Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, January 30, 1940, Volume 27, Part 1

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

_ 164

A meeting of the Board of Governors of the Federal
Reserve
was held
in Washinw,ton on Tuesday, January 30, 1940, at 11:30

PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Ransom, Vice Chairman
Szymczak
Davis
Draper

Mr.
Mr.
Mr.
Mr.

Morrill, Secretary
Bethea, Assistant Secretary
Carpenter, Assistant Secretary
Clayton, Assistant to the Chairman

The action stated with respect to each of the matters herein"tar
'eferred to was taken by the Board:
The

minutes of the meeting of the Board of Governors of the

leserve System held on
January 29/ 1940, were approved unenik°484.

41:k op

Letter to Mr.
Gidney, Vice President of the Federal Reserve

YO k

reedinr, as follows:
tt-r... a
lette
ccordance with the request contained in your
the
°f January 25 on the subject, the Board approves
ex 1Jroposed appointment of Eystein L. Anderson as an
EtA
inirler for the Federal Reserve Bank of New York. Please
2e us of the effective date."
Approved unanimously.
14.

Letter to the board of directors of "The Sterling State Bank",
/14 te
rlinE,
0h1, stating that, subject to conditions of membership
kktbe
1 to
3 conteined in the Board's Regulation H and the followine
'1)ee.inl
conditions, the Board approves the bank's application for




165
-214631thel
'
shiP in the Federal Reserve System and for the
appropriate
of
stock in the Federal Peserve Bank of Cleveland:
"4.

Such bank shall make adequate provision for dePreciation in its banking house and furniture and
f
ixtures.

115
.

Prior to admission to membership, such bank if it
has not already
done so, shell charge off or otherwise eliminate estimated losses of 743.00, as
shown in the report of examination of such bank
as of
November 28, 1939, made by an examiner for
the Federal Reserve Bank of
Cleveland."
Approved unanimously, together with
e letter to Mr. Fleming, President of the
Federal Reserve Bank of Cleveland, reading as follows:
tell

The Board
of Governors of the Federal Reserve Sys:Dproves the application of 'The Sterling State Bank',
Syt
..:!erlinS*, Ohio, for membership in the Federal 'Reserve
subject to the conditions prescribed in the ennggi
ggiletter
which you are requested to forward to the
°f Directors of the institution. Two copies of
letter
are also enclosed, one of which is for your
riles
to
elld the other of which you are requested to forward
his ;3711,:grt
t
irdent of Banks for the State of Ohio for
T)oli:
It is understood that the criticized investment
Of the past have been discontinued by the bank
t ill,'"et definite steps are being taken, with the assisr/lenjof investment
counsel, to effect needed improveor es in the
account without undue delay. It is assumed,
that the situation will be followed closely
bY
1111114,Letter
Reakin,
7,
to:::
s,
hoard of directors of "The First State Bank of
statin g; that, Fibject to conditions of member111111tlibersd 1 to 3
contained in the Board's Regulation H and the
c)11°Wil:t.g
special
condition, the Board approves the bank's application




166
llrjoho
-3“ship in the Federal Reserve System and for the appropriate
8111°11/It

Of
St0ek

in the Federal Reserve Bank of Dallas:

"4.,
Sucn bank shall make adequate provision for de13
4=0
.,
/ in its banking house and furniture and

.
Approved unanimously for transmission through the Federal Reserve Bank of
Dallas.
Tel
°t

Ioston,

agrem to Mr. Young, President of the Federal Reserve Bank
ea in

es follows:

"Relet twenty-fifth. In view of your recommendation
mm
end 4 „—
obi 4.1'10/nation submitted the Board will interpose no
to'8aetion under the
conditions of membership to the pro51:zecl Purchase
for q35,000 of the property located at
13/1;519 ;Ma ssachusetts Avenue and 12 Norfolk Street, CaT7100,1:ge, Me
ssachussets, by the 'County Bank and Trust
or 13„arir Cambridge,
Massachusetts, and the expenditure
illitu
r°t, to
exceed :ff;25,000 additional for alterations and
Rlyo °ell
,elltst Provided the entire transaction is formally
bY the State Commissioner of Banks.”
Approved unanimously.

Lette

441t. or 14

-1-

to Mr. Swanson, Vice President of the Federal
Reserve

P0 is, reeding as follows:
extt,ni"Ieference is made to your analysis of the report of
riesotia
nation of the 'Sprague State Bank', Caledonia, Vinet:4E111)1;i as of November 25, 1939, wherein you recommend that
,e with condition of membership numbered 16 requiral
depreciation in banking house and furniture
be
i xtures of 2 per cent and 10 per cent, respectively,
-117.ed for
the year 1938.
ro):. '
d m t al0Dears that no provision was made by the bank
le131"eciation on its banking house during the year
Zth°1101 Permanent improvements and repairs were
the buildim: at a cost of approximately $;3,700,




