Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, February 5, 1946, Volume 33, Part 1

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170

A meeting of the Board of Governors of the Federal Reserve Systern was

held in Washington on Tuesday, February 5, 1946, at 10:30 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Ransom, Vice Chairman
Szymczak
McKee
Draper
Evans

Mr. Carpenter, Secretary
Mr. Connell, General Assistant, Office
of the Secretary
Mr. Morrill, Special Adviser
Mr. Thurston, Assistant to the Chairman
The action stated with respect to each of the matters hereinatter r
eferred to was taken by the Board:
The minutes of
the meeting of the Board of Governors of the
Reserve System held on February 4, 1946, were approved unani41011814,..

Memorandum

dated February 1, 1946, from Mr. Bethea, Director
the h
vivision of Administrative Services, recommending that Benjamin
R. Ilea,.
"13.1.1gy who has been on military leave, be reinstated in his posiOt

tiOn

a8 guard in
that Division, with basic salary at the rate of
42,3.00
Per armum, effective as of the date upon which he enters upon
the
"
P
)Itance of his duties after having passed the usual physical
ation.
Approved unanimously.
Letter to Mr. Creighton, Chairman of the Federal Reserve Bank
°t 18°eto
112 reading as follows:




-1_

2/5/46

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"The Board is pleased to learn that your Bank has arranged to retain the services of Yr. Ralph E. Flanders in an
advisory capacity along the lines you discussed informally
Tlith the Board
some time ago. The Board approves payment of
Salary to Mr. Flanders, effective March 1, 1946, as Consultant to the Board of Directors at the rate of $200 per
month, which is the rate fixed by your directors as reported
in Your letter of January 28, 1946."
Approved unanimously.
Letter to Mr. Neely, Federal Reserve Agent at the Federal ReBee

Bank of
Atlanta, reading as follows:

"The appointment of Messrs. J. Val Westerhaus and D. J.
Due,„
,
1 4-7us as your representatives at the New Orleans Branch,
is the subject of your letter of January 16 and of
the
Board's reply of January 28, has been reconsidered in
,ne light of the information furnished by Mr. Clark in his
t,elePhone
conversation last Friday, February 1.
Du "With the understanding that Messrs. Westerhaus and
b eamus have nothing whatever to do with currency, as stated
ilitr Mr. Clark, the Board of Governors approves their appoint°
as
;_itsr Leans Federal Reserve Agent's Representatives at the New
Branch.
"This approval is given with the further understanding
FederLiessrs. Westerhaus and Ducamus will be placed upon the
sirral Reserve Agent's payroll and will be solely respontout
le t° him or, during a vacancy in the office of the Agent,
--e Assistant Federal Reserve Agent, and to the Board of
117ternors, for the proper performance of their duties. When
Res engaged in the performance of their duties as Federal
of
e Agent's Representatives they may, with the approval
Aes:ne Federal Reserve Agent or, in his absence, of the
perl
istant Federal Reserve Agent, and the Managing Director,
such work for the Branch as will not be inconsistent
with°114
duties as Federal Reserve Agent's Representatives.
trienth Since, according to the usual procedure, salaries of
13e ?rs of the Federal Reserve Agent's staff require the
110(c
approval of the Board, and on the assumption that
ap 2.ange in salaries is contemplated in connection with the
sj-lntments, the Board of Governors approves the payment of
AgerTes to Messrs. Westerhaus and Ducamus as Federal Reserve
rat -3 Representatives at the New Orleans Branch at the
es of $2,820
and $2,400 per annum, respectively, which are




2/5/46

-3-.

"the rates shown in the salary list as of January 1, 1946,
enclosed with Mr. McLarin's letter of January 25.
"Messrs. Westerhaus and Ducamus should execute the
1.1sual oaths of office which should be forwarded to the Board,
together with advice of the effective date of the appoint—
ments.
"Since the titles of Vault Custodian and Assistant Vault
Custodian
might well imply that Messrs. Westerhaus and Ducamus
have custody of both cash and securities, it is suggested for
Your consideration that some change in their regular titles
might be
advisable."
Approved unanimously.
Letter to Mr. Attebery, Vice President of the Federal Reserve
13ank of

St. Louis, reading as follows:

"This refers to your letter of January 25 regarding the
.12en!1ty of $14.55 incurred by Holland National Bank, Holland,
itridana,
as a result of a deficiency in reserves for the
period ended September 15,
1945.
1the circumstances stated in your letter, the Board
authorizes your Bank to waive this penalty."
Approved unanimously.
Telegram
to Mr. Volberg, Vice President of the Federal Reserve
tara,

P

k)an Francisco, reading as follows:
13a

"Relets January 28. In view your recommendation Board
r°1rea establishment and operation of two branches as
4?
1,
(
)
,Bed in San Mateo, California, by American Trust Company,
l'rancisco, California, with understanding that counsel
the Reserve Bank will review and satisfy himself as to
lee
galitY of all steps taken to establish the branches."

