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263 A meeting of the Board of Governors of the Federal Reserve _ Was held in Washinc, ton on Monday, February 19, 1940, at 10:00 PRESENT: idr. Mr. Mr. Mr. Mr. Mx. 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 The action stated with respect to each of the matters hereur r eferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the 441411 Ileee-rve System held on February 16, 1940, were approved Itaktliziousiy. Telegram dated February 17, 1940, to Mr. Nardin, Chairman (theederal 'Reserve Bank of St. Louis, reading as follows: tel. "Referring your February 14 letter and Februar y 17 Board interposes no objection to appointment or t0 1'• Schacht as Managing Director of Louisville Branch akie lainder of current year, and approves payment of rY . to him until May 31, 1940, at rate of 0,000 per kliznza Plea' lf fixed by your Board of Directors at such rate. k' e advise effective date of Mr. Schacht's appoint- Approved unanimously. l'I'e orandum dated February 14, 1940, from Mr. Morrill recom4, 'or the reason stated in the memoran dum, that L. H. Cooley, 264 2119/4o -2- Peat-time telegraph operator, be transferred from the Telegraph orrice to the Building Operation and iatintenance Unit of the Secretkry, 8 Office as a full tire elevator operator, with no change in 44 I. -"resent salary at the rate of 1,200 per annum, effective as of the dat 6 upon which he enters upon the performance of his new duties. Approved unanimously. Letter dated Febru2ry 17, 1940, to Mr. Fry, lace President Ot t hv rederal Reserve Bank of 'Richmond, reading as follows: 1, "Reference is made to your letter of February 5, 0740, with enclosures, requesting advice as to whether 01' n°t you should inform 'The Wilmington Savings &Trust 13:2anY i , Wilmington, North Carolina, that the Board's esion is required under the condition of memberfor the further retention of 480 shares of Socarnat 07" Corporation stock acquired for debts previously 1,1!/t1lacted and carried as a charged off asset. The ap' 41ca tble condition of membership reads as follows: r7. ( Except with the permission of the Federal Reserve Board, such bank shall not purchase or acquire through any device whatever any stock of any other bank, trust company, or Other corporation of any kind or character except in satisfaction or protection of debts previously contracted in good faith, and all stock acquired in satisfaction or Protection of debts shall be disposed of Within six months from the date on which it was acquired unless the time is extended by the Federal Reserve Board on the application of such bank for good cause shown.' that "It is noted from Vice President Thornton's letter the Socarnat Bank Corporation stock was acquired in 14144'sfsetion of debts previously contracted and which Thol„bieen charged off. It is observed also that Mr. rEiti t°n is of the opinion that the stock of the corpoS1 4 illaY in the not distant future bring an amount 1441 ent to effect a recovery in full of the debt for e"- it was acquired. 265 213-9/4o -3- "As you suggest, the provisions of the condition apPlY to charged off assets as well as to stocks carried at !onle value in the bank's assets. It is felt, however, that in acting under the authorization to grant an exten81On of time under the provisions of the condition of membership for the disposal of stocks, consideration should properly be given to all of the circumstances involved, including those in connection with the acquisition of the stock, the nature of the stock, the amount ,, ' 1 all stocks held as well as of the particular issue, "cl. the policy of the bank with respect to the disposal °I. stocks acquired. "In the present case it appears that you would be iUsti I, —tied in granting an indefinite extension of time ; °11 disposal of the stock under the provisions of the °4dition of membership, retaining the right, however, toil° 1 invoke the provisions of the condition at any time bi,the future should circumstances indicate the desira'JAY of so doing." Approved unanimously. Letter to Mr. B. J. Savage, Cooper, Erving & Savage, Albany, rit $ reading as follows: ‘11(1 "Your letter of January 31, 1940 has been received, 01 Your comments regarding possible amendments to the inem er°n Act have been brow;ht to the attention of the el;;ers of the Board of Governors, although you ap-lar1)01tY understand that this is a matter of legislative 481c1. ?" for the consideration of Congress, because you our lor the name of the Chairman of the Banking and p frenoY Committee of the Senate. He is Senator Robert 4 " aigner of New York. Doe "You say that the Albany Morris Plan Bank might thl,eiblY relinquish any parer to receive deposits, and ' as You understand it, render the Act inapplicab1;8 Youevidently have reference to the fact that the ir' h s aPplicable to a director of a member bank only bEttlke is serving a 'bank, banking association, savings or trust company', which means, as indicated in ollr be ""etter of January 30, that the statute would not b -PPlicable if the Albany Morris Plan Bank ceased to e 4 Ibankt. 4 266 2/19/40 -4b "As you know, one of the simplest definitions of a dal* is an institution which is authorized to receive iePosits. It is not always easy to define deposits, and some borderline cases it is even less easy to deterwhether an institution is a bank. However, if you ;fe interested in pursuing this question further, I thed suggest that before any steps are taken, you or : Morris Plan Bank communicate with the Federal Re:;!ve Bank of New York which, because of its famililaltY with New York State law and the rulings and reguwil!'°ns of this Board and the general factual background, I believe, be able to be of assistance." Approved unanimously. Letter to Mr. R. D. Cowley, President, Peoples Bank of Kelso, Xeis Term essee, reading as follows: 1.94n "Reference is made to your letter of January 31, si0 7) requesting advice as to whether, under the proviRe Of section 8 of the Clayton Act and the Board's L, you may continue to serve at the same Xei- as a director and officer of the Peoples Bank of Natie, ' ° Kelso, Tennessee, and as a director of the Union -"nal Bank of Fayetteville, Fayetteville, Tennessee. 13;40:Section 8 of the Clayton Act was amended by the 10rZng Act of 1935 and the Board of Governors is no tIleesr authorized to issue individual permits under okteAct; and the permit which was issued to you under 111.6 f JulY 19, 1234, is no longer effective since el.C.tocking directorate relationships are now govRe: bY the provisions of the statute and the Board's N7, -ati°n L. As amended by the Banking Act of 1235, dirt.'r°1risions of the Clayton Act do not prohibit a Ped,;:t°r, officer or employee of a member bank of the 4;4'8-1 Reserve System from serving at the same time lilliedirector, officer or employee of another bank ett1 ; 4 15 not located and has no branches in the same ! °wn or village as such member bank or in a )wn or village contiguous or adjacent thereto. he i; " ler rd is now in receipt of information from the 4elz Reserve Bank of Atlanta which indicates that 4Lalla Fayetteville, Tennessee, are not contiguous Pteeogacent within the meaning of the Clayton Act. -141Y, your services as a director and officer N 267 2/19/0 -5- "Of the Peoples Bank of Kelso and as a director of the Irnion National Bank of Fayetteville do not came within the prohibitions of section 8 of the Clayton Act." Approved unanimously. Thereupon the meeting adjourned. 1-1r) Secretary. ArprOVed: Chairman.
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