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34 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Tuesday, Tanuary 11, 1938, at 10:45 a. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. amead, Chief of the Division of Bank Operations Mr. Dreibelbis, Assistant General Counsel Mr. Piser, Senior Economist in the Division of Research and Statistics Reference was made to the fact that in some instances the same individual has served in the dual capacity of director of a Federal reserve bank and director of a branch of the bank and the question was raised as to the desirability of such appointments. The members of the Board were unanimous in their opinion that such dual service was not desirable and after a consideration of the various aspects of the matter the suggestion was made that the regulation of the Board with respect to the appointment of directors of branches of Federal reserve banks should be amended so that such appointments would not be made in the future. 35 1/11/38 -2In accordance with the above suggestion, Mr. Davis moved that the regulation with respect to the appointment of directors of branches be amended by adding at the end of the second paragraph of the regulation a sentence reading as follows: "No director of a Federal reserve bank shall be appointed to serve as a director of a branch of the bank during the period of his service as a director of the Federal reserve bank." Carried unanimously. At this point Messrs. Goldenweiser and Piser left the meeting. There was then presented a memorandum dated January 11, 1938, from Mr. Snead with respect to advices received by the Board of proposed salaries for officers of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Chicago, St. Louis, Dallas and San Francisco for the Year 1938. Information relating to action taken by the directors of the remaining banks concerning officers salaries for the current year had not been received. After consideration of the information submitted by Mr. Snead, the following salaries of officers of Federal reserve banks for the year 1938, fixed by the boards of directors of the respective banks were approved unanimously: Federal Reserve Bank of New York Name G. L. Allen W. R. L. R. W. S. Barrison Sproul Burgess Rounds Logan Title Presi dent First Vice President Vice President Vice President Vice President & General Counsel Salary $50,000 30,000 30,000 30,000 25,000 36 1/11/38 Federal Reserve Bank of New York (cont'd) Name R. M. Gidney J. H. Williams L. W. Knoke C. H. Coe W. H. Dillistin J. W. /ones W. B. Matteson Z. M. Rice H. V. Roelse Arthur Phelan H. H. Kimball Valentine Willis J. A. w. F. Mitchell Sheehan E. C. French D. H. Barrows is W. Waters W. A. Scott R. F. McMurray D. J. Cameron M. C. McCahill W. W. Burt E. C. Douglas S. A. Miller C. N. Van Houten Horace Sanford N. I. R. T. W. F. G. P. B. J. G. F. T. W. Davis Smith Trimble Tiebout Treiber Davis Ferguson Title Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President & Secretary Assistant Vice President Manager, Credit Department Manager, Bank Examination Department Manager, Cash Department Manager, Personnel Department Manager, Cash Custody Department Manager, Government Bond Department Manager, Safekeeping Department Manager, Foreign Department Manager, Service Department Manager, Accounting Department Manager, Bill Department and Collection Department Manager, Securities Department Manager, Security Custody Department Manager, Research Department and Assistant Secretary Manager, Security Loans Department Manager, Bank Relations Department Assistant Counsel Assistant Counsel Assistant Counsel Assistant Counsel General Auditor Salary 420,000 22,000* 17,500 15,000 15,000 14,000 14,000 13,000 12,000 9,000 8,500 10,000 12,000 12,000 10,000 9,000 9,000 8,500 8,000 8,000 7,500 7,000 7,000 6,500 7,000 6,500 6,500 5,500 11,500 7,700 6,200 5,900 9,000 Buffalo Branch R. M. O'Hara R. B. Wiltse Managing Director Assistant Manager t12,000 9,000 1/11/38 -4Federal Reserve Bank of New York (contld) Buffalo Branch (cont'd) Name Salary Title H. W. Snow, Jr. C. L. Blakeslee $7,000 5,500 Cashier Assistant Cashier *During period of part time service to the bank, which will involve Mr. Williams' spending two days a week at the bank, Salary paid him by the bank will be at the rate of one-third of his regular annual salary. Federal Reserve Bank of Philadelphia F. J. Drinnen C. A. McIlhenny W. J. Davis E. C. Hill W. G. McCreedy L. E. Donaldson C. A. Sienkiewicz J. M. Toy G. X. Morris A. E. Post R. M. Moore MacCoy, Brittain, Evans and Lewis First Vice President Vice President and Cashier Vice President Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Cashier Assistant Cashier Secretary General Auditor Counsel $15,000 13,200 12,000 10,000 9,000 6,000 6,500 8,000 6,500 3,500* 5,000 (retainer) 2,500 *Also receives $4,500 per annum as Assistant Federal Reserve Agent. In connection with the salaries fixed by the board of directors Of the Federal Reserve Bank of Philadelphia, consideration was given to a letter dated January 8, 1938, from Mr. Joseph Wayne, Sr., Class A direet°r of the bank, which stated that, subject to the approval of the 1 of " 18 'd Governors, the board of directors of the bank had fixed a salary at the rate of $27,000 per annum for Mr. Sinclair as President of the bank for the year 1938. 