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Ameeting of the Board of Governors of the Federal Reserve SYstea was held in Washington on Tuesday, February 7, 1939, at 4:30 PRESENT: Mr. Eccles, Chairman Ransom, Vice Chairman Mr. Szymczak Mr. McKee Nh.. Davis Mr. Draper Mr. Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mt. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Dreibelbis, Assistant General Counsel Mr. Wingfield, Assistant General Counsel Mr. Ransom referred to a memorandum addressed to the members of t14"oard by Mr. Ningfield under date of February 6, 1939, relating to the Provisions in the Barkley Trust Indenture Bill (S.477) with respect to the use by the Securities and Exchange Commission of information esteited in reports of examination of banks. The memorandum pointed 014 that the bill authorized the Securities and Exchange Commission, 1/1 Eld,. ' ltion to obtaining information from bank supervisory agencies, to -''e its own investigations of banks named as trustee in trust inet --es for the purpose of deternining in any case whether or not the 111'°13o sed trustee was qualified and that no obligation was imposed upon tlie °mmission by the bill to treat as confidential any information o btained although the bill did require that information obtained 177 2/7/39 -2- from bank supervisory agencies be not divulged except in confidence to the Attorney General of the United States. Mr. Ransom stated that the memorandum had raised a question in Mr. Draper's mind whether the language of the bill, in the light of recent developments in connecti°4 with the order issued by the Securities and Exchange Commission t° Transamerica Corporation to show cause why its stock should not be delisted from national securities exchanges, adequately protects the e(Infidential nature of information contained in reports of examination r benks made by examiners for bank supervisory agencies and that this 'fleeting had been called to consider whether a further amendment to the bill should be recommended. In this connection 'Mr. Ransom said that he and members of the Ikarri 8 staff had held numerous conferences during the last three ears with Chairman Douglas and other representatives of the Securities and Exchange Commission, that Mr. Douglas had been very cooperat1 7e in considering changes in the bill suggested by the Board's liel)l ' esentatives, and that he (Mr. Ransom) felt that if an amendment wel.e to be recommended it should be sent to Mr. Douglas promptly so the.t he would have an opportunity to present it to the Senate committee bero._e 4' hearings on the bill which are now being conducted by the cam- 'qttee are concluded. Be added that it is expected that the hearings '11.1 be closed tomorrow or the next day and that any action to be taken ell°11-1(1 be decided upon by the Board immediately. , 2/7/39 In the ensuinef discussion of the pertinent provisions of the til1/4 indenture bill it was suggested that the existing confusion in the situation with respect to examinations of banks by Federal super18°17 authorities would be increased by granting further authority to the Securities and Exchange Commission to make independent investigations Qf banks and that an amendment to the trust indenture bill should be 131 'c/Posed which would require the Securities and Exchange Comaission to btein desired information with respect to banks examined by the Board, the 0 omptroller of the Currency, or the Federal Deposit Insurance Cor%ration from those agencies. It was agreed unanimously to request Counsel to draft a form of amendment along the lines suggested during the discussion for consideration at a meeting of the Board to be held tomorrow at 10:30 a.m. At this point Messrs. Thurston, Wyatt, Dreibelbis and Wingfield left the meeting and the action stated with respect to each of the tfletters hereinafter referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Reserve System held on February 6, 1939, were approved unani- rack iy. Memorandum dated February 3, 1939, from Mr. Noell, Assistant Zeel, "erY, recommending, with the concurrence of Mr. Morrill, that All-rite-Arden Ball, a temporary file clerk in the Office of the 179 2/7/39 -4- Secretary, be transferred to the stenographic section of the Secretary's °rfice as a stenographer on a permanent basis, with Ealary at the rate Of 1,3() per annum, effective as of February 16, 1939, subject to her P"sing satisfactorily the usual physical examination. Approved unanimously. Memorandum dated February 3, 1939, from Mr. Morrill recommend14g that, for the reason stated in the memorandlim, the appointments listed below be made in the Building Operation and Maintenance Section (It the Secretary's Office, with salary at the respective rates shown, 411 to be effective as of the dates upon which the respective employees exit "uPon the performance of their duties after