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988 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Wednesday, July 3, 1940, at 2:30 P.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis 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 hereinafter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on July 2, 1940, were approved unanimously. Memorandum from Mr. Nelson, Assistant Secretary, submitting the resignation of Clair M. Aldrich as a guard in the building operation and maintenance section of the Secretary's office, effective as of the close of business on July 13, 1940, and recommending that the resignation be accepted as of that date. Approved unanimously. Memorandum from Mr. Nelson, Assistant Secretary, submitting the resignation of Russell A. Accrocco as a porter in the building Operation and maintenance section of the Secretary's office, effective as of the close of business on June 30, 1940, and recommending that the resignation be accepted as of that date. Approved unanimously. 989 7/3/40 -2Memorandum dated July 2, 1940, from Mr. Van Fossen, Assistant Chief of the Division of Bank Operations, submitting a letter dated June 28 from Mr. Schaller, President of the Federal Reserve Bank of Chicago, which requested approval by the Board of a proposed increase in the salary of Walter A. Hopkins, Assistant Cashier, from $5,000 to 51 500 per annum, effective July 1, 1940. The memorandum recommended approval of the salary proposed for Mr. Hopkins and Mr. Szymczak had noted his approval on the memorandum. Approved unanimously. Memorandum dated July 2, 1940, from Mr. Van Fossen, Assistant Chief of the Division of Bank Operations, submitting a letter dated June 29 from Mr. Drinnen, First Vice President of the Federal Reserve Dank of Philadelphia, which recommended approval by the Board of changes in the personnel classification plan of the Bank to provide for an increase in the maximum salary for the position of "General Clerk" in the Fiscal Agency Department and an addition to the description of work for this position. The memorandum stated that the pro- posed changes had been reviewed and recommended that they be approved. Approved unanimously. Memorandum dated July 2, 1940, from Mr. Van Fossen, Assistant Chief of the Division of Bank Operations, submitting a letter dated June 28 from Mr. Martin, President of the Federal Reserve Bank of St. Louis, which recommended approval by the Board of changes in the 990 7/3/4o -3- personnel classification plan of the Little Rock Branch of the Bank to provide for the creation of the new positions of "Assistant Head of Department" and "Collection Teller and Recorder of Custodies" in the Collection and Collateral and Custody Department, and "Assistant Head of Department" of the Commodity Credit Corporation Department; the elimination of the positions of "City Collection Teller" and "City Collection Teller and Securities Teller" in the Collection and Collateral and Custody Department; increases in the maximum salaries for the positions of "Porter" in the Banking House Department, "Head of Department" in the Collection and Collateral and Custody Department, and "Telephone Operator" in the Stenographic-Files-Telephone and Telegraph Department; and changes in the description of work for the Positions of the "Head of Department" and "Collection Clerk" in the Collection and Collateral and Custody Department. The memorandum stated that the proposed changes had been reviewed and recommended that they be approved. Approved unanimously. Memorandum dated June 29, 1940, from Mr. Szymczak referring to the action taken by the board of directors of the Federal Reserve Bank of Philadelphia in approving certain alterations and additions to the Philadelphia bank building and the expenditure of P500,000 for that purpose as outlined by Mr. Sinclair, President of the Philadelphia Bank, at an informal conference with members of the Board 991 7/3/40 -4- on June 12, 1940, and a letter addressed by him to the Board on June 17, 1940. Mr. Szymczak's memorandum stated that while there was no immediate need for the additional space, a program of expansion eventually would have to be undertaken and that, in th4 circumstances, it was recommended that the expenditure authorized by the directors of the Philadelphia Bank be approved. It was voted unanimously to interpose no objection to the proposed expenditure. Letter to the board of directors of the "Plymouth United Savings Bank", Plymouth, Michigan, stating that, subject to conditions of membership numbered 1 to 3 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 Federal Reserve Bank of Chicago. The letter also contained the following special comment: "It appears that the bank is authorized to exercise fiduciary powers, and has handled some fiduciary business in the past, hut was not doing so at the time of the examination for membership and no new business is being solicited. The application for membership has been approved on that basis and should the bank desire in the future to exercise fiduciary powers, application for permission to do so should be made to the Board in accordance with the provisions of condition of membership numbered 1." Approved unanimously, together with a letter to Mr. Schaller, President of the Federal Reserve Bank of Chicago, reading as follows: 992 7/3/40 —5— "The Board of Governors of the Federal Reserve System approves the application of the 'Plymouth United Savings Bank', Plymouth, Michigan, 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 is for your files and the other of which you are requested to forward to the Commissioner of Banking for the State of Michigan for his information. "It is assumed of course that you will follow the matter of the bank's providing for the amortization of bond premiums." Letter to the board of directors of "The Lake State Bank", Richland, Indiana, stating that, subject to conditions of membership numbered 1 to 3 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 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 Lake State Bank', Richland, Indiana, 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 is for your files and the other of which you are requested to forward to the Director, Department of Financial Institutions, for the State of Indiana for his information. "Since the estimated losses classified in the report of examination for membership are reported to have been eliminated during the examination, the usual condition of membership regarding the elimination of losses has not been prescribed." 