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248 Minutes of actions taken by the Board of Governors of the ral Reserve System on Monday, February 27, 1950. &lithe The Board met Special library at 3:05 p.m- ?RESET: Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Eccles Szymczak Draper Vardaman Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Before ok,,t Carpenter, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Leonard, Director, Division of Bank Operations Vest, General Counsel Millard, Director, Division of Examinations Townsend, Solicitor Baumann, Assistant General Counsel this meeting there had been sent to each member of the draft of statement to be made by Chairman McCabe before the 411ats Banking and Currency Committee on March 1, 1950, with respect to 8% 2318, a bill to provide for control and regulation of bank 11°1411g ecoalPanies. 1)4r1ng a discussion of the draft, Mr. Vest presented a memoNclum dated Feb it14 the ry 25, which referred to recent correspondence 1950, National City Bank of New York and the First National Bank of katola regarding amendments to the bank holding company bill (1) to exNt a situation in which a trust company operates for all practical r4411°8 "as the trust department of a bank, and (2) to exempt organiza- 21 2/27/50 -2-tione engaged in international or foreign banking operating under Sectioll 25 or section 25a of the Federal Reserve Act. "ate that Inittee de f3 The memorandum letter from Mr. Burgess, Chairman of the Executive Com- of the National City Bank of New York dated February 23, 1950, 13°ne additional sugLestions of a technical character regarding these 4mendments, that the legal division had considered his suggestions, arld that it had revised the proposed amendments to take care of the Pc)ints l'aised by Mr. Burgess. Mr. Vest read the proposed amendments 814t1 4.11g that it was proposed that Chairman McCabe offer the amendt4erlts t0 the bill, S. 2318, when he appeared as a witness before the tatkin _ 8 and Currency Committee. In this connection, at Chairman McCabe's request, Mr. Carpenter 4" lett„ from the secretary of the Federal Advisory Council dated ?1:111tIr 20, 1950, stating that the Council approves the bank holding e(31111341W bill, S. 2318, subject to the inclusion of a satisfactory pro14hich would exempt wholly-owned or affiliated trust companies 4°tcl°141g a commercial banking business. The members of the Board who Pr'eseut concurred in a suggestion that Chairman McCabe include , 114 letter in the material which he would present to the Senate Bank: klIcl Currency Committee on March 1. Following the discussion, it was agreed unanimously that the draft of statement would be revised along the lines suggested during the discussion, with the understanding 250 2/27/50 —3— that when in a form satis— factory to Chairman McCabe and Messrs. Vest and Townsend, it would be submitted to the Senate Banking and Currency Committee together with the proposed amendments to the bill. Mr. Carpenter stated that the Bureau of the Budget had advised bY telephone this morning that there would be no objection to submission to fq,, ""e Senate Banking and Currency Committee of the letter approved by the on February 24, 1950, to Chairman Maybank of the Senate Bank— a- d Currency Committee with respect to the bill S. 2943 which would create in the executive offices of the President the office of a small bilsitess c oordinator. However, he said it had been learned that the he411.4 on the bill originally scheduled for tomorrow had been post1351:1 "Yhich suggested that, since it was no longer urgent that a report be 8111)blitted at this time, it might be desirable to defer sending the letter to Chairm8r Maybank until reports could be prepared in connection lq% other proposals including the bills introduced by Senators OiMahoney 4°11411elle 'Ss 2975, a bill to establish corporations to assist financial illstitlIti°ns in making credit available to commercial and industrial and to provide capital for such enterprises, and S. 2947, bill to amend the Reconstruction Finance Corporation Act, as amended, ord er to Provide more effective financial assistance for small busi— Yhich the Board had been requested by the Senate Banking and /27/50 -4- etill'erleY Committee to comment. This suggestion was approved unanimously. M. Carpenter then referred to the discussion at the meeting 0/1 Februa/7 etsc°, for 44 of the application of American Trust Company, San Fran- permission to establish a branch in Woodland, California, and 4.64 a draft of telegram to Mr. Slade, Vice President of the Federal 11"ler*ve Bank of San Francisco, stating that the Board in approving the eetablisitment of the branch did so with the understanding that American l'Irlast Company would increase its capital during the year 1950 by $4 I1i11 0 i 11 as indicated in a letter from the Bank in connection with the aPplicatioa for a branch. bul'ing a discussion of the draft telegram the view was expressed thEt th e Board should not approve the establishment of the branch by 494ricala Trust Company until the bank made a written commitment to sell Ett St th 100,000 shares of additional stock for at least $4 million the next six months. This suggestion was discussed and it was understood that Mr. Millard would call Mr. Slade on the telephone and ask him to ascertain informally whether American Trust Company would be willing to make such a commitment. rt,t, Ill% Carpenter said that this morning he received a telephone call Mal°neY of the investigating staff of the House Appropriations Co„ ' 4411LiteA 4 -- 411 which the latter stated that the Committee was making a study ?kV% °t the -5- functions performed by the Federal Reserve banks as fiscal 111e4t8 for other agencies of the Government on a reimbursable basis for the Purpose of determining whether these services should be perfelted by the agencies themselves and that he would like to discuss the rneltter with members of the Board staff. Mr. Carpenter stated that, in the absence of objection, members of the staff would meet with Mr. lieti°11e7 and report to the Board the results of the discussion. At this point all of the members of the staff with the exception or Messrs. Carpenter, Sherman, and Kenyon withdrew, and the "taon stated with respect to each of the matters hereinafter referred taken by the Board: Minutes of actions taken by the Board of Governors of the Fed- erea Reserve System on February 24, 1950, were approved unanimously. Memorandum dated February 27, 1950, from Mr. Bethea, Director "th n; e -4-vision of Administrative Services, recommending the appoint-. Of RaYmond J. Martin as operator (duplicating devices) in that atialir : 14°11 a temporary basis for a period of three months, with basic khieh the t the rate of $2,450 per annum, effective as of the date upon enters upon the performance of his duties after having passed el161-1 Physical examination. Approved unanimously. 411at Letter to Mr. Denmark, Vice President of the Federal Reserve Or Atlanta, reading as follows: 25-3 2127/50 "In accordance with the request contained in your letter of February 17, 1950, the Board approves the ap— ointment of G. C. Jinks, Jr., Lewis King and Levings 611eY, at present assistant examiners, as examiners for the Federal Reserve Bank of Atlanta. "If the appointments are not made effective March 1, 1950 as planned, please advise us." t Approved unanimously. Letter to Mr. Woolley, Vice President of the Federal Reserve 40 of r "anaas City, reading as follows: In accordance with the request contained in your letter, _,.er of February 20, 1950, the Board approves the ap4 4 -1-utinent of W. B. Aker, at present an assistant examiner, ci4an examiner for the Federal Reserve Bank of Kansas r. Please advise us of the date upon which the ap— ' „j'-urtment becomes effective and also as to salary rate." Approved unanimously. 4pPtoyea: 0_ p Chairman.
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