having passed satisr"torilY the usual physical examination: Royal Joseph Murphy Chester Barrett Dampley Harry Eugene Kern Percy Clinton Piston marble maintainer painter porter porter 0_,800 per annum 1,500 " " ft 1,080 TT 1,080 Approved unanimously. Letter to Mr. Gidney, Vice President of the Federal Reserve telik Of New York, reading as follows: "In accordance with the request contained in your letter of January 26, the Board approves the appointments of Lawrence E. Quackenbush and George C. Smith, at present sistant examiners, as examiners for the Federal Reserve .11k of New York, and the appointments of Richard C. ConOily, Frederick W. Forberg, William F. Holland and Nathan Muzzy, as regular assistant examiners. The Board aproves also the designation of John T. Lamont as an assis-usnt examiner in order that he may lend clerical assistance r 80 2/7/39 -5- "in examinations, such approval being on the understanding that he will not be transferred permanently to examining work without the Board's approval." Approved unanimously. Letter to Mr. Young, Vice President of the Federal Reserve Bank Of Chicago, reading as follows: "In accordance with the request contained in your letter of February 4, the Board approves the designations aS assistant examiners of John George, Walter Mack and Levi Johnson, employees of the Detroit Branch, such designations being in order that they may lend clerical assistance to your regular examiners. Approval is given With the understanding, of course, that the employees listed vall not be transferred permanently to examining work without the Board's approval." Approved unanimously. Letter to Mr. Martin, President of the Federal Reserve Bank of St. Low. , s reading as follows: "In view of the circumstances set forth in your letter of February 1, 1939, the Board approves the payment Of a salary to Mr. O. C. Phillips, formerly an Assistant Cashier, at the rate of c4,200 per annum, which is Z,.600 in excess of the maximum annual salary provided in the Personnel classification plan of your bank for the positlon of Head of Money Department, to which Mr. Phillips has been transferred." Approved unanimously. Letter to the board of directors of "The Gnadenhutten Bank", enhutten, Ohio, stating that, subject to conditions of membership Zlizzb -red 1 to 3 contained in the Board's Regulation H, the Board 1E_ 2/7/39 -6- ePProves the bank's application for membership in the Federal Reserve SYsten and for the appropriate amount of stock in the Federal Reserve 13artk of Cleveland. Approved unanimously, together with a letter to Mr. Fleming, President of the Federal Reserve Bank of Cleveland, reading as follows: "The Board of Governors of the Federal Reserve System approves the application of 'The Gnadenhutten Bank', Gnadenhutten, Ohio, for membership in the Federal Reserve SYstem, subject to the conditions prescribed in the inclosed letter which you are requested to forward to the board of directors of the institution. TWO copies of such letter are also inclosed, one of which is for your files and the other of which you are requested to forward to the Superintendent of Banks for the State of Ohio for his information. "Since the losses classified in the report of examination for membership are only nominal in amount, the usUal condition of membership regarding the elimination Of estimated losses has not been prescribed. "If the bank completes its membership it is assumed that the matter of bringing the handling of time and savings deposits into conformity with the provisions of State laws and the Board's regulations, which matter is referred to i the examiner's comments on page 2 of the report, Will be followed for the necessary corrective action. "It has been noted that the officers of the bank, and all of the active employees are officers, are bonded °nly in the amount of :'1,000 each and that the Federal usposit Insurance Corporation has been endeavoring to lave the bonds increased. It is felt that the coverage is entirely inadequate and it is suggested that you discuss with the management the desirability of providing additional protection in this respect. "The copies of the bank's articles of incorporation and certificate of authority to commence business, subnoitted with its application, have not been certified by the appropriate State official as required by the Board's 1_82 2/7/39 -7- "Form 83A. In this instance, no farther action need be taken if, as we assume, you are satisfied that the articles Of incorporation have not been amended. In future cases, however, it will be appreciated if you will obtain a certificate from the appropriate State official to the effect that such documents are true copies and include copies of all amendments to the articles of incorporation to date." Thereupon the meeting adjourned. Secretary. Chairman.
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