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169 A meeting of the Board of Governors of the Federal Reserve SYsterti was held in Washington on Friday, February 14, 1941, at 10:40 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Paulger, Chief of the Division of Examinations Mr. Dreibelbis, Assistant General Counsel Mr. Wingfield, Assistant General Counsel There was presented a telegram addressed to Chairman Eccles lincler date of February 13, 1941, by Mr. Caldwell, Chairman of the Fed— eral Reserve Bank of Kansas City, asking that Chairman Eccles confirm bY. wire or letter the statement which he made over the telephone to Mr. °4141vell on the previous day that the Board would not approve Mr. Leedy 4a Pre sident of the Kansas City Bank. Unanimous approval was given to the following telegraphic reply to Mr. Caldwell's wire: "Your wire February 13. Board of Governors confirms herewith statement which I made to you over telephone on ry 12 that it does not approve appointment of H. G. ;!eedY as President of Kansas City Bank for five—year term oegianing March 1, 1941." 170 2/14/41 -2There were also presented telegrams to Mr. Hays, Secretary of the Federal Reserve Bank of Cleveland, Mr, Leach, President of the Fed Reserve Bank of Richmond, Messrs. Dillard, Stewart, and Powell, Seel'etaries of the Federal Reserve Banks of Chicago, St. Louis, and nnea -Pc4is, respectively, Mr. Gilbert, President of the Federal Re"e Bank of Dallas, and Mr. Nest, Vice President of the Federal Re" e sank of San Francisco, stating that the Board approves the estab4shm -"teat without change by the Federal Reserve Banks of St. Louis and Sala i'rancisco on February 11, and by the Federal Reserve Banks of Cleve land, Richmond, Chicago, St. Louis, Minneapolis, and Dallas on -17 13, 1941, of the rates of discount and purchase in their ex:tat ing schedules. Approved unanimously. Reference was made to a memorandum dated February 6, 1941 from lir. 8 2Yi11czak in which he inquired whether the members of the Board should rileet with the temporary employees of the staff who were employed pursuant to ue action taken at the meeting of the Board on June 18, 1940, to give tilan opportunity to report directly to the members of the Board what theywere doing and how they were pointing up the special studies on Which they were engaged. The memorandum also inquired as to when the tIlree questions submitted to Chairman Eccles by the President were to be 411silrered. Chairman Eccles indicated a feeling on his part that no fur- ther co nsideration need be given to answering these questions. In the 171 2/14/41 —3— cliecussion reference was made to the arrangement which had been made to have Professor Hansen meet with the members of the Board on Thursday, Peb Y 20 for the purpose of discussing the studies which he had been Making. It was agreed unanimously that the time for the meeting with Professor Hansen hould be changed to one o'clock on Thursday, February 20, so that the discussion of his studies could take place during luncheon. Before this meeting the members of the Board had seen a memofrom Mr. Szymczak dated January 30, 1941, in which he called attie,t,44 ' - 40n to the understanding previously reached that the Spring cone of the Chairmen of Federal Reserve Banks would be held some- Where outside of Washington and to an inquiry from Mr. McCabe, Chairman Of thR - conference, as to when and where the conference should be held. R, "nscm stated that he had suggested that the matter be discussed by the Board as he doubted whether a meeting outside of Washington should be ,„ dertaken because of the difficulty in getting an adequate attendarlee Of the members of the Board. During a discussion of the question raised by Mr. Ransom, Chair- Eng,1 --4-es suggested that there should be no difficulty in getting a at tendance of the members of the Board if the meeting were held in lic)t SPI'ings, Virginia, or some other similar nearby place, on Saturday 411d SUnday, which would make it necessary for the members of the Board t° be away from their desks only on Saturday morning. This suggestion was agreed to by all of the members of the Board and it was 1.72 2/14/43. understood that Mr. Szymczak would advise Mr. McCabe that it would be agreeable to the Board if the conference were held at Hot Springs, Virginia, on the 26th and 27th of April. Szymczak stated that Mr. McCabe had also suggested that the 'J-ctents be invited to attend the next conference of Chairmen. All of the members of the Board indicated a feeling that such an arrangement would result in an unwieldy conference which would tend to impede the consideration of the particular problems that it was contemplated would be taken up and it was agreed that Mr. Szymczak would advise Mr. McCabe accordingly. Consideration was then given to a memorandum dated January 21, 1941, , Irom Messrs. Wingfield and Cagle, in which it was stated that, in acorci. ellee with the action of the meeting of the Board on January 11, they had conferred with Deputy Comptroller of the Currency Upham Chi --Ler National Bank Examiner Folger on the subject of granting trust Power 8 t° small national banks, that it appeared from the discussions that . it would be the future policy of the Comptroller's Office to recom, t a greater extent than in the past against the granting of trust Nyer 8 tO small national banks; and that Messrs. Wingfield and Cagle had the etinet impression that the Comptroller's Office would recommend un- on many applications similar to those