167

-40,Lwhich amount ''1,700 was capitalized and :2,000 charged
L7Pense. It has been noted also that during the year
the furniture and 'Fixtures were depreciated 200 whereas
Th,illininnim depreciation reouired under the condition of
"emoarship was
, 1"According to
the report of condition as of December
and the report of earnings and dividends for
the
ts_e Period
ending December 31, 1939, subseauent to the
4v3311inat1on in November the bank charged off 500 on accunt f d
epreciation in bank premises and P300 account
"e
the Preciation in furniture and fixtures. It appears,
rnrs, that the question of proper provision for delaie4etion under the terms of condition of membership reOily to the year 1938.
till
, "In view of your recommendation and the amount of
ejrolrements made on the bankinF premises which were not
toPie,,alized, no further action need be taken with respect
r0?-fPliance with condition of membership numbered 15
uue year
or "It has 1938.
been noted that the bank has an investment
is .15,000 in City of Seattle Light and Power Bonds which
su 411 excess of 10 per cent of the bank's capital and
thij ills. While no mention is made in the report regarding
sbov eXcess
investment, it is our understanding that the
elad
bonds are not general obligations of the municipality
Of s4culd be subject to the limitations end restrictions
is
:
ction 5136 U.S.R.S. In this connection your attention
ected to the
runner on Page 16 of the consolidated
dat e °f the
bulletin of the Comptroller of the Currency
ecl i
s snuarv 1,
1938."

'1

r

Approved unanimously.
Letter

tolAr. Worthington, First Vice President of the Federal

I3ank of
Kansas City, reading as follows:
19 "eference is made to your
letter of January 22,
tiot) eU bmitting for consideration as required by condiby
f M eMbership numbered 8, the proposed expenditure
betw
,T2'e ratchinson State Bank', Hutchinson, Kansas, of
13,000 and $.22,000 for alterations and improve- -L/1 its
bank building.




168
-5n4 "In accordance with your recommendation, the Board
1
i,'",711130,s'es no objection to the expenditure of the amount
cated. This action is taken with the expectation, of
10°111"se, that the bank will make adequate provision for de-reciation in its premises. Please advise the bank acco/'dingiy.
"No reference has been made as to the amount of dePreciati
f,,
on to be taken on banking premises since it is
tht the determination of the appropriate amount to
be
b_trrovided is more Properly an administrative matter to
:_left to the
Federal Reserve banks in the regular dise of their
supervisory responsibilities."
Approved unanimously.
1'01, ala

IleMorendum dated January 19, 1940, from Mr. Morrill submitting

'
Pr°78-1 by the Board drafts of entries for the policy record re111111,ed b
Y section 10 of the Federal Reserve Act to be kept by the
eri
cov --ng actions taken by the Board as shown below:
.1.11Y 31,

193g.

AlletIst 1,
1939.

411.'P1st 25,
1939.

Sel)t
emb

er 1,
1939.

etnb er 7, 1979,




Amendment of Regulation J, Check
Clearing and Collection.
Amendment of Regulation L, Interlocking Bank Directorates Under
the Clayton Act.
Reduction by the Federal Reserve
Bank of New York in Rate on Advances to Nonmomber Banks on Government Obligations.
Advances by Iederal Reserve Banks
to Member and Nonmember Banks on
Government Obligations.
Amendment of Regulation F, Trust
Powers of National Banks.
Amendment of Regulation H, Membership of State Banking Institutions
in the Federal Reserve System.

1_69
1/ /40
-6December 26, 1K9.

Adoption of Regulation G, Collection
of Noncash Items.
Approved unenimously.

Letter to
Honorable W. T. Bulow, -United States Senate, Prepared
tOr

the si gnature of Chairman Eccles, and reading as follows:
en

"I have
received your letter of January 26, 1940,
poci°sing a letter from Mr. Rex Terry, Cashier of The
enrt Pierre
National Bank, Fort Pierre, South Dakota,
s
' copy of his letter to the Federal Reserve Bank of
Aci-11
.!
eP°11a, regarding the applicability of the Clayton
" uo the
service of Mr. Karl Goldsmith as a director
of th at
- bank and the Pierre National Bank, Pierre,
South
11-4 0ta.
"As You know,
. the statute (U. ,
S. Code, title 15, secped.„
provides that no director of a member bank of the
ben1
:
1 -1 Reserve System shall be a director of any other
whe -; with certain
exceptions, one of the exceptions being
tha Dlaces in which the two banks are situated are
tiot, f;c3ntiLlmous or adjacent'. This is evidently the excepthe- Li() which Mr. Terry refers, and, es you will understand,
fect estion whether it is applicable is a question of

ti

the i tlir• Terry has taken the proper course in sabmittinc:
4aen,
1
,rY
originally to the Federal Reserve Bank of Linrel''''2, which Till be in a position to ascertain all the
to _ 1,
rallt facts.
That Bank has forwarded Mr. Terry's letter
obte;! 8
, and in reply is being requested by wire to
you
the necessary
information. I can therefore assure
that the
eretion.
matter is receiving the most careful considlett:As Y°1-1 requested, I am returniniz to you herewith the
the ;fs which you enclosed, and I have had conies made
for
')uardt s
„
Approved unanimously, together with
telegram to Mr. Swanson, Vice President
Of the Federal
Reserve Bank of Minneapolis,
reeding as follows:
irm

25. If corporate limits of Pierre and
re actually touch, they are contiguous and Clayton

Ze1et `raillery
?1:311 1:




170
1/30/4o
-7"
Act Prohibits interlocking directorate. Whether they
rle
?djacent is a question which depends on existing facts,
is suggested that your Bank ascertain all relevant
iLLAorraation and consider question in light of footnote 8
ilegulEttion L. If you then decide to submit case to
vi
"
dt Please furnish such information together with your
9"e SUggeSt Goldsmith maintain present relationships
Pending
ruling."

L




Thereupon the meeting adjourned.

Chairman.