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273 A meeting of the Board of Governors of the Federal Reserve 8Y8ter"m3 held in Washington on Monday, February 19, 1945, at 2:30 PRESENT: Mr. Hr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary 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 44re1. Reserve System held on February 17, 1945, were approved unani111011a17. Memorandum dated February 15, 1945, from Mr. Leonard, Director the D. , Ilasion of Personnel Administration, recommending that the baate a.e salarY of Mrs. Ruth S. Lamb, a clerk in that Division assigned rarlan of the Reserve Board Club Library, be increased from 1346() 43 1,560 per annum, effective March 1, 1945. Approved unanimously. Memorandum dated February 15, 1945, from Mr. Thomas, Director the bivision of Research and Statistics, submitting the resignation "lrel'ett Hagen as an economist in that Division in order to accept il l°8ition with the Office of War Mobilization and Reconversion. The 274 2119/45 -2- raenorandum stated that some delay had been encountered in the Office or War M obilization and Reconversion in clearing the necessary papers for** Hagen's employment and that that office had asked if it would be P°88ible for Mr. Hagen to be detailed to it on a reimbursable loan b4i8 beginning February 19, 1945, for a period of approximately 30 bY Which time, if not before, all the necessary negotiations for employment should be completed. The memorandum recommended that the request be granted subject to the receipt of an official request tl'e44 that agency, and that Mr. Hagen's resignation as an employee of the Boanftbe accepted effective as of the close of business on the day Preceding the effective date of his employment by the Office of War 40bilization and Reconversion. Approved unanimously. Letter to Mr. Rice, Vice President of the Federal Reserve Bank °t tlew York, reading as follows: "The Board of Governors approves the changes in the sonnel classification plan of the Buffalo Branch, inposYlng an increase in the maximum annual salary for the luion of Charwoman, as requested in your letter of Febrile. Z 17 13, 1945.n Approved unanimously. Letters to the Presidents of the Federal Reserve Banks of , 0 -Leveland, Atlanta, Chicago, St. Louis, and Minneapolis stating th at the, jpeard had noted without objection the salaries paid to em114, ,Yeea cDf the respective Banks as of January 1, 1945, as indicated 275 2/19/45 —3— atatenients submitted with letters from the respective Banks. The letter - + Mr. Young, President of the Federal Reserve Bank of Chicago, cc'ltained the following additional comment: "As requested in Mr. Meyer's letter of February 9, 1945, the Board also approves for the period ending Dee_erliber 4 1945, the payment of salary to Mr. George P. qichter as General Man Senior in the Personnel DepartTent, at the rate of $4,000 per annum, which is $500 in e 4lccess of the maximum established for this position under 'due personnel classification plan." Approved unanimously. Letter to the Presidents of the Federal Reserve Banks of Rich4°14 'Atlanta, St. Louis, and Dallas reading as follows: 1177, znclosed is a program for joint effort upon the of the various Federal Reserve Banks and the chief B"'10nal bank examiners to enforce compliance with the 8°ard's Regulation Q and Section 19 of the Federal Re, eorve Act in accordance with the Board's interpretation September 1943"This program meets with the approval of the Comptroll of the Currency and it is contemplated that he e-J-J- address letters to the national banks named in the , 1 cl?sure on March 15, 1945. Accordingly it will be ap' Ieelated if, on the same date, you will address letters d4 the form enclosed to the State member banks in your 'etrict appearing on the list." !,'!'s L Approved unanimously, together with the enclosures mentioned in the letter, Which were in the following form: 1. Program for Joint Effort to Enforce Compliance with Board's Regulation Q and Section 19 of the Federal Reserve Act in Accordance with Board's Interpretation: The Board and the Comptroller's office will exinformation concerning those national and member 276 2/19/45 -4"State banks which, from available reports, it seems likely are violating the law under the Board's interpretation. rmi information now available it would seem that there are some 25 banks (State and national) in this category. , "2. Letters along the lines agreed upon in the attached draft would be addressed to the board of directors of each such bank, letters to national banks going out ?Ver the signature of the Comptroller of the Currency and letters to member State banks going out over the signature .