation be accepted as of the close of business November 17, 1945 (the expiration date of her last extension of leave) with the understanding that appropriate reimbursement would be made to the Board for any overdrawn leave and for any money she may owe the Board for her contributions to the Retirement System of the Federal Reserve Banks and for group insurance. The resignation was accepted as recommended. Memorandum dated December 27, 1945, from the Division of Personnel Administration reporting that the following employees were retiring from active service at the end of this year: 011ie M. Croghan John DeLaMater Oliver E. Foulk E. A. Goldenweiser Noted. Letter to Mr. Rice, Vice President of the Federal Reserve Bank Of New York, reading as follows: "The Board of Governors approves the changes in the personnel classification plan of the Federal Reserve Bank of New York involving the establishment of four new positions, changes in descriptions of duties for seven positions, and the elimination of one position, as sub— mitted with your letter of December 10, 1945." Approved unanimously. Telegram to Mr. Hill, Vice President of the Federal Reserve sank of Philadelphia, reading as follows: "Relet December 27. Board approves appointment of Fred W. Zeller, Jr. as examiner and appointments of Elmer 12/29/45 -4- Lyster and Victor H. Shumaker as assistant examiners for Federal Reserve Bank of Philadelphia. Please advise effective dates of appointments." Approved unanimously. Letter to Mr. Weigel, Assistant Vice President of the Federal Reserve Bank of St. Louis, reading as follows: "The Board of Governors approves the change in the personnel classification plan of the Federal Reserve Bank of St. Louis, involving the changing of the name of the Collateral and Custody Department to that of Safekeeping Department, as submitted with your letter of December 13, 1945-" Approved unanimously. Letter to Mr. Stewart, Secretary of the Federal Reserve Bank of St. Louis, reading as follows: "The Board of Governors approves the payment of salary to Mr. Joseph C. Wotawa as General Auditor of the Federal Reserve Bank of St. Louis, for the period January 1, 1946, to May 31, 1946, inclusive, at the rate of $6,000 per annum, which is the rate fixed by your Board of Directors as reported in your letter of December 20, 1945." Approved unanimously. Telegmato Mr. Leslie M. Stratton, Jr., Stratton-Warren Hardware Company, Memphis, Tennessee, reading as follows: "Board of Governors of the Federal Reserve System has appointed you director of the Memphis Branch of the Federal Reserve Bank of St. Louis for three-year term beginning January 1, 1946, and will be pleased to have your acceptance by collect telegram." Approved unanimously. 2055 12/29/45 -5- Letter to Mr. Payton, President of the Federal Reserve Bank of Minneapolis, reading as follows: "Reference is made to your letter of December 26 regarding a number of salary increases, to be effective January 1, 1946, which will cause the salaries to exceed the maximums for the respective positions under the personnel classification plan. "As Mr. Leonard explained to Mr. Core, specific approval of the Board is not required in those cases where the proposed salaries come within the limits authorized by the Board's letter of November 13, from which the following is quoted: 'The Board of Governors authorizes your Bank to exceed in individual cases maximum annual salaries under the personnel classification plan of your Bank by as much as 15% of the first $3,000 of the maximum annual salary, provided that the total annual salary, including any such excess over the maximum annual salary under the personnel classification plan, shall not exceed $7,500.' "Specific approval, however, is required for any salaries which do not fall within those limits. There are two such cases in the list transmitted with your letter. In accordance with your request, the Board approves payment of salaries to the following employees at the rates shown, effective January 1, 1946: $5,500 Clayton E. Tillander, Chief Examiner Charles R. Jennings, Guard 2,484." Approved unanimously. Letter to "The Merchants National Bank of St. Johnsbury," St. Johnsbury, Vermont, reading as follows: "The Board of Governors of the Federal Reserve System has given consideration to your supplemental application for fiduciary powers, and, in addition to the authority heretofore granted to act as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, and committee of estates of lunatics, grants 20561 12/29/45 -6- "you authority to act, when not in contravention of State or local law, in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted , to act under the laws of the State of Vermont, the exercise of all such rights to be