38 -5It was agreed that Mr. Wayne should be advised that the Board was not willing to approve .a salary at the rate of ',27,000 per annum for Mr. Sinclair but would approve a salary for the year at a rate fixed by the board of directors not exceeding :25,000 per annum. Federal Reserve Bank of Cleveland Name M. F. W. G. I% C. R. E. A. R. F. J. Fleming J. Zurlinden H. Fletcher H. 'Wagner F. Taylor W. Arnold B. Hays A. Carter G. .Oster F. X. Smith V. Grayson Squire, Sanders & Dempsey Title President First Vice President Vice President Vice President Vice President and Cashier Assistant Vice President Assistant Vice President & Secretary Assistant Cashier Assistant Cashier Assistant Cashier Auditor Counsel (retainer) Salary ;-325,000 18,000 14,000 11,000 10,000 8,200 8,000 6,700 6,700 5,000 8,000 5,000 Cincinnati Branch , .13. T. Lazar N. Ott R. G. Johnson P. T. Geers Managing, Director Cashier Assistant Cashier Assistant Cashier S9,000 6,500 4,400 4,000 Pittsburgh Branch P. D. P. C. A. Brown B. Clouser E. Cobun J. Bolthouse Managing Director Cashier Assistant Cashier Assistant Cashier 0,000 8,000 5,500 5,400 Federal Reserve Bank of Chicael G. J. Schaller Preston H. Snyder C. S. You. President First Vice President Vice President and Cashier Vice President and Secretary 000 25,000 17,500 16,000 39 1/11/38 -6Federal Reserve Bank of Chicago (contid) Name X. H. Dillard W. C. Bachman 0. J. Netterstrom A. P. Sihler A. L. Olson N. B. Dawes J. C. Callahan J. G. Roberts F. L. Purrington Fred Bateman F. A. Lindsten C. M. Saltnes L. G. Meyer A. M. Black X. L. Sweet C. B. Dunn J. J. Endres Title Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President and Assistant Secretary Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Manager, Planning Department Manager, Research and Statistics Department General Counsel Auditor Salary 12,000 9,000 9,000 9,000 8,000 7,000 6,750 6,750 6,500 6,000 6,000 6,500 6,000 6,000 5,400 12,000 7,000 Detroit Branch R. H. Buss H. J. Chalfont U. L. Diehl Managing Director Cashier Assistant Cashier ,12,600 8,500 5,000 Federal Reserve Bank of St. Louis W. Mc. Martin F. G. Hitt 0. M. 3. S. Attebery Wood C. M. Stewart A. H. Haill S. F. F. N. Gilmore Ball G. 0. Hollocher 0, C. L. H. Phillips A. E. Bailey Debrecht President First Vice President Vice President Vice President Cashier and Secretary Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier General Auditor Assistant Auditor 20,000 18,000 15,000 15,000 10,000 7,500 7,000 6,000 4,500 4,500 6,000 3,900 40 1/11/38 -7Federal Reserve Bank of St. Louis (cont'd) Little Rock Branch Name A. F. Bailey M. H. Long Clifford Wood Salary Title 0,000 4,800* 3,900 Managing Director Cashier Assistant Cashier Louisville Branch C. A. Schacht S. B. Jenks Managing Director** Cashier Assistant Cashier V,000 4,000 Memphis Branch W. H. Glasgow S. K. Belcher C. E. Martin $10,000 5,300 4,800 Managing Director Cashier Assistant Cashier .1Vntil close of business July 31, 1938. **Managing Director Moore retired on December 31, 1937. In connection with the proposed official salaries at the Fed"al Reserve Bank of St. Louis, Mr. Smead presented a letter dated 3-1111ilarY 8, 1938, from Mr. Nardin, Chairman, in which it was stated that the board of directors had passed a resolution authorizing the executive committee of the bank to seek counsel for the bank and authorizing the retention of Mr. T. G. McConkey in an advisory capacity until such time as new counsel was selected. The letter inquired whether the Board would approve of such action, it being understood that the bank would Proceed Immediately to seek new counsel and would make a selection as soon as a suitable man could be found. Reference was made to 41 the Board's telegram of December 15, 1937, and letter of December 23, 1937, to Mr. Nardin advising him in substance that the Board would not approve a salary for Mr. McConkey as Vice President and General Counsel of the bank beyond the end of 1937, and the opinion was expressed that the Board should not approve any arrangement that would in effect defeat this position or the purposes of the Retirement System in providing for retirement of employees of Federal reserve banks after the age of 65. At the conclusion of the discussion, the Secretary was requested to communicate