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1 2to A meeting of the Board of Governors of the Federal Reserve SYstemlvas held in Washington on Monday, June 15, 1942, at 11:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak Draper Evans 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— referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the ' ' 1 41 Reserve System held on June 12, 1942, were approved unani— 44'84 The minutes of the meeting of the Board of Governors of the Pedel'al Reserve System held on June 13, 1942, were approved and the titioris recorded therein were ratified unanimously. Memorandum dated June 11, 1942, from Mr. Nelson, Assistant Secret erY, recommending that John N. Lyon, a clerk in the Secretary's °rilee 'be granted a leave of absence without pay beginning June 15, 80 that he might enter active duty with the United States Naval e) and that he be granted the benefits provided in the policy 4N)te by the Board on November 14, 1940, and amended August 20, or' all employees entering military service. Approved unanimously. Memorandum dated June 12, 1942, from Mr. Goldenweiser, Director I 21 6/15/42 -2o fthe ..ivision of Research and Statistics, submitting the resignation . Rose H. Schultz as a clerk-stenographer in that Division, to beefte effective as of the close of business on July 15, 1942, and rec°Inniending that the resignation be accepted as of that date. The resignation was accepted. Memorandum dated June 13, 1942, from Mr. Goldenweiser, Director cilr the n4 -4-vision of Research and Statistics, submitting the resignation (41488 Josephine F. Bertolini as a clerk in that Division, to become effective as of the close of business on June 9, 1942, and recommend- 11le that the resignation be accepted as of that date. The resignation was accepted. Memorandum dated June 13, 1942, from Mr. Nelson, Assistant 4cre,_ 47, submitting the resignation of Umberto F. Salvetti as a labor the Secretary's Office, to become effective as of the close qb118i4es8 on June 15, 1942, and recommending (1) that the resigna411 be accepted as of that date, and (2) that he be paid two months' eala rY, aMounting to $200, in a lump sum because of the termination "hia employment. The resignation was accepted and the Payment to Mr. Salvetti of an amount equal to two months' salary ($200) was approved unanimously. Letter to the board of directors of the "Ravalli County Bank", ) Montana, stating that, subject to conditions of membership I2 6/15/42 -3— ered 1 to 3 contained in the Board's Regulation H and the followttle Special condition, the Board approves the bank's application for nielthership in the Federal Reserve System and for the appropriate amount of stock in the Federal Reserve Bank of Minneapolis: 114, Prior to admission to membership, such bank, if it has not already done so, shall charge off or otherwise eliminate estimated losses of $1,078 as shown in the report of examination of such bank as of April 11, 1942, made by an examiner for the Federal Reserve Bank of Minneapolis." Approved unanimously, together with a letter to Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, reading as follows: t "The Board of Governors of the Federal Reserve SysaPproves the application of the 'Ravalli County Bank', 1-1 •lto, Montana, for membership in the Federal Reserve 4stem, subject to the conditions prescribed in the en11 -"ed letter which you are requested to forward to the °ard of Directors of the institution. Two copies of ti 8ll..?11 letter are also enclosed, one of which is for your 4. -Les and the other of which you are requested to forward ib o the Superintendent of Banks for the State of Montana Qr his information. ,"It has been noted that the general condition of the 'Dank is regarded as only fair and that although the ,esent management is considered capable of working out atiite Problems, more substantial progress toward that end tl.,°111d the Rd have been made. It is assumed, of course, that Bank will give the bank close supervision and ap,let upon a more aggressive administration of the bank's 7 i V Telegram to the Presidents of all the Federal Reserve Banks, readQ follows: ue "In accordance with request received from Colonel cheM of War Department, it will be appreciated if you 6/15/42 -4-tt • ' 4111 make available to liaison officers located in your ?itY, such secretarial and other services and supplies as they may require, including telephone and telegraph service, °face supplies not furnished by Washington, office space, etc., all on a reimbursable basis. Expenses thus incurred nly be included along with other expenses incurred by Reserve, Bank on behalf of War Department pursuant to Executive urder 9112." Approved unanimously. Letter to the Presidents of all the Federal Reserve Banks, read- trig 48 follows: "The Board has received from the Navy Department a ! u tter to all Federal Reserve Banks signed by Mr. S. A. 74-tohe1l, Chief of Finance Section, stating that the ,..,tandard form of guarantee agreement of May 14, 1942, ; 1th certain necessary minor changes therein, will be „sped in cases arising under paragraph (f) of section 2 `; the Navy Department's instructions to all Federal Reervs Banks, where a guarantee agreement is entered into bet vi wesn the Navy Department and a Federal Reserve Bank respect to a loan made or participated in by such "ral Reserve Bank. uR,, "A copy of Mr. Mitchell's letter is enclosed here5n together with a copy of the standard form of guar.!e agreement of May 14, 1942, as modified in accordance with :2 Mr. Mitchell's letter for use in cases in which a 10 made or participated in by a Federal Reserve Bank guaranteed by the Navy Department. z,e "We have not yet received advice from the War Departand Maritime Commission with respect to the form pa,lereement to be used in cases where a loan made or 4-cipated in by a Federal Reserve Bank may be guaranteed b" Y those agencies." Z Approved unanimously. ttlp Letter to the Presidents of all the Federal Reserve Banks, readf• 'ollows: time :The Board has received from the United States Maricrnmission a letter addressed to all Federal Reserve 's dated June 12, 1942, and signed by Mr. R. E. Anderson, -5“Director of Finance, stating that the standard form of guarantee agreement of May 14, 1942, with certain necessar7 minor changes therein, will be used in cases arising 1.11:Ider paragraph (g) of section 2 of the Maritime Commis3f.