subject to the provisions of the Federal Reserve Act and the regulations of the Board of Governors of the Federal Reserve System. "This letter will be your authority to exercise the fiduciary powers granted by the Board pending the preparation of a formal certificate covering such authorization, which will be forwarded to you in due course." Approved unanimously. Letter to the Presidents of all the Federal Reserve Banks readtrig as follows: "Under Regulation T, reports are being collected on Form F. R. 240 from all member firms of the New York Stock Exchange semi-annually and from 15 member firms monthly. The semi-annual reports will be continued, but, in view of the collection of certain figures by the New York Stock Exchange, monthly reports from the 15 firms will no longer be required. "In a comparison of the June 30 reports to the New York Stock Exchange with the Form F. R. 240 reports for the same date, it has been found that there has been SOMB misunderstanding as to the way in which certain items are to be reported. This is due in part to turnover of personnel and the fact that the persons now preparing the reports are not aware of earlier instructions given to the firms on special points. "In order to improve the reporting, a set of supplemental instructions on Form F. R. 240 has been drawn up/ which should be sent to the reporting firms for use in the preparation of the December 31 reports. A copy is enclosed. We believe that reproduction by mimeograph would be quite satisfactory, although this is a matter left to your discretion. Since the main points will be covered in a similar set of instructions on the New York Stock Exchange reports, we doubt that it will be necessary for the Federal Reserve Banks to issue the supplemental set on Form 2057 12/29/45 -7- "F. R. 240 more than once, although provision will need to be made for new firms and special requests." Approved unanimously. Letter to Mr. S. Jay Levy, New Economic Library, New York, New York, reading as follows: "This is with reference to your letter of December 18, 1945, with which you enclosed a clipping from the Wall Street Journal of December 14 concerning bank loans for purchasing stock exchange securities. "Under the terms of the Board's Regulation U, no bank is permitted to loan any more on listed stocks to buy such stocks than a broker can -- at present 25 per cent of current market value. Any instances of the type cited in the clipping would appear to be violations of that regulation, although they possibly may have been cases where the borrowing was on stocks but for purposes other than purchasing them. "We have seen no indications that practices of this kind are widespread. Banks are examined periodically and anything more than isolated instances, where the loan was made inadvertently on more liberal terms than permitted, would be brought to our attention. We are aware, of course, that a certain amount of speculation is developing but it is largely on a cash basis. This is one of the by-products of the large amount of liquid funds accumulated during the war. "So far as this particular complaint is concerned, efforts are being made to find out just what county is referred to by the complainant in order that the complaint may be followed up." Approved unanimously. Telegram to Mr. Young, President of the Federal Reserve Bank of Chicago, reading as follows: "Retel December 29, in view of circumstances set forth in your wire, you are authorized to set aside reserve of $4000000 for airconditioning." Approved unanimously. 2058 12/29/45 -8- Letter to Mr. Young, President of the Federal Reserve Bank of Chicago, reading as follows: "Reference is made to your letter of December 18, 1945, submitting the proposal of the Davenport Bank and Trust Company, Davenport, Iowa, to correct an existing violation of the provisions of Section 23A of the Federal Reserve Act, arising in an investment of $700,000 in the stock of a wholly owned affiliate formed to purchase the banking premises from the bank at that figure, by reducing the par value of the capital stock of the affiliate within the prescribed limit and lending the affiliate the amount of the reduction. After the proposed correction is effected the bank's indirect investment in banking premises will exceed the amount of its capital stock ($600,000) and the Board's approval of this investment is requested under the provisions of Section 24A of the Federal Reserve Act. "In view of your recommendation, the Board approves the investment of $700,000 in banking premises as proposed provided the elimination of the violation of Section 23A is effected." Approved unanimously. Thereupon the meeting adjourned. Vice Chairman.
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