4

Approved unanimously.
Letter to the Presidents and Chairmen of all the Federal Re8

reading as follows:

Boa 7Jnder present practice and in accordance with the
taZ 8 Regulations Relating to Branches of Federal Reserve
an officer in charge of a branch who is a Vice




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-4-

"President of the Reserve Bank is not also a member of the
board of directors of the branch, although an officer in
Charge of the branch who is Managing Director is a member of
the
branch board.
"The inconsistency of this distinction is apparent.
Even more inconsistent is the fact that the officer in charge
(
,
)f a branch, if a
Managing Director, is a member of the
branch board, whereas the President, who is the chief execuofficer of the Reserve Bank, is not a director of the
,ank
"Accordingly, the Board has amended its Regulations,
effective January 1, 1947, to eliminate the office of Manag113ing Director and to provide that the officer in charge of a
ranch shall not be a member of the branch board of directors, If the
officer in charge is not a Vice President of
2e Reserve
Bank, he will have the title of Manager or such
nher title not
including the word 'Director' as may be fixed
athe Reserve
Bank. To conform with this amendment, the
ti Y changes in the text of the Regulations are the eliminas
;
e0
cfi=s7lion (c) of section 3, minor modifications in
and (e) of section 3 and in subsection (b)
Of
section 4: and a revision of subsection (a) of section 4al
fe ,."Enclosed is a
copy of the Regulations as revised efthulve January 1, 1947. Notice of the revision is given
Mari8 far in advance in order that those Banks which have
,
1 aging
their branches may prepare
1-4-ans forDirectors in charge of
next year."

Z

Approved unanimously. The text
of the Regulations relating to the
Branches of Federal Reserve Banks as
amended effective January 1, 1947,
read as follows:
branc7hese regulations, governing the operations of all
toa„
"es of Federal Reserve banks, are prescribed by the
ax,"4 of Governors of the Federal Reserve System (hereinerred to as the Board of Governors) under authority
ovisis of section 3 of the Federal Reserve Act.
"SECTION 1. NAMES uF BRANCHES AND TERRITORY SERVED
(a) Names of branches. - Each branch shall include in
its j
the ltle the name of the city in which it is situated and
as'name of the Federal Reserve bank of which it is a branch,
Dtroit Branch of the Federal Reserve Bank of Chicago.'
pede 'OD) Branch territorz. - No change shall be made by any
rel Reserve bank in the territory included within the




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2/5/46
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"district served by any of its branches, except with the approval or upon the direction of the Board of Governors.
"SECTION 2. AUTHOLITY AND FUNCTIONS
"No substantial change shall be made by any Federal Reserve bank
in the authority of or functions performed by any
.,
)
c its branches,
except with the approval or upon the direction of the
Board of Governors.
SECTION 3. DIRECTORS
"(a) Number of directors. - The board of directors of
each branch
of a Federal Reserve bank shall consist either
°_fl seven members or of five menbers, as may be determined by
e Federal Reserve
bank, subject to the approval of the
of Governors. Where the board of directors of the
branch consists of
,;'_ahch
seven menbers, four shall be appointed by
'
41e Federal
Reserve
bank and three by the Board of Governors,
and, where
the board consists of five members, three shall
appointed by the Federal Reserve bank and two by the
1100ard
of Governors.
be
son(1D) ualiacati;(21.L
s.:2
1di.- All directors shall
01 4,Ls
of high character and standing who have estab;Jed
reoutations and ability to meet their financial oblii:L i°118- They shall be persons whose business and financial
are primarily within and representative of the
oz-noh
branch territory
rather than of interests controlled or owned
:side the
territory. The directors appointed by the Fed..Reserve banks shall be Dersons who are either well
co,f.fied and experienced in banking or actively engaged in
agriculture or some other industrial pursuit. The
ie;r;rt'e:14 appointed by the Board of Governors shall be
s_sons who are actively engaged in commerce, agriculture,
siT other
industrial pursuit, or the practice of a profesaretil who are not primarily engaged in banking and preferably
No le't directors of banks, although they may be stockholders.
of a Federal Reserve bank shall serve as a director of
as
a branch of the bank during the period of his service
shal director of
the Federal Reserve bank. All directors
t4zens of the United States and shall reside within
tdhtles
It.e1;7-i-etO
served by the branch, but at least one of the
out:n°rs appointed by the Federal Reserve bank shall reside
ue of the city in which the branch is located.
t1(
c) Te_rnisof directors. - The term of office of directors 3hall be
three years where the branch board consists of
seven
or f members
and two years where the branch board consists
rota :
lre members. In order to make practicable an orderly
of branch directorships, the terms of directors shall
be
sO1°11
arranged
that the term of one director appointed by the

