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131 Minutes of actions taken by the Board of Governors of the FedReserve System on Friday, January 30, 1948. the The Board met in Board Room at 10:40 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak Draper Evans Vardaman Clayton Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Thomas, Director of the Division of Research and Statistics Leonard, Director of the Division of Examinations Nelson, Director of the Division of Personnel Administration Townsend, Associate General Counsel Baumann, Assistant Counsel There were presented telegrams to the Federal Reserve Banks of 8(38toxi New York, Chicago, St. Louis, and San Francisco stating that the 1304r4 . 643Proves the establishment without change by the Federal Reserve tarat of San Francisco on January 27, by the Federal Reserve Banks of ellieag0 and St. Louis on January 28, by the Federal Reserve Bank of New York on January 29, 1948, and tod i,iy. of by the Federal Reserve Bank of Boston the rates of discount and purchase in their existing schedules. Approved unanimously. 41,04). ) 4t Reference was made to a letter dated January 23, 1948, from Mr. President of the Federal Reserve Bank of New York, stating that, e reqUeSt of the board of directors of that Bank the Committee ) 1.32 1/30/48 °I Di rectors on Welfare of Staff, consisting of Messrs. Calkins (Chair1n), Adams, Aldrich, and Myers, would like to have a conference with the Board of Governors to discuss salary policy at the Federal Reserve Bank of New York and the salaries of the individual officers of the Bellk, and suggesting that either Wednesday, March 3, or Friday, March 5 be fixed as ' the date for the meeting. There was a discussion of the letter during which it was suggested that the customary procedure followed generally by Federal Resel'Ire Banks of taking up informally with the Personnel Committee any changes co ntemplated in official salaries be followed in this case, and that the New York Bank be informed that the Board would be pleased to 41% the members of the committee come to Washington on March 5 at 10:30 at which time, in accordance with the usual procedure, arNetaent would be made for them to meet with the Board's Personnel e()ninlittep, and such other members of the Board as might be available for the Purpose of discussing informally the matters which the directors of t414ew York Bank might wish to have presented. Upon motion by Mr. Evans, it was agreed unanimously that the Secretary should reply to the letter from the New York Bank along the lines suggested. Before this meeting the attention of the members of the Board had drawn to a memorandum prepared in the Legal Division under date of 44 ' 1"Y 26, 1948, in which it was stated that, in response to the letter of December 5, 1947, requesting the views of the Compof the Currency concerning proposed legislation designed 133 113CA8 -3- t° repeal the capital requirements for the establishment of out-oft01411 b ranches by national and State member banks and to permit such banks to establish branches on the same terms and conditions as non- 1E31ther State banks, the Comptroller had stated that his Office was opPosed to of any material change in the requirements for the establishment cL_s ban"e by national banks except the repeal of the provision re- cilliring 4 minimum capital of $500,000 (or lesser amounts in a few 8tats,. . wlth small population), and that he favored retention of the rew,_ 'rement that a national bank with branches have capital equal to the aggregat,e capital required for the establishment of unit banks in the places where its head office and its branches were situated. The taeraoratictum also said that, in an informal discussion, Deputy Comptrollel 'Robertson 114der had suggested that the Board might seek legislation Ilhich requirements for the establishment of branches by national 1:111ts If 14°111d not be applicable to State member banks, which legislation, enacted, 'would permit State member banks to establish branches, with the Board,s bet, tanks. lqth approval, on the same terms and conditions as State nonmem- Clayton said that inasmuch as the Comptroller did not agree the n4tional Board,s proposal for elimination of the requirement that a bank with branches have capital equal to the aggregate capital l'ed for the establishment of unit national banks in the places where its h ead °ffice and its branches were situated, it would be necessary ,or t4 e 13°ard to consider whether it would (1) recommend legislation 134 1/30/48 -4relating only to branches of State member banks to place them on the sate basis as nonmember banks, (2) recommend legislation placing State rneraber banks on the same basis as State nonmember banks (except for 81)81rd approval) and amending the law governing branches of national 4144 in conformity with the recommendation made by the Comptroller of the Currency which would repeal the existing provision requiring a ralAirauni capital of $500,000 for national banks having branches, or (3) Postpone indefinitely any request for legislation in this connection. ileelso e xpressed the opinion