Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, January 25, 1938, Volume 25, Part 1

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112

A meeting of the Board of Governors of the Federal Reserve
SYstecil was held in Washington on Tuesday, January 25, 1938, at 10:30
a. ta.

PRESENT:

Mr. Eccles, Chairman (First part of meeting)
Mr. Ransom, Vice Chairman
Mr. Szymczak
Mr. McKee
Mr. 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. Paulger, Chief of the Division of
Examinations
Mr. Goldenweiser, Director of the Division
of Research and Statistics
Mr. Dreibelbis, Assistant General Counsel

Mr. Davis submitted the following recommendations of the PerCommittee with respect to the appointment of Class C directors
at the Federal Reserve Banks of Atlanta and Minneapolis and of director—
Q at the
Jacksonville and Nashville Branches of the Federal Reserve
Beak
Of Atlanta and the Seattle Branch of the Federal Reserve Bank of
SEV4Franeisco:

u
r2
,, 41t, subject to confirmation of his willingness to serve,
'Cr
"C. Harris, President, Tulane University, New Orleans,
isians, be appointed a Class C director of the Federal
,
Ralleservos Bank of Atlanta for the unexpired portion of the
'erm ending December 31, 1940;

T

hat W. D. Cochran, President, W. D. Cochran Freight Lines,
Mountain, Michigan, be appointed a Class C director
the Federal Reserve Bank of Minneapolis for the unex'
l ea' Portion of the term ending December 31, 1940. Mr.

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113
-2Lavis stated that while Mr. Cochran was a director and
s ockholder
of The Commercial hank, Iron Mountain, he had
signified his willingness to sever his connection with the
bank and dispose of his stock.
That, subject to confirmation of his williiTness to serve,
J7 M. Tillman, President, Lake Wales Citrus Growers Association, Lake rales, Florida, be appointed a director of
the Jacksonville Branch of the Federal Reserve Bank of
Atlanta for the unexpired portion of the term ending December 31,
1938;
That, subject to confirmation of his willingness to serve,
A' W. Palmer, President, Kingsport Press, Kingsport, Tennessee,
be aPpointed a director of the Nashville Branch of the Federal Reserve Bank of Atlanta for the unexpired portion of the
tem
ending December 31, 1940;
That, subject to confirmation of his willingness to serve,
Fred Nelson, dairy farmer, Seattle, Washington, be appointed
la) director of the Seattle Branch of the Federal Reserve
tflk Of San
Francisco for the unexpired portion of the term
ending December 31, 1938.
Mr. Davis moved that appointments be
made by the Board in accordance with the
above recommendations of the Personnel
Committee.
Carried unanimously.
There was presented a draft of letter to Mr. Hamilton, President
QD the

Federal Reserve Bank of Kansas City, reading as follows:

"This refers to your letter of January 22, in which
advise that you wish to serve notice on Mr. Judd Jones,
Assistant Cashier at Denver, that you no longer need his
services and that you desire to transfer Mr. William Phillips,
11°1v Assistant Cashier at the Omaha Branch to Denver as Assisent Cashier, vice Mr. Judd Jones. You call attention to
he fact that Mr. Phillips now receives a salary of 44,800,
the
same as the salary paid to the Cashier at the Denver
E
anch$ and ask the Board to interpose no objection to your
j
ntinuing to pay Mr. Phillips the salary he is now receiv.knE,
Yo