993 7/3/40 -6Telegram to Mr. Knoke, Vice President of the Federal Reserve Bank of New York, reading as follows: "Relet June 29, 1940. Board approves your Bank receiving and holding under earmark gold for the Royal Norwegian Government upon terms outlinied in your letter." Approved unanimously. Letter to the Alexander Rieger Investment Company, Kansas City, Missouri, reading as follows: "This refers to your request that the Board determine that your company is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies. "The Board understands that Alexander Rieger organized your company in 1916 to hold various properties Which he had accumulated and to provide a corporate medium for the conduct of his personal affairs; that of the company's 1,000 shares of stock, 998 shares were issued to Mr. Rieger and 1 share was issued to each of two of his sons; that the company served as a personal holding company for Mr. Rieger until his death in 1936 when its stock was inherited by his three sons and the two minor children of a deceased daughter; that the company has since been strictly a family investment company maintaining and carrying out the policies and purposes originally outlined by Mr. Rieger; and that the officers and directors of the company consist of the three sons and the father of the two grandchildren. "It is understood that originally the assets of the company consisted principally of real estate and notes receivable and the only bank stock owned was a small portion of the stock of The Stock Yards National Bank of Kansas City, Kansas City, Missouri, which was located in a building owned by the company; that subsequently Mr. Rieger became actively engaged in the banking business and caused the company to acquire stock of various banks; that bank stock now constitutes approximately 40 per cent of the company's assets; and that the company owns stock of the 994 7/3/40 -7-- "following banks to the extent indicated: Community State Bank, Kansas City, 88.8% Missouri Company, Mercantile Home Bank & Trust 55% Kansas City, Missouri The National Bank in North Kansas City, North Kansas City, Missouri (Company '46% owns 84.3% of common stock but preferred stock is owned by Reconstruction Finance Corporation) Southeast State Bank, Kansas City, 15.3% Missouri The Stock Yards National Bank of 9.6% Kansas City, Kansas City, Missouri The City National Bank and Trust Company of Kansas City, Kansas City, 1% Missouri The National City Bank of New York, Minute New York, Nem-York "It is understood, however, that a majority of the outstanding shares of stock of Mercantile Home Bank & Trust Company, including 850 of the 1,100 shares owned by your company, are held by three trustees under a voting trust agreement which gives such trustees complete voting rights; that a majority of outstanding shares of stock of Southeast State Bank, including 143 of the 153 shares owned by your company, are held by three trustees under a similar voting trust agreement; and that in each instance only one of the trustees is connected with your company. "It is also understood that, while members of the Rieger family are active in the management of three of the banks as officers and/or directors, your company, as such, does not perform any services for or supervise the banks of which it owns stock; that the operations of the company relate to the real estate and notes receivable owned by it and not the management of the banks and other organizations in which it has investments; and that the company receives no income other than as interest and dividends from investments. "In view of these facts, the Board has determined that your company is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies, within the meaning of section 2(c) of the Banking .995 7/3/40 -8- "Act of 1933, as amended. If, however, the facts should at any time differ from those set out above to an extent which would indicate that your company might be deemed to be so engaged, this matter should again be submitted to the Board. The Board reserves the right to make a further determination at any time on the basis of the then existing facts." Approved unanimously for transmission through the Federal Reserve Bank of Kansas City. Letter to Mr. Stacy May, Director of the Bureau of Research and Statistics of the Advisory Commission to the Council of National Defense, reading as follows: "Chairman Eccles has brought to the attention of the Board of Governors your letter of June 26 in regard to the establishment by the Defense Commission of a Bureau of Research and Statistics as a channel through which information needed by the Commissioners may be obtained. "The Board is glad to cooperate and in the interest of expediting the handling of requests for such information as the Board may be able to furnish, it is suggested that you communicate directly with Dr. E. A. Goldenweiser, Director of Research and Statistics for the Board of Governors, who will be glad to confer with you at any time regarding information which the Commission may desire." Approved unanimously. Thereupon the meeting adjourned. Chairman.
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