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345 A meeting of the Board of Governors of the Federal Reserve Syst '61 was held in Washington on Thursday, February 25, 1937, at 11:30 a.m. PRESENT: Mr. Eccles, Chairman Mr. Szymczak Mr. Davis Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter retctrred to and the action stated with respect thereto was taken by the 130ard. Telegrams to Mr. Leach, President of the Federal Reserve Bank °tRicizIond, and Mr. Gilbert, First Vice President of the Federal ReBank of Dallas, stating that the Board approves the establishment with°11t change by the respective banks today of the rates of discount "4 PUrchase in their existing schedules. Approved unanimously. Letter to Mr. Stewart, Secretary of the Federal Reserve Bank of St 'tollis, reading as follows: t "Reference is made to the postscript added to your let"of January 20 requesting advice as to whether reappointents and new oaths of office are required for the Assistant p, , cleral Reserve Agent, and Alternate and Acting Assistant ' e el'al Reserve Agents at your bank and branches. "Y° were advised, in the Board's letter of September 3o, p'1936, of its approval of the appointments of Messrs. arker and Hagedorn, as Assistant and Alternate Assistant oe td.nral Reserve Agent, respectively, and advice of approval Zehner's appointment as Alternate Assistant Federal iVel*ve Agent as contained in the Board's wire of October ,"! 1936 to Mr. Parker. The Board, in approving these ap; °14tments, did not intend such approval to be for the reportion of the year 1936 only and, accordingly, r 346 2/25/37 -2"unless it is desired to make some change no further action With regard to the above employees appears to be required at this time. "Assuming that there has been no change in the status Of Acting Assistan t Federal Reserve Agents at your branches, it will not be necessar y to reappoint them or for them to execute new oaths of office at this time. In the Board's letter of December 24, 1936, to Mr. Martin approving the Personnel classification plan, the persons acting for the Federal Reserve Agent in the issuance and retirement of Federal Reserve notes at the branches were referred to as Federal Reserve Agent's Representatives. You will be advised further with respect to this designation at an early date." Approved unanimously. Letter to Mr. Worthington, First Vice President of the Federal Reserve Bank of Kansas City, reading as follows: "Reference is made to your letter of February 8, 1937, and the report of exAmination of 'The Peoples Bank', Pratt, lansaa, i transmitted therewith. The report discloses that on Plil 4, 1936, without referring the matter to the Board for 1831 eZati lo .:n under provisions of condition of membership applicable to the institution, the board of directors of the bank authorized a charge to undivided profits in the amount of 46,000 to be expended for the purpose of Ilemodeling the banking house, that 4'15,000 had already been expended and charged to undivided profits at the time of the j .e amination, and that the management did not consider that i e expenditure constituted a violation of the condition : -flaamuch as it did not endanger the bank's solvency or liquidity and the amount was not capitalized. You state in your letter that if, under the circumstances, the approval of the Board is required your office recommends that such apProval be granted. appears that the bank is in sound asset condition, cl 4a no estimated losses and only a nominal amount of assets i'aseified as doubtful in the current report of examination, !highly liquid, and is under capable management. It has been noted that the investment in banking house and furniture sad fixtures amounts to only $257, 800 as compared with a net 111,nd capital of a63,500, and that the institution has no Lier real estate or potential other real estate. In view ul the circumstances, and the recommendation of your office, : 4 349 2/25/37 -3"the Board will interpose no objection to the 0_6,000 exPenditure in question. In taking this action, however, the Board has not undertaken to define the technical Question, Which is involved in this case, of whether such an expenditure by a bank which is not capitali zed represents an 'in- Approved unanimously. Letter to "The Citizens National Bank of Alton", Alton, Illinois, l'eliding as follows: "This refers to the resolution adopted on December 7, 936, by the board of directors of your bank signifying the 1uallk's desire to surrender its right exercise trust powers to which have been granted to it by the Federal Reserve Board. The Board of Governors of the Federal Reserve System Understands that your bank has been discharged or otherwis e lY relieved in accordance with the law of all of its .pu bies as fiduciary. The Board, therefore, has issued a ?Mal certificate to your bank certifying that it is no °Ilger authorized to exercise any of the fiduciary powers covered by the provisions of section 11(k) of the Federal Reserve Act, as amended. This certificate is inclosed herewith. r2Per tl„,:in this connection, your attention is called to the fact 11—gul under the provisions of section 11(k) of the Federal ieserve Act, as amended, when such a certificate has been by the Board of Governors of the Federal Reserve Systent to a national bank, such bank (1) shall no longer be subJect to the provisions of section 11(k) of the Federal Res Act or the regulations of the Board of Governors of the Fed e?ral Reserve System made pursuant thereto, (2) shall be li tltled to have returned to it any securities which it may : Ve deposited with the State or similar authorit ies for the Prot e ection of private or court trusts, and (3) shall not exFadeenY of the powers covered by section 11(k) of the ofral Reserve Act except with the permission of the Board Governors of the Federal Reserve System." Approved unanimously. re erve Letter dated February 24, 1937, to the Presidents of all Federal benks, reading as follows: 348 2/25/37 -4"There will be forwarded to you under separate cover Within a few days copies of the 'Instructions Governing the PrePeration of Earnings and Expense Reports and Profit and Loss Statements', which have been rewritten to bring them Up to date. One copy of the instructions is inclosed for Youz. information. "It will be noted that the principal change in the monthly report of earnings, Form 95, is the exclusion from miscellaneous earnings of