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. 123 A meeting of the Board of Governors of the Federal Reserve 8:P3-Lemmas held in Washington on Friday, January 31, 1941, at 11:30 PRESENT: Mr. Szymczak Mr. McKee Mr. Draper Mr. Ir. 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 hereinafter referred to was taken by the Board: Telegrams to Messrs. Sanford, Post, Dillard, and Stewart, Secretaries of the Federal Reserve Banks of New York, Philadelphia, Chicago, and St. Louis, respectively, Mr. Caldwell, Chairman of the Pede_ al Reserve Bank of Kansas City, and Mr. Hale, Secretary of the Pede ra-L Reserve Bank of San Francisco, stating that the Board approves the establishment without change by the Federal Reserve Banks of St. Lout S and San Francisco on January 28, by the Federal Reserve Banks of e York, Chicago, and Kansas City on January 30, 1941, and by the Federal Reserve Bank of Philadelphia today, of the rates of disc°Unt and purchase in their existing schedules. Approved unanimously. Telegram to Mr. Hays, Secretary of the Federal Reserve Bank Of _ ' -Leveland, stating that the Board of Governors approves for the eland Bank, effective as of February 1, 1941, the following rates '"Qustrial loans and commitments under section 13b of the Federal 124 4/K/41 -2- Reserve Act: "Advances to industrial or commercial businesses made through financing institutions: "Advances to financing institutions secured by obligations evidencing working capital loans made under the provisions of section 13b: On portion of such advances for which the financing institution remains obligated: On portion for which the financing institution is relieved of responsibility: "Commitments with respect to: Direct loans by Federal Reserve Bank: Loans made by financing institutions: On undisbursed portion of loan: On disbursed portion of loan, if rate to borrower is less than 3 1/2% per annum: On disbursed portion of loan, if rate to borrower is 3 1/2% per annum or more: Rate fixed by financing institution. 1% per annum less than rate to the borrower. Same as rate to the borrower. 1/2% per annum. 1/4% per annum. Not to exceed 3/4% per annum. Not to exceed 1% per annum." The telegram also stated that the Board approves the establishielt by the Bank without change of the other rates of discount and purel148e in the Bank's existing schedule, advice of which was contained in 41'1 HaYs' telegram of January 30, 1941 Approved unanimously. Letter to Mr. Brainard, Chairman of the Federal Reserve Bank of 125 1/31/41 —3— Cleveland, reading as follows: "Further reference is made to your letter of JanIlarY 10, 1941, advising that during an informal discussion at your Board meeting on January 9, the unanimous conclusion was reached to reappoint Messrs. Fleming and Zurlinden as President and First Vice President, respectively, for the five-year term commencing March 1, 1941. You stated that formal action on the above-mentioned apPointments would be taken at the regular meeting of the Board of Directors on February 27, 1941, and that the ecommendations were submitted to the Board of Governors advance so that it might have an opportunity to consider the matter. "The Board has requested me to advise you that it sees no reason why formal action on these appointments should not be taken by your directors at the meeting to be held on February 27, 1941." Approved unanimously Letter to the board of directors of the "Glasford State Bank", 44sford, Illinois, stating that, subject to conditions of membership ralillbered 1 to 3, inclusive, contained in the Board's Regulation H, the Board approves the bank's application for membership in the FedReserve System and for the appropriate amount of stock in the ?ederal Reserve Bank of Chicago. Approved unanimously for transmission through the Federal Reserve Bank of Chicago. Letter to the board of directors of the "Villa Grove State 8aropn, Villa Grove, Illinois, stating that, subject to conditions of Itlenibers1.4 numbered 1 to 3, inclusive, contained in the Board's Regu14tiorl H, the Board approves the bank's application for membership in the 'ederal Reserve System and for the appropriate amount of stock in 126 1/3l/41 the —4— Federal Reserve Bank of Chicago. Approved unanimously for transmission through the Federal Reserve Bank of Chicago. Letter to the board of directors of the "Bank of Eldon", 146°n, Missouri, stating that, subject to conditions of membership nuniberecl 1 to 3, inclusive, contained in the Board's Regulation H, the Board approves the bank's application for