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194 Minutes of actions taken by the Board of Governors of the -eral Reserve ystem on Tuesday, February 5, 1952. The Board met illthe Board Room at 10:30 a.m. PREEENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Evans Vardaman Powell Carpenter, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Thurston, Assistant to the Board Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Leonard, Director, Division of Bank Operations Mr. Vest, General Counsel Mr. Townsend, Solicitor Mr. Young, Director, Division of Research and Statistics Mr. Allen, Director, Division of Personnel Administration Mr. Hackley, Assistant General Counsel Mr. Youngdahl, Chief, Government Finance Section, Division of Research and Statistics Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Thomas presented a review of developments in the Government -es Market which was followed by a general discussion. At the sileeti°n of Mr. Vardaman, it was understood that henceforth Mr. Thomas %1°11141 exPand his regular reports to the Board to include comments with respect to trends in the volume or character of bank loans. With regard to a suggestion by Mr. Szymczak that a study be made r the effects of excess profits taxes on corporate borrowing, Mr. Young ite..tecl that a staff study of that problem was in process and that he 2/5/52 -2- 'loped to have it available within the near future. At this point Mr. Youngdahl withdrew from the meeting. Mr. Carpenter said that in accordance with the custom followed for several years delegations representing various itate bankers associa- ti0 118 w°uld be visiting Washington over the course of the next few months, thevisits of all but one of these groups being under the sponsorship of the Am erican Bankers Association. He recalled that it had been the practice of the Board to invite each of the groups for luncheon, and that the 1)11°gr'" included in most cases an economic presentation by Mr. Young or One c)f his associates in the Division of Research and Statistics. Mr. ea.rPenter went on to say that according to comments made indirectly by rel3r8884tatives of the associations the delegations would prefer to have az op POrtunity to meet entirely informally with members of the Board to I.E3c11 88 t off the record" any matters in which they might be interested. su ggested, therefore, that, if agreeable to the Board, plans might be 1484e pi ' - °11g those lines this year, with the understanding that if any delegation , ' 11dicated a desire for an economic presentation, Mr. Young or other Ilieraber 8 of the staff would be available for that purpose. Mr. Powell stated that he also had heard from representatives from the 1,_ ex. -can Bankers Association that the opportunity for informal discuswi ion th members of the Board would be appreciated by the Etate delegations. lie said that such discussions were customary when the groups visited 196 V5/52 the Pederl Deposit Insurance Corporation. Messrs. Martin, Fzymczak, and Evans agreed that informal discusWould he worthwhile and that the members of the Beard who were in ilir,ton at the time should, if possible, arrange their schedules to Irleet wtth the delegations following the luncheons. Mr. Vardaman said that he thought the visits were of much benefit Public relations standpoint, but that he continued to feel as he had When the visits were being considered earlier, that unless arrangenienta were made by the American Bankers Association to bring in several at one time the visits would become so numerous as to require an Mount of the time of the members of the Board. He proposed that it be m.A a special assignment of one Board member to work out, if possible, vith t1,0„ American Bankers Association a plan whereby delegations from tEtte . e in the same Federal Reserve District would come to Washington at the same time. Chairman Martin then suggested that for this year arrangements be. al°I1g the lines proposed by Mr. Carpenter, with the understanding that the 13°ard- would pay the cost of the luncheons served to the members of the cieleEationu. This suggestion was agreed to umnimously. Mr. Powell referred to discussion at the meeting on January 10, 1. 952 re 6ardi; a proposed bill which would eliminate certain statutory 2/5/52 rNuirements with respect to the capital required for admission of State ba'rlke to membership in the System and for the establishment and operation or domestic branches by member banks. At that time he stated that a let- ter expressing the views of the Federal Deposit Insurance Corporation with reePect to the proposed bill was expected shortly, and the Board had agreed that. ' 1 the Corporation expressed no substantial reservations, the Chair1811 should transmit the bill to the Chairmen of the Senate and House Bankand Currency committees. Mr. Powell reported that Chairman Martin on February 1, 1952 rea letter from Chairman Harl, of the Federal Deposit Insurance Corpora- ceive dated January 11, 1952 in which Mr. Hanl expressed objection to any 'which would reduce capital requirements for State member and national ILke. At Mr. Powell's request, Mr. Vest reviewed interagency discussion or the or bill, stating that in the summer of 1951 the Board obtained clearance e. draft from the Comptroller of the Currency and the Bureau of the Bud- '-t) that subsequently Mr. Lyon, Superintendent of Banks for the State of New ' 43rk, suggested a minor amendment which was incorporated and cleared 17 hlro 174411Y with the Bureau of the Budget, that the views of the Federal 13e1k) Bit Insurance Corporation were solicited regarding this change, and that the letter now received by Chairman Martin was in response to that 14cilairy. Mn, Vest also stated that according to advice from the Bureau of te Ildget, Mr. Hanl in a letter dated July 19, 1951, written in response 198 2/51)2 -5- to the Bureau's request for comment on the original draft of 1)111, had e l)reesed the same general views as contained in his letter of January 11' Mr. Vest said that in his opinion the objection of Mr. Earl was not founded since as far as admission to membership was concerned the bila would nrovide that where capital was to be less than required by elsting law a bank could not be admitted to membership unless it is, or 118'8 been) approved for insurance by the Federal Deposit Insurance Corpora4) also with respect to capital requirements for branches, the bill 14°111d merely strike from the National Bank Act the requirement of $500,000 and this would go no further than the provisions of the Federal Tposit Insurance Act, which allow that