on which the Office prehad made favorable recommendations. n. Ransom stated that while he was in general agreement with the 13°Ited Position of the Comptroller's Office for the reasons which he 173 -5ae.nsom) had stated to the members of the Board on numerous earlier °ccasi°ns, the approval of the application of the City National Bank of Rastin -g8) Hastings, Nebraska, for trust powers would be in accordance Ilith the Board's existing policy, and therefore the question before the 4ard 1478-8 whether the change in the policy of the Comptroller's Office would lead the Board to make any change in its present policy of granting tru st powers to small national banks in a case where it appeared that the bank was in good condition, the capital funds were sufficient 11171der the circumstances of the case, the management was capable, and the bank desired trust powers as a means of serving its customers or meeting c°14Pstiti0n from other institutions, but where there was a reasonable cl°11°3t Whether the bank could or would establish a trust department adeclilatelY staffed or would find the department adequately compensating in earnings. The question presented by Mr. Ransom was discussed at considerable length and during the discussion Mr. Davis moved that the application of the City National Bank of Hastings, Hastings, Nebraska, be approved as of this date and that the following letter be sent to the bank: "The Board of Governors of the Federal Reserve Syshas given consideration to your application for fidu-arY powers, and grants you authority to act, when not contravention of State or local law, as trustee, exOr, administrator, registrar of stocks and bonds, •"ardian of estates, assignee, receiver, and committee of is)states of lunatics, the exercise of all such rights to ,e subject to the provisions of the Federal Reserve Act and the regulations of the Board of Governors of the FedReserve System. tem V 174 2/14/41 —6— "This letter will be your authority to exercise the ljdlIciary powers granted by the Board pending the prepara1?11 of a formal certificate covering such authorization, which will be forwarded to you in due course." All of the members of the Board were in agreement that the granting of trust powers was a responsibility of the Board which would have to be discharged by it on the basis of its best judgment regardless °I the reco endations that the Office of the Comptroller of the ClIll ' enc,7 might make, and that the question to be decided was whether the e 0neiderations which led to the change in the Comptroller's position any other factors which might have a bearing on the matter, 811°111d lead the Board to adopt a less liberal policy in the future. trhero 4ae general agreement with the position that, although it was to b e expected that the smaller the bank the less likelihood there would beim, completely adequate administration of trust accounts and while there . 'Ught be some justification for the position that banks with capital or less than a stated amount should not be granted trust powers, the to ard l e decision should be based on all the factors involved and not e °1elY on the size of the bank. The opinion was also expressed that the r eascns given by Deputy Comptroller Upham in his letter of November .13, 194, for the recommendation that the application of the City National Bank of Hastings be not approved did not justify denial of the aPPlioation. tion of 14r. McKee suggested that the Board defer action on the applicathe City National Bank of Hastings in order to afford the bank eino p°Il tlInitY to discuss the matter further with the office of the 175 ' 2/111A1 _7- C°111Ptroller of the Currency, through the Chief National Bank Examiner °f the district, after which the Board would give further consideration to 41, that matter. This suggestion was discussed and it was generally agreed . this course were followed the Comptroller of the Currency should be advised of the Board's intention to so advise the national bank. At the conclusion of the discussion Mr. Davis' motion was put by the Chair and carried, Mr. Ransom voting "no", not solely because of the adverse recommendation of the Comptroller's Office, but for reasons which he previously had recorded for not agreeing with the existing policy of the Board. Mr. Davis then suggested, in view of the new policy of the C°1143trolier of the Currency of recommending adversely in a number of cases which, under its present policy, the Board would approve, that the Pl'actice of asking the Comptroller of the Currency for his recomillei1 deti°11 in connection with future applications of national banks for POWers be discontinued. This suggestion was approved unanimously. At this point Messrs. Thurston, Wyatt, Goldenweiser, Paulger, 1)1'eibeibis, and Wingfield left the meeting and the action stated with r Pe et to each of the matters hereinafter referred to was then taken the Board: The minutes of the meeting of the Board of Governors of the Ped el'sa Reserve System held on February 13, 1941, were approved unani43144. 1_76 2 / 14/41 -8Memorandum dated February 11, 1941, from Mr. Wingfield, Assistant General Counsel, recommending that there be published in the March iselle of the Federal Reserve Bulletin statements in the form attached to tu_ un memorandum with respect to the following subject: General Licenses Issued by the Secretary of the Treasury. Approved unanimously. Thereupon the meeting adjourned. 01Z41.1GEL„ hr( Secretary.
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