-,°n's instructions to all Federal Reserve Banks of May 7, where a guarantee agreement is entered into between T'he u. , ritime Commission and a Federal Reserve Bank with :,espect to a loan made or participated in by such Federal iteserve Bank. "In accordance with the Maritime Commission's request, .ere is enclosed a copy of Mr. Anderson's letter together I lth a copy l of the standard form of guarantee agreement of IlaY 14, 1942, as modified in accordance with his letter for in cases in which a loan made or participated in by a Fed s eral Reserve Bank is guaranteed by the Maritime Commis..t°n. You will note that the changes to be made in the fitand.ard form of guarantee agreement in cases of this kind !ire identical with the changes in the agreement which the IfrY Department's letter of June 11, 1942, stated should 7...made in cases where a loan made or participated in by a. rederal Reserve Bank is guaranteed by the Navy Depart14ent.” Approved unanimously. serve 13 Letter to Mr. Bowman, Assistant Vice President of the Federal Renk of Atlanta, reading as follows: "This refers to your letter of June 8, 1942, regardthe extent of your Bank's responsibility in passing on trie legal sufficiency of documents required to be executed , a connection with a loan to be guaranteed by the War Detzent, the Navy Department, or the Maritime Commission "er_Executive Order 9112. lind "It is, of course, important that guarantees of loans Executive Order be executed with the least p05delay, However, it is our view that where the execudor° ,11 of a loan agreement, a 'stand-by' agreement, or other ex; 11Me1ts is required as a condition prerequisite to the dis211, ,1tlon of a guarantee, the Federal Reserve Bank in the L,rge of its responsibility as fiscal agent should satbet,itself that such documents have been properly executed -re the guarantee agreement is consummated. It would 12;40 6/15/42 —6— Seem to us that ordinarily this would be a matter for je_01:1sideration by counsel for the Reserve Bank; but whether 'Ills is true and the extent to which the legal sufficiency )11 any such documents should be examined into would appear 4. ( '° depend upon the circumstances of the particular case. "We have not taken your letter up with the War DepartMerit, Navy Department, or Maritime Commission; but, in the Trent that any question of this kind should arise in connection with the negotiation of a particular guarantee, we !nail be glad to submit the question to the appropriate 'Orley for its consideration." Approved unanimously. Letter to Mr. Hale, Vice President of the Federal Reserve Bank Of 8n. Francisco reading as follows: "This refers to your letter of May 28, 1942, adessed to Mr. Cravens, enclosing a copy of a letter from s Canadian Bank of Commerce of Seattle regarding the estion whether branches of that Bank situated in this 1 b17 may be named as assignees of contracts between 11..n ) t( Navy Department and shipbuilding concerns. "Following the receipt of your letter, we took the 7tter up with the Navy Department and there is enclosed R copy of a letter received by us on June 12, 1942, from ,orable James Forrestal, Acting Secretary of the Navy, resPect to the question presented. It will be noted Mr. Forrestal's letter indicates the reason for which ' tht_e clause in question was inserted in the particular conact here involved." d 4 r Z Approved unanimously. tiLve or 11.eniorandum dated June 15, 1942, to Colonel J. C. Mechem, Execuflcer of the Division of Budget and Fiscal Administration, Service 811151D1Y1 War Department, reading as follows: ..r°u will recall that at the conference on June 4 quest" 1n was raised as to the necessity for insertion in the guarantee agreement of the special condition quoted 6/15/42 -7ti • ln the memorandum from the War Department dated May 21, 1942, and it was understood at that time that this requireni?nt would be dispensed with. This note is merely to reyou of the matter and there is enclosed for your conalderation a suggested form of memorandum which could be used to accomplish the purpose." Approved unanimously. Memorandum dated June 11, 1942, from Mr. Smead, Chief of the kyri . 810a of Bank Operations, reading as follows: "Since Section 14b, as amended on March 27, 1942, proees for purchases of United States securities either in open market or directly from the Treasury, and limits the 1 4:e amount of purchases that may be made direct from the : a asurY to t5 billion held at any one time, Mr. Rouse ed me whether it was considered necessary to show purchases direct from the Treasury, if and when made, separately ,:c'm Purchases in the open market in the Board's weekly Press statement of condition of Federal Reserve Banks. ur "It is recommended that I be authorized to advise of. , 11°use informally over the telephone that purchases be united States securities direct from the Treasury will in combined with securities purchased in the open market the weekly press statement. If any publicity is to be given to the amount of UnitedStates Government securities that may be purchased .471.1 !ame to time direct from the Treasury, it is believed lt would be sufficient to incorporate a paragraph or -""--Le thereon in the monthly bulletin." T Approved unanimously. Thereupon the meeting adjourned. 41314. Chairman.
@FedFRASER