4




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2/5/46

—6—

"Board of Governors shall expire at the end of each year and
;he term of
at least one director appointed by the Federal
eserve bank shall expire at the end of each year.
n(d) Directors with six or more years of continuous
.
_ No director shall be reappointed as a director if
reappointment is to become effective within a period of
two
:I° Years immediately following six or more years of continuous service
at any branch having five directors or within
!_period of three years immediately following such service at
anY branch
having seven directors.
"(e) Chairman. - The Federal Reserve bank shall provide
i()_r the annual designation, in such manner as it may prescribe,
°r one of the
members of the board of directors of each branch
ted by the Board of Governors as the chairman of the
aPPoinboarci
"(f) Vacancies. - In the event of a vacancy occurring in
board of directors of a branch of a Federal Reserve bank,
the
blaPPointment to fill such vacancy shall be made by the
the original appointment and such appointment
• all be
for the unexpired term.
H(g) Removal f directors. - As provided in section 3 of
the pederal Reserve
o Act, directors of branches of Federal Rep_
banks hold office during the pleasure of the Board of
`'
4 vernors.
"(h) Meeti
- The board of directors of each branch
°I-L1 meet once a
month during, at least ten months in each
rallenclar year. A
special meeting may be called at any time
accordance with such procedure as the Federal Reserve bank
Y
Prescribe.
the 1,"(1)
- A majority of the board of directors of
b4s.uranch shall constitute a quorum for the transaction of
ti,„l
_ness, but less than a majority may adjourn from time to
-lilt until a
quorum is in attendance.
\
be .0) Pees and allowances. - The fees and allowances to
Ofto directors of the branch for attendance at meetings
thethe board of
directors of the branch or any committees of
to tibiranch shall be fixed by the Federal Reserve bank subject
aPproval of the Board of Governors.
PerVjse(k) Powers. - The board of directors of the branch shall
•
the operations of the branch subject to the direcancl+,and control of the Federal Reserve bank of the district
'
ne regulations of the Board of Governors.
"SECTION 4. OFFICERS
nr_N
desi ka.) Officer in charge. - The Federal Reserve bank shall
and E"te an officer to be the active manager of the branch
"e shall not
be a member of the board of directors of the




2/5/46

—7—

"bra
If the officer in charge is not a Vice President of
the Federal
Reserve bank he shall have the title of 'Manager'
or such other title not including the word 'Director' as may
be fixed
by the Federal Reserve bank.
"(b) Other officers. - The Federal Reserve bank shall
aPpoint such officers for each branch, in addition to the
44ficer in charge of the branch, as the bank from time to
, 11e deems necessary. Such officers shall perform such
:0,tuties as may be prescribed, with the approval of the Federal
ervc bank, by the board of directors of the branch or by
4.,.
11e officer in charge. In accordance with the provisions of
!"e Federal Reserve Act, all officers of a branch shall be
nbject to removal by the Board of Governors and any compensan provided for officers or employees of any branch shall
be
subject to the approval of the Board of Governors.
"SECTION 5. SUPPLFMENTAL INSTRUCTIONS
ad "Each Federal Reserve bank may issue instructions or
v °13t by-laws, not inconsistent with the law or these regula0-°ns, containing such further provisions with regard to the
Peration of its branches as it may deem advisable."

j




Thereupon the meeting adjourned.

Vice

hairman.