that, in view of the consideration at the current session of Congress of more pressing legislation, it might be Preferable to defer a recommendation on this matter until the next session of Congress. There was a general discussion of the proposed legislation in thcl light of the legislative situation and the suggestion was made t114t action be deferred by the Board with the understanding that the rilattell would be studied further by the staff in consultation with Mr. C4Irtort, and that after the present session of Congress adjourned, a cirqt Of a proposed amendment would be prepared and submitted to the tosrl together with other amendments that had been suggested from time t0tillle in the past as desirable changes in the act which would not in: c: 1. e questions of major policy and which could be submitted in a single Aext year. It was agreed unanimously that the staff should proceed in accordance with this suggestion. 135 1/30/48. -5In connection with the above action there was agreement that the matter was taken up again by the Board it should consider the desirability of proposing, as a means of discouraging the charterof banks with less than $50,000 capital, that the law be amended to Provide that existing banks with capital of 25,000 or more, in the discretion of the Board, could be admitted to membership in the System, bIlt that banks subsequently chartered would be eligible for membership (3412Y if they had a capital of $50,000 or more. Mr. Carpenter referred to a letter addressed to Mr. Morrill 15"11.1 PeYton, President of the Federal Reserve Bank of Minneapolis, dated January 27, 1948, stating that the executive council of the illdePendent Bankers Association planned to be in Washington on Febru11' ' r24 and 25, and that it would be convenient for the council to have 11111che°11 with the Board on February 25 in accordance with the informal ill\rit4-tion that had been extended to Mr. DuBois, Secretary of the Asa°ciliti°11, pursuant to the action taken by the Board on January 23, N8. It was agreed unanimously that the Secretary should write Mr. Dubois, extending a formal invitation to the council to have luncheon with the Board on Wednesday, February 25, 1948. 111%* Szymczak stated that at times in the past the individual rflet(lbers of the Board had taken two or more guests into the brown dining l'°°41 /11-th the result that on occasion there were not an adequate number 136 1/30/48 -6of Places to accommodate everyone which caused some embarrassment. In a dis,b it was agreed that the members of the Board would avoid 4"lch as possible taking more than one guest at a time into the 1)1%ft room, and that if a member had two or more guests, he would re- the blue room or a table in the staff dining room. Mr. Vardaman stated that he had been looking at some of the recentlY published statements of banks which disclosed a declining ra- tio of capital to deposits and loan accounts, that in his opinion there %lere substantial inherent dangers in the existing situation, and that he Proposed to discuss the matter with Mr. Clayton, whose assignment inCluded adjustments in the capital accounts of member banks, with the th°11ght that the question of what, if any, action should be taken by the Board would be discussed at a later meeting. At this point all members of the staff withdrew and the Board l'terit into executive session' Following the 'neeting Mr. Szymczak reported to the Secretary th4t durtng the executive session reference was made to the statement bY the Pr esident that he had nominated Mr. Thomas B. McCabe as a memher of the Board for the unexpired portion of the term ending January 31) 19561. with the intention of designating him as Chairman. The Illetabers of the Board were in agreement that Mr. McCabe should be free to select whomsoever he might wish to serve as his assistant, and that 814ce 14r. T hurston had in fact been serving for a number of years as 137 1/30/48 —7— alalissistant to the Board rather than as Assistant to Chairman Eccles, his title should be changed accordingly. Thereupon, by unanimous vote, Mr. Thurston's title was changed, effective immediately, to Assistant to the Board of Governors, with the understanding that he would continue to perform substantially the duties that he had been performing for the Board. The action stated with respect to each of the matters hereinter eraa set forth was then taken by the Board: Minutes of actions taken by the Board of Governors of the Fed- lleeerve System on January 291 1948, were approved unanimously. Memorandum dated January 30, 1948, recommending that the emte bent of Mrs. Katie Gill, a cafeteria helper in that Division, be natea as of the close of business January 30, 1948, with the 141clel'stand1ng that a lump sum payment would be rade for annual leave iflg to her credit as of that date. The memorandum also recom- Daericleci that a special payment in an amount equivalent to four weeks' be r Illade to Mrs. Gill with the understanding that such action would 14testablish a precedent. Approved unanimously. Secretary. 44'°yed: Chairman.
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