Corporation to approve out-of-town Ches for insured nonmember banks without any particular capital require- hollowing discussion of the procedure to be followed in the light (Ty Harl's letter, it was suggested that no further steps be taken ' 11E a review of the matter by Mr. Robertson, member-designate of the ' 4) Who had worked closely with the Federal Deposit Insurance Corporation 011 v . arlous other matters in his capacity as Deputy Comptroller of the Clzrrelicy. This suggestion was approved unanimously. In a memorandum dated December 26, 1951, the Personnel Committee 11E4 recommended that 1,./alter S. Byrne, General Manager of the Omaha Cliqj 2/5/52 -6Utilities District, Omaha, Nebraska, be appointed a Class C director of the Federal Reserve Bank of Kansas City for the unexpired portl°4 of the term ending December 31, 1953, if it were ascertained that he lould accept the appointment, and as Deputy Chairman of the Bank for the ea'1" 1952. bubseouently, a question was raised whether Mr. Byrne's posi- t104 Would contravene the Board's resolution of 1915 against officers and ectors of a Federal Reserve Bank holding political or public office, 6'14 Upon inquiry Chairman Caldwell of the Kansas City Bank had advised Carpenter by telephone that the utilities district was regarded as a " 1 ical subdivision and had been dealt with in that way, that some years Ilg° the district issued bonds which were treated as municipal bonds free „_ Elxation, that the whole operation was treated as if it were part of tile c that the manager was selected by the directors who were elected PoPular vote, and that the manager was regarded generally as a public ()Tricia,. There followed a discussion of the steps to be taken in the light or 0 114i11man Caldwell's comments, during which it was pointed out that when kr. t Yrne was appointed a director of the Omaha Branch in 1943, in which 11)e'eit,Y he served until 1949, it was with the understanding that his job ' 4Ete g business management position rather than a public office. Consideratt r 41co was given to the geographical composition of the Board of the 4.3as City Rank and to reasons why it was believed desirable to select a 200 2/5/52 -7- director from outside Kansas City. It was then suggested that the Personnel Committee review the situation in the light of the discussion at this meeting and make a further reco mmendation to the Board. This suggestion was approved unanimously. Mr. Townsend stated that counsel for respondent had requested that there be placed in the record as respondent's exhibit 399 in the matter "Transamerica Corporation a stipulation to the effect that the board of directors of that corporation at a special meeting on January 31, 1952 had declared a stock dividend payable in shares of common stock of Bank of 1111°11-ca. National Trust and Favings Association and that the payment of that 114 gend on January 31 had reduced the Transamerica ownership of shares in 4111 clf America to approximately 7.6 per cent of all of Bank of America's °14etanding shares. Mr. Townsend said that he was agreeable to such a ti1)111ation being made part of the record. Mr. Evans reported that he had asked Mr. Cherry, Assistant Counsel, 141s attending the regional Reserve Bank conferences relating to Regulatioh the 14, Consumer Credit, and Regulation Y, Real Estate Credit, to provide etaff of the Joint Congressional Committee on Defense Production with develop—u4a.rY of the results of the conferences, together with other time to time in connection with the regulations, so that the 114tttee would be fully advised of the manner in which the regulations 107 nAYA 2/ /52 were time -8- being administered and so that the Committee might raise at any such questions as it desired with respect to the regulations. All of the members of the staff then withdrew and the Board rervt into executive session. Following the executive session the Fecretary was advised that by unanimous vote the Board had ordered that the stipulation referred to by Mr. Townsend be entered into the record as requested on February 5, 1952. The actions stated with respect to each of the matters hereinafter "rerred to was then taken by the Board: Minutes of actions taken by the Board of Governors of the Federal 11"e17 e System on February 4, 1952, were approved unanimously. Memorandum dated January 30, 1951, from Mr. Young, Director, 8Lo11 of Research and statistics, recommending that the resignation je 'lle M. Lashley, Clerk-Typist in that Division, be accepted to be eNctive, in accordance with her request, at the close of business 41111847 30, 1952. Approved unanimously. Memorandum dated February 4, 1952, from Mr. Bethea, Director, bt of Administrative Services, recommending that the temporary a 1/1/rtMent of Angelina M. Ferguson, Cafeteria Helper in that Division, be et erided for a period of one month from February 7, 1952, with no c}1414, in her basic salary at the rate of $2,420. Approved unanimously. 20? 2/5/52 -9Letter to Mr. 1\iltse, Vice President, Federal Reserve Bank of 4w York, reading as follows: "In accordance with the request contained in your letter of January 28, 1952, the Board approves the appoint111ent of Allen F. Peterson as an assistant examiner for the Federal Reserve Bank of New York, and the designations of Henry O. Green and Edward F. Odell as special assistant e xaminers. "Please advise us of the date upon which the appointment of Mr. Peterson is made effective." Approved unanimously. Letter to Mr. rtetzelberger, Vice President, Federal Reserve Bank of Cleveland, reading as follows: lg s.uipmialej erence is made to your letter of January 29, 1952, for approval of the Board of Governors the change location of its North Canton Branch by The Harter Bank & .rust 0 -omPany, Canton, Ohio, from 107 South Main Street to 39 South Main Street, North Canton, Ohio, to become effective as of February 11, 1952. It is noted that approval of the appropriate state aut horities has been obtained and it is assumed that the bank' • s investment in the new quarters of the branch will rt bring the total investment of the institution in bankPremises to an amount exceeding its present capital stock. The Board will interpose no objection to the removal of the Ilanch as indicated." Approved unanimously. Memorandum dated February 1, 1952, from Mr. Carpenter, Secretary Of he 11°Ird, recommending the destruction of certain material in the 203 2/5/52 -10- S files, as listed in attachments to the memorandum, according to stated destruction schedules. Approved unanimously. et y.
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