with Mr. Nardin by telephone advising him of the Board's position in the matter and that before final action was taken the Board would wish to be advised of the details of the arrangement which it was proposed to make with Mr. McConkey. Federal Reserve Bank of Dallas Name B. R. R. W. W. E. L. R. W. A. McKinney R. Gilbert B. Coleman X. Evens O. Ford B. Austin G. Pondrom O. Webb P. Clarke Locke, Locke, Stroud and Randolph Title President First Vice President Vice President and Cashier Vice President and Secretary Assistant Vice President Assistant Cashier Assistant Cashier Assistant Cashier General Auditor Counsel (retainer) Salary $30,000 15,000 11,000 9,000 9,500 6,600 6,000 6,000 7,000 9,000 El Paso Branch X. . Hermann Lle SaYles Managing Director Cashier 46,000 4,200 42 1/11/38 -9Federal Reserve Bank of Dallas (cont'd) Houston Branch Name W. D. Gentry H. R. DVoss Title Managing Director Cashier Salary 48,000 4,500 San Antonio Branch M. Crump W. 2. Eagle Managing Director Cashier $7,500 4,500 Federal Reserve Bank of San Francisco Vi, A. Day Ira Clerk S. G. Sargent W. M. Hale C. E. Earhart H. N. Mangels C. D. Phillips E. C. Mailliard J. M. Osmer H. F. Slade P. H. Holman R. T. Hardy W. V. Volberg A. C. Agnew President First Vice President Vice President and Secretary Vice President Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier General Auditor Assistant Cashier Auditor (retainer includes k)2,400 Counsel for clerk hire) $25,000 18,000 15,000 14,000 9,000 6,600 6,300 5,200 5,500 5,200 7,500 5,200 4,500 12,400 Los Angeles Branch W. H. M. L. N. Ambrose M. Craft McRitchie C. Meyer Managing Director Assistant Manager Assistant Manager Assistant Cashier 40,000 6,600 5,500 4,800 Portland Branch R. B. West S. A. X. P. MacEachron Blanchard Managing Director Assistant Manager Assistant Cashier (d7,500 5,3,00 4,500 Salt Lake City Branch . Partner Managing Director $7,500 43 -10Federal Reserve Bank of San Francisco (cont'd) Salt Lake City Branch (cont'd) Name J. M. Leisner W. M. Scott Title Assi etant Manager Assistant Cashier Salary 0,400 3,900 Seattle Branch C. R. Shaw B. A. Russell Managing Director Assistant Manager 500 4,800 Spokane Branch D. L. Managing Director F. C. Davis$7,500* Bold 5,500 Assistant Manager *Also joint Manager at Seattle branch. At this point Messrs. Thurston, Wyatt Smead, and Dreibelbis left the meeting and consideration was then given to each of the matters hereinafter referred to and the action stated with respect thereto was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on January 10, 1938, were approved unanimoUsly. Memorandum dated January 8, 1938, from Mr. Morrill stating that Mrs. Mary B. Marshall, whose permanent appointment as a charwoman On the Board's staff and admission to the Retirement System of the /'ederal Reserve Banks subject to her passing satisfactorily the usual PhYsical examination based on an examination for life insurance at 44 1/11/38 -11- the normal rate was approved by the Board on December 28, 1937, was unable to pass the examination, but the examining physician had reported that she would be acceptable for insurance at a rate of 1/2 to 1 percent higher than the normal rate, and that insurance on that basis could be issued with safety. The memorandum recommended that, in the circumstances, the permanent appointment of Mrs. Marshall be approved, With the understanding that she would be admitted to the Retirement System as of January 1, 1938. Approved unanimously. Letter to the board of directors of the "Farmers State Bank of Yale, Yuma, Colorado, stating that, subject to the conditions of membership numbered 1 to 3 contain ed in the Board's Regulation 11 and the followin g additional condition, the Board approves the bank's application for membership in the Federal Reserve System and for the appropriate amount of stock in the Federal Reserve Bank of Kansas City: "Such bank shall make adequate provision for depreciation in its banking house and furniture and fixtures." The letter also contained the following special comments: "It is reported that, due to the growth in deposits, anIncrease in the combined capital and surplus of the bank 10115, be necessary in order to meet the requirements of the laws of the State of Colorado, and that it is your intention to continue to conserve earning for the purpose of s Providing such increase. The application for membership Iii the Reserve System has been approved with the understanding that the capital and surplus of the bank will be brought 45 1/11/38 -12- "into conformity with the requirements of State law within a Short time, either through the application of current earnings or from other sources. In this connection, your attention is called to the provisions of condition or membership numbered 2 regarding the maintenance of adequate