membership in the Federal Reserve System and for the appropriate amount of stock in the -'ral Reserve Bank of St. Louis. Approved unanimously for transmission through the Federal Reserve Bank of St. Louis. Letter to the board of directors of the "Citizens State Bank Pe.ir Play", Fair Play, Missouri, stating that, subject to condition 8 of membership numbered 1 to 3, inclusive, contained in the t0a.v.at 'ws Regulation H, the Board approves the bank's application for nlebershiP in the Federal Reserve System and for the appropriate amount or 8 tock in the Federal Reserve Bank of St. Louis. Approved unanimously, together with a letter to Mr. Martin, President of the Federal Reserve Bank of St. Louis, reading as follows: "The Board of Governors of the Federal Reserve System approves the application of the 'Citizens State Bank of Fair Play', Fair Play, Missouri, for membership in the Federal Reserve System, subject to the conditions Prescribed in the enclosed letter which you are requested to forward to the Board of Directors of the institution. Two copies of such letter are also enclosed, one of which 127 -5is for your files and the other of which you are requested to forward to the Commissioner of Finance for the State of Missouri for his information. "The bank is reported in acceptable asset condition and it has a strong capital structure in relation to deposits. However, the management is regarded as rather weak and the future possibilities of the little bank are recognized as limited. In the circumstances, the Board has approved the application on the understanding that, dicated in the presentation memorandum would be adsonie: the Reserve Bank will follow the situation closely and give the bank more than ordinary supervision. "A special condition of membership to require increases in the common stock, or in the reserve for increase in common stock, concurrently with reductions in capital debentures does not seem necessary since appropriate requirements can be made in connection with aPprovals of capital debenture retirements. Therefore, the suggested special condition has not been prescribed. "In order that the Board's files may be complete, 't is requested that you forward a copy of the form of capital debentures which the bank sold to the ReconstructIon Finance Corporation. "According to the report of examination made in connection with the bank's application for membership it was expected that Director Crow would be dropped from the Board at the next annual meeting because of his involved financial condition. It will be appreciated if You 'will advise us as to whether this was done. "Referring to pages E(1) and E(2) of the report of rcamination for membership where the examiner describes "he plan under which the bank's officers are endeavoring , t,'° acquire the controlling stock of the bank, it is the J°?ard's view that, at least, such officers should fully disclose to the directors the functions to be performed by the bank and, if the bank undertakes to hold any of the stock certificates (as contemplated by the note f°rm quoted by the examiner), the bank's records should adequately reflect the facts." Letter prepared by Mr. Draper for his signature to Mr. C. 0. 14.11gg les, Director of Research of the Graduate School of Business Adration at Harvard University. The letter was presented as a 128 -6.. Joint recommendation from Messrs. Davis and Draper pursuant to the action taken at the meeting of the Board on January 28, 1941: . "With further reference to the research project which Ur. L. L. Hollinger is preparing, 1 have discussed the matter with our Board and with Governor Davis who has direct supervision over all such matters for the Board. "The Board expresses a desire to be co-operative ir.1 the distribution of Mr. Bollinger's study to financial and business men located in the various Federal Reserve districts. . "It would be our idea to have these pamphlets Printed as a study of the Harvard School of Business Administration and distributed by our various banks and branches as a public service on our part, on the understanding that all cost of printing and mailing would be borne by the Harvard School. "It is further understood that before publication Mr. Bollinger's manuscript would be submitted to us for c?nsideration as suitable for publication and distributlon as discussed by Mr. Bollinger and myself and as outlined above." Approved unanimously. Thereupon the meeting adjourned. Secretary. 4PProved: Aete vr,d, er. 7 1
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