reimbursements received from the Treasury Department and Government agencies for maintenance Of floor and vault space used by the Reserve bank in conducting fiscal agency, custodianship and depositary operations. ouch reimbursements should be reported as a deduction from ?Persting expenses. Rent received from tenants, including the Loan Agency of the Reconstruction Finance Corporation, allould be included in miscellaneous earnings as heretofore. "The monthly report of current expenses, Form 96, should Include all fiscal agency end other expenses, whether or not reimbursable. Heretofore reimbursable fiscal agency ex1Inclitures have not been included in current expenses. Reursements for certain fiscal agency and other expenses ;re to be shown as a deduction from total operating expenses to arrive at net operating expenses. To this total will be c1c1 assessment for expenses of Board of Governors and cost Of Federal Reserve currency to arrive at total current exPense " 7 "It will be noted that furniture and equipment purchased Should be a included in current expenses instead of in profit 2'4 loss account as heretofore. Normal depreciEtion on bank including vaults and fixed machinery and equipment, !ould also be included in current expenses. Depreciation ;1 one-twelfth of the annual rate should be charged to curout exPenses each month and credited to reserves. Prior torvice contributions to Retirement System should be charged h Profit and loss when paid and not to current expenses as eretefore. cal "On the daily balance sheet, Form 34, the caption 'Fis?pi egencY expenses, reimbursable' should be changed to shn, ,; s a1 agency and other expenses, reimbursable'. No amount of course, be reported opposite the caption 'Furniture id cha equipment' as the cost of furniture and equipment purad.sed is to be included in current expenses. The necessary Justments on Form 34 should be made on February 25. the "Form 96-a is a new form on which should be reported tot reimbursable expenses of the Federal Reserve bank. The el of such expenses should agree with the total reimburse- 349 2/25/37 ments for certain fiscal agency and other expenses shown on F°11ll 96. "It will be appreciated if you will advise whether it IS practicable to submit combined reports on Forms 95, 96 and 96-e, es revised for use during 1937, for each calendar year "a whole since organization of the System for use in comPiling for publication comparable fi!zures for prior years." Approved unanimously. laslak Of Telegram to Mr. Sargent, Vice President of the Federal Reserve San Francisco, reading as follows: "Relet February 11, 1937, transmitting copy of letter fr cin Union Bond and Mortgage Company, Port Angeles, Washington, from which it appears that such company desires to know cash, accounts receivable, or notes receivable may b w? nether considered readily marketable assets acquired in compliance h section 5144 of the Revised Statutes for purpose of A Pcssible claim for tax credit under section 26(d) of Revenue 1936. Board feels that it should rule upon questions 02it,4fs nature only in making certifications under section tilka) with respect to claims made for tax credit in tax reand upon basis of all facts involved in particular haeilas. It is assumed that Union Bond and Mortgage Company co8 in mind that even though particular kinds of assets might vnstitute readily marketable assets within meaning of see1 dt 11 question whether a holding company affiliate 1 e to a tax credit for any increase in amount of assets during a taxable year involves other questions, ear:ing whether such increase resulted from devotion of 411g8 or profits to acquisition of such assets. It is 76.Eested that you call attention of holding company affil4e 1..; to desirability of furnishing full information upon which kr such claim is predicated as provided in regulation of x..9; 3 13, Internal Revenue inclosed with Board's letter Approved unanimously. Reeerve Letter to Mr. Dillistin, Assistant Vice President of the Federal 13ank of New York, reading as follows: "Receipt is acknowledged of your letter of February 18, 350 2/25/37 -6"1937, with inclosures, regarding the proposed organization under section 25(a) of the Federal Reserve Act of the International Funding Corporation. It has been noted that the organizers have not submitted the information requested in Your letter of October 30, 1936 and that a reply has not been received to your letter of January 18, 1937 requesting !_lcIvice as to when such information would be received. It nes been noted, also, that you feel that there is little likelihood that the organizers have developed plans which will warrant favorable action upon the proposed organizai°11, and that the matter should be allowed to rest awaitfurther action by the applicants. In view of the cir! Urnstances, the matter will be held in abeyance pending rurther action by the applicants." Approved unanimously. Letter to the Federal reserve agents at all Federal reserve benks, reading as follows: "In the Board's telegram Trans 2094 of September 28, 1934, each Federal Reserve agent was requested to notify each other Federal Reserve agent and the Board, by telegraph, or the name and location of every nonmember bank which files agreement with the Board pursuant to the provisions of 8(a) of the Securities Exchange Act of 1934. On the ,e basis of these telegrams the Federal Reserve agents keep /144a 13 to date the list of nonmember banks which have filed such J„Ttnents, which list is intended to be available for dis1,:'uution to interested persons as provided by Section 10, " regraph (b), of Regulation T. e_ "It has been suggested to the Board by one of the Feds'al Reserve banks that the notices of changes are not of pilfricient urgency to justify the use of the wires for the in°8a- The Board concurs in this view and, accordingly, 110,:ls requested that hereafter each Federal Reserve agent to bifY each other Federal Reserve agent by mail of additions list of nonmember banks which have filed agreements with the 0, Board pursuant to the provisions of Section 8(a) 1:-e the Securities Exchange Act. The Board, however, should ro advised by telegram, by code word 'Alightable' assigned re: the purpose, unless notice can be mailed in time to ell the Board's offices within two days from the date on Which the nonmember bank files the agreement." r Approved unanimously.
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