capital." Approved unanimously, together with a letter to Mr. Hamilton, President of the Federal Reserve Bank of Kansas City, reading as follows: "The Board of Governors of the Federal Reserve System approves the application of the 'Farmers State Bank of_Ylima', Yuma, Colorado, for membersh ip 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 State Bank Commissioner for the State of Colorado for his information. "It has been noted that the basis for the classification in the report of examination for membership of 41;2,304.16 estimated loss in other real estate was to reduce to 41.00 each the carrying values of two properties which were to became statutory before the end of the year, the management having agreed to make the write-down, that you consider that the reported values of the properties appear to justify the amounts at which they were being carried by the bank, and that your office does not feel that a condition of membership requiring the elimination of this estimated loss should be prescribed. It has been noted also that the examiner classified as an estimated loss an item of 4225 which represents, not a defined loss, but the balance due on the purchase price of a lot and which is to be paid and charged off upon delivery of the deed. In view of the circumstances, therefore, and since the remaining losses estimated by the examiner are reported to have been charged off during and following the examination, the usual condition of membership regarding the elimination of estimated losses has not been prescribed. "The report of examination for membership lists two sayaccounts which do not conform to the definition of savings deposits as contained in the Board's regulations and it is assumed, of course, that, if the benk is admitted to membership, sach accounts will be brought into confirmity with the provisions of the Board's regulations. 46 1/11/38 -13- "It is noted that in the report of examination for mem— the statement is made that there were no loans exceeding the limit prescribed by State law, which in this case is reported to be 46,750. The report lists, however, for reference purposes, 8 line of 08,441.64 to Securities Credit Corporation, Denver, Colorado, representing 120 loans secured by chattel mortgages on automobiles and endorsed by Securities Credit Corporation. You will recall that in connection with the application of The Routt County State Bari', Steamboat Springs, Colorado, which was recently admitted to membership, the question of the applicability of the statutory limitations to the liability of the Securities Credit Corporation was raised and that you advised the Routt County State Bank that in the absence of a definite ruling by the Bank Commissioner of Colorado, it would be necessary to consider the liability of the Corporation as an excess loan. In view Of the fact that no comment was made regarding the line of the Securities Credit Corporati on in the present case, it is assumed that you are now satisfied that the statutory limitations are not applicable to such extension of credit." bership Letter to Mr. Merritt, Chairman of the Federal Reserve Bank of Dallas, reading as follows: "Reference is made to Mr. Walsh's letter of December 271 1937, advising the Board of the results of the consideration given by your board of directors and senior officers to the report of a survey of the auditing department of your bank transmitted to Mr. Walsh with the Board's letter of November 10, 1937. "The Board appreciates the completeness of this review of the matters contained in the report of survey and has noted with interest the changes being made in the auditing procedure at your bank, and the comments concerning certain recommendations which were not adopted. Detailed consideration of the latter has been deferred by the Board at this time in view of the fact that the Board's field eximiners are now engaged in an examination of your bank and will review such matters in the course of their examination." Approved unanimously. Memorandum dated October 22, 1937, from Mr. Morrill submitting f" aPProval by the Board drafts of entries for the policy record re- 47 1/11/38 -14- quired by section 10 of the Federal Reserve Act to be kept by the Board covering actions taken by the Board on August 20, with respect to changes In rates on discounts and advances under sections 13 and 13a, and section 10(b) of the Federal Reserve Act, and on September 14, 1937, with respect to the adoption of a revised Regulation A, Discounts for and Advances to Member Banks by Federal Reserve Banks. Approved unanimously. Letter to Mr. Young, Secretary of the Federal Reserve Bank of Chicago, reading as follows: "Phis refers to your letter of December 18, 1937, inclosing for the Board's approval a copy of the proposed form of revised by-laws of the Detroit