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1/25/38
"After reviewing this matter in the light of the statements contained ir your letter, the Board approves a salary
°f 44,800 per annum. for Mr. William Phillips as Assistant
Cashier of the Denver Branch from the date of his transfer
to December
31, 1938. It will be appreciated if you will
advise the Board when the transfer becomes effective and
the date on which the services of Mr. Jones are terminated."
Approved unanimously.
There was also presented a draft of a letter to Mr. J. B. Doolin,
Class C director of the Federal Reserve Bank of Kansas City,
l'eading as follows:
"It was with some reluctance that the Board allowed
Your term as class 'C' director of the Federal Reserve Bank
(3' Kansas City to expire at the close of December 31, 1937
without reappointment. However, the Board recognizes that
!Peculiar situation exists on the Board of Directors of
11,e Kansas City
Bank in that in recent years all three of
class 'C' directors have lived at a considerable disl_lince fram Kansas City although it is almost imperative
lor the sake of satisfactory operation that at least one
°r the class 'C' directors should reside close at hand.
expiration of your term affords the Board the opporIlnitY to correct the situation and the subject is now
er careful consideration. The Board is appreciative of
services you have rendered as a class 'C director parlcUlarly during the recent important years in the history
o
t the Federal Reserve System and, therefore, it desired
uat You be
advised as to its position in the present sit-

Approved unanimously.
C°11sideration was then given to a draft of letter to Senator

ittet

Cheiman of the Banking and Currency Committee of the Senate,

read;
- 11g as follows:
'
"This is in response to your request for the comments
4 the Board of Governors of the Federal Reserve System




115
1/25/38

-4-

upon S. 2171, 'A Bill relatinp; to the exclusion of certain
deposits in determining the assessment base of banks insured
bY the Federal Deposit Insurance Corporation.'
"The purpose of this Bill is to exempt from assessments
for deposit insurance purposes that portion of each bank's
total deposit liabilities which consists of deposits received
°41 and payable to other banks. This is a matter which prifl
'
11Y affects the Federal Deposit Insurance Corporation, but
1-81
'
the Board is glad to offer the following comments relating
to the
effect of such legislation on the general banking and
credit situation.
"As shown by the following tabulation, balances 'due to
Other banks' which would be exempted from assessment by the
Proposed Bill are concentrated very largely in the financial
centers and constitute a substantial portion of the total dePosits of the banks in those centers. The exemption under the
Bill includes not only balances due to other insured banks in
United States, but also balances due to uninsured banks in
1-1e United
States and banks in foreign countries.
Banks, Members of the Federal Reserve System, June 30, 1937.

Class of bank

Central reserve
cities:
New York
City
Chicago
Reserve cities
(60)
Country hanks

Due to other
Deposit liabilities as defined banks in
United States
for insurance
assessment purposes
(in millions of dollars)

Due to banks in
foreign countries

10,400
2,500

2,000
200

587
6

14,200
12,100

2,800
400

34
2

The amounts above are approximate and in round figures.
"To exempt from assessment for deposit insurance purposes
b alances due to other banks woul d relieve banks in the finan-. e-.1 centers of some of the cost of accepting such deposits.
It is reasonable to expect that such action would have the ef1-ect of encouraging the further concentration of interbank bal41ces in
such financial centers.

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1/25/38

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"We hope that the above information will be of assistance
to you in the consideration of the proposed legislation, and
that you will advise us if further data are desired."
Approved unanimously.
At this point Chairman Eccles left the meeting.
Mr. McKee stated that, in accordance with the action taken at

he meeting of
the Board on December 10, 1937, he had given considerst1011 to the
question what steps should be taken in connection with the
c°Prection of criticized matters in State member banks in the Second
l'ederal Reserve District and that he felt the matter should be taken
413 with

President Harrison for the purpose of bringing about the

adoption of a more positive policy toward effecting such corrections.
After a discussion, upon motion by
Mr. Szymczak, it was agreed unanimously
that Mr. McKee should discuss with Mr.
Harrison, and such other officers of the
bank as Mr. McKee may desire, the changes
believed to be necessary for the purpose
of bringing about the adoption of a policy
in the examination department of the bank
which will be satisfactory to the Board.
The minutes of the meeting of the Board of Governors of the Fedarea
.R

°serve System held on January 24, 1938, were approved unanimously.

Thereupon the meeting adjourned.

21-24(14Secretar..

%roved:




Chairman.