°J..the President of the Federal Reserve Bank of the disarlet in which the addressee bank is located, it being , tated that they are sent upon direction of the Board of 'tremors. Where there are State and national banks in .e same town, the letters would be sent approximately slmu ltaneously. "3. Each agency would keep the other currently intoed as to progress and developments in all cases. c,. The President of a Federal Reserve Bank and the biLiler National Bank Examiner of the same district would de expected to exchange information pertaining to their in the same manner as is contemplated between the 'le Board and the Comptroller's office. th Letters are to be sent immediately to all of e banks on the attached list." 2. Draft of proposed letter to the banks: tm "Section 19 of the Federal Reserve Act provides that bank shall, directly or indirectly, by any detaee whatsoever, pay any interest on any deposit which is yable on demand.' Go "The same section also provides that 'the Board of toverriors of the Federal Reserve System is authorized, the Purposes of this section ... to determine what s. .. 1,r/‘]1 be deemed to be a payment of interest, and to preSuch rules and regulations as it may deem necessary e ,T'ectuate the purposes of this section and prevent ira-eatns thereof.' lip„;..The Board of Governors, in the exercise of the obsh'tV.?n placed upon it by the Congress to determine what that ' °e deemed to be a payment of interest, has determined pos absorption of exchange charges, if done for the pure °f acquiring or retaining deposits, is a payment of IT ? member 277 2119/45 -5- "interest. From the reports available to us there seems to be a reasonable likelihood that your bank is absorbing exchange for the purpose of acquiring or retaining deposits. It you do not believe that you are thus paying interest, contrary to law under the ruling of the Board of Governors, We suggest that, before a definite conclusion on the point , 1.8 - reached, you seek an opinion of your bank's counsel as Whether, in the light of the facts of your case, your .40sorption of exchange is for the purpose of acquiring or retaining deposits. ''our counsel will no doubt wish to refer to the case in v Ihich the Board of Governors of the Federal Reserve Systern rules that a payment of interest in violation of law Occurred. It can be found at page 817 in the Federal Rervc Bulletin for September 1943. nether or not the ets in the case of your bank are identical with those that case, if your bank is absorbing exchange for the tl:Irpose of acquiring or retaining deposits, it would be a violation of the law. If your counsel should conclude that Your absorption of exchange is not for the purpose of acw1: 1.1 /: 1ing or retaining deposits, we ask that you furnish us as i:oa ssay e.of his opinion and supporting brief as promptly r, lius letter is sent to you at the direction of the " 4 of Governors of the Federal Reserve System in pursurolce general policy which has been adopted by the th'Ptroller of the Currency and the Board looking toward pee enforcement of the provisions of Section 19 of the ueral Reserve Act." 3. List of the banks to which the letter was to be sent: Fifth District First National Union Trust Company Maryland Trust Company , Central National SIxth District Commerce Union Third National American National Deposit Guaranty Bank & Trust Co. Capital National Baltimore Baltimore Baltimore Richmond Nashville Nashville Nashville Jackson Jackson 28 2/19/45 -6Sixth District: (Continued) Jackson State National Hamilton National ,. American Bank & Trust Co. First National Union and Planters National Bank of Commerce First National Liberty National Citizens - Fidelity Louisville Trust Lincoln Bank and Trust W. B. Worthen Commercial National Peoples National Union National National Stockyards National Bank Eieventh District Commercial National First National Continental-American Bank & Trust Neomit Jackson Chattanooga Chattanooga Memphis Memphis Memphis Louisville Louisville Louisville Louisville Louisville Little Rock Little Rock Little Rock Little Rock National Stockyards Shreveport Shreveport Shreveport Memorandum dated February 191 1945, from Ir. Hooff, Attorney, ending that there be published in the March 1945 issue of the Federal Reserve Bulletin statements in the form attached to the rri With respect to the following subjects: Foreign Banking Corporations Amendment to Regulation K Margin Requirements for Purchasing Securities Supplements to Regulations T and U Consumer Credit Amendment to Regulation W Foreign Funds Control Treasury Department Releases Approved unanimously. memo— Thereupon the meeting adjou
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