Branch which was approved by the board of directors of your bank at its meeting on December 16, 1937, subject to the approval of the Board of Governors. "You are advised that the Board of Governors approves the amendments contained in the proposed revision of the bylaws of the Detroit Branch in the form inclosed in your letter." Approved unanimously. Letter to Mr. C. C. Morris, Vice President and Trust Officer, The Exchange National Bank of Colorado Springs, Colorado Springs, Colorado, reading as follows: "It is regretted that the pressure Of other matters has Prevented an earlier reply to your letter of November 1937, relating to the use of a nominee to hold record -title to stocks belonging to trusts administered by your bank. "The Board has not had occasion to express an opinion concerning this practice and feels that the question whether t should be adopted is primarily one to be decided by your bank in the light of the applicable State law and sound .48 1/11/38 -15- "principles and practices of trust administration and after consultation with counsel for your bank. It is believed, however, that it should be pointed out that the use of a nominee is in conflict with the well established rule requiring a trustee to properly identify or earmark trust Property as property of the trust, unless the practice is authorized by the terms of the trust instrument or the State law." Approved unanimously. Letter to Honorable Wayne C. Taylor, Assistant Secretary of the Tre"tlrY, prepared pursuant to the action taken at the meeting of the Board on January 4, 1938, and reading as follows: "Reference is made to your letter of July 6, 1937, in Which you advised the Federal Reserve banks that it was anticipated that redemptions of adjusted service bonds would Slacken off appreciably during the coming year and that beginning January 1, 1938, Federal Reserve banks would be expected to absorb the slight expense involved in these redemptions, and to your discussion of this matter with Governor Ransom, Mr. anead and myself on January 7, 1938. '14t the time of the receipt of your letter the Federal Reserve banks had, of course, no means of telling what the rate of decline mould be in redemptions of adjusted service bonds and accordingly were not in a position to know whether the expense of redeeming such bonds would decline by January 1, 1938, to such an extent that they then would be justified in absorbing it. We are advised, however, that during the twelve months ending November 1, 1937, redemptions for the entire country amounted to approximately 2,270,000 pieces and that on the latter date there still emained over 7,100,000 pieces outstanding, or more than in=s ast .imes the number redeemed during the preceding twelve f "We are now in receipt of a communication from Mr. M. J. Fleming, Chairman of the Presidents' Conference Committee on Reimbursable Expenses, in which he states that expenses at the Federal Reserve Bank of Cleveland approximated $1,500 per month during 1937 and that it is estimated they Will average 41;1,000 per month during 1938. President Harrison of the Federal Reserve Bank of New York has written to 49 1/11/38 -16- nAr. Fleming advising him that such expenses of that bank are estimated to average about $2,000 per month during 1938, and President Schaller at Chicago estimates that such expenses will amount to between 410,000 and 416,000 at his bank in 1938. "In view of the substantial amounts involved, around 50,000 at only three Federal Reserve banks, the Board feels that there is merit in the view of the Reimbursable Expense Committee of the Presidents' Conference that the Federal Reserve banks should not be asked to absorb such expenses during the calendar year 1938. "It will be appreciated if this matter is discussed informally with Mr. M. S. ileming, Chairman of the Presidents' Conference Committee on Reimbursable Expenses, and with Mr. mead, of the Board's organization, before final decision is reached with respect thereto by the Treasury Department." Approved unanimously. Memorandum dated January 6, 1938, from Mr. Ransom submitting a coPy Of a letter addressed to Mr. Wyatt, General Counsel, by Mr. Merle Seleaman, Deputy Manager of the American Bankers' Association, under ci"e of January 5, 1938, extending to Mr. Wyatt an invitation to particiPate in the program of the forthcoming Nineteenth Mid-Winter Trust Conference of the Trust Division of the American Bankers Association t° be held in New York City on February 15-17. The memorandum recam- niended thatMr. Wyatt accept the invitation and speak at the conference on the subject of the Board's new provisions in Regulation F with resPact to common trust funds. Approved unanimously. Thereupon the meeting adjourned. Chairman.
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