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945 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Saturday, July 10, 1937, at 11:30 a. m. PRESENT: Mr. Eccles, Chairman Mr. McKee Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter referred to and the action stated with respect thereto was taken by the Board: Telegram to Mr. Thomas, Federal Reserve Agent at the Federal Reserve Bank of Kansas City, reading as follows: "Referring your July 8 telegram. relative to special election of Class A director to succeed C. C. Parks deceased, 1..n accordance with Board's May 19, 1932 letter, X-7159, it 18 not the practice of the Board to fix or approve dates for opening or closing of polls in either annual or special elections of Class A and B directors." Approved unanimously. Letter to Mr. Austin, Chairman of the Federal Reserve Bank of Philadelphia, reading as follows: "Reference is made to the report of examination of the Federal Reserve Bank of Philadelphia as of May 22, 1937, copies of which were left with you and President Sinclair. "It has been noted that the need for strengthening the auditing department of the bank was again brought to your attention and to the attention of Mr. Sinclair, and it is understood that the matter would be referred to the Board of Directors at an early date. It will be appreciated if you Will keep the Board advised as to developments in this connection. "On Page 21 of the report the examiner refers to what appears to be an over-departmentali zed situation in the bank and reports that the management is cognizant of the situation ?ut feels that it can better be worked out over a period of time rather than through drastic action at this time. It is 946 7/10/37 -2- "assumed that careful consideration is being given to this situation and that opportunities will not be overlooked to work it out. "After the report of examination and this letter have received the consideration of the Board of Directors of the Federal Reserve Bank, the Board will appreciate advice from you as to what actio n has been taken or will be taken with respect to the matters discussed and to other significant matters which may have been discussed with the management during the course of the examination." Approved unanimously, together with a letter to Mr. Sinclair, President of the Federal Reserve Bank of Philadelphia, reading as follows: "It has been noted from the report of examination of the Federal Reserve Bank of Philadelphia as of May 22, 1937, that on March 20, 1937, the bank, without advance approval of the Board, made payment of 4422 to cover tuition fees for three emplo yees of the bank at the Graduate School of Banking at Rutgers University . "The Board's letter dated February 26, 1937, X-9829, states that advance appro val of the Board should be obtained for expenditures exceeding those provided for by the statement contained in the Board's letter of October 30, 1936, X-9729, which, with respect to attendance of representatives of the Federal Reserve banks at the Graduate School, made Provision for leave with pay and assumption of transportation expenses, but made no provision for tuition fees. According to the report of examination, this matter was discussed with you by the Board's examiner, who was advised that You desired to review with the Board this question as it affects the Federal Reserve Bank of Philadelphia. "Your desire in this respect has been noted, and members of the Board will be glad to have your views on the matter and to discuss it with you." Letter to Mr. Clark, Vice President of the Federal Reserve Bank of Atlanta, reading as follows: "This refers to your lette r of June 12, 1937, inclosing a copy of the amendment to the by-laws of the Federal Reserve Bank of Atlanta which was adopted at the meeting of the board of directors on Stine 11, 1937, and requesting ad! ice as to whether or not the Board of Governors miFht see rit to interpose any objection to such amendment. 947 7/10/37 -3- "Section 1 of Article II of the by-laws was amended so as to provide that, when the chairman of the board of directors is absent, as well as when the office of the chairman is vacant, two members of the Executive Committee, instead of three, shall constitute a quorum for the transaction of business. It is understood that this amendment was adopted in order to eliminate the difficulty of holding meetings of the Executive Committee due to the fact that Mr. Kettig, the chairman of the board of directors, resides in Birmingham. "The Board of Governors has taken the position that, in the interest of sound procedure, the chairman of the board of directors shoul d be the chairmsm of the Executive Committee and that, when he is unable to attend the meetings of the Committee, the deputy chairman Should act, or in his absence as well as that of the chairman, the third Class C director Should act as chair man of the Committee. Accordingly, the Board of Governors suggests that your board of directors give consideration to the advisability of amending the bylaws so as to provide that durin the absen g ce or disability of the chair man or during a vacancy in the office of chairman, the deputy chairman, and during the absence or disability of or a vacancy in the office of both the chairman and deputy chairman, the third Class C director, shall serve as a membe r of the Executive Committee and as chairman thereof. If this amendment should be adopted, your board of directors may wish to give farther consideration to the question whether two or three members of the Executive Committee should be required to const itute a quorum. "It will be appreciated if you will advis the Board e of Governors of the views of your board of directors with reference to these sugge stions." Approved unanimously. Thereupon the meeting adjourned. •(29Pzizit jlic)creta el2Lry. 4.40 413131"oved: Chairman.
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