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693 A, meeting of the Board of Governors of the Federal Reserve System was held in Washington on Monday, June 20, 1938, at 2:30 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Pansam, Vice Chairman Szynczak McKee Draper Mr. Morrill, Secretary Mr. Bethea, 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: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on June 17, 1938, were approved unanimously. Memorandum dated June 16, 1938, from Mr. Goldenweiser, Director Of the Division of Research and Statistics, recommending, for the reason stated in the memorandum, that the Board authorize the temporary assignIllent for a period of not to exceed three months of Mr. FMilio G. Collado, Foreign Statistician at the Federal Reserve Bank of New York, to the Illoard's Division of Research and Statistics, effective as of the date 11Pon which he enters upon the performance of his duties in the Division; 4:lad that the Board authorize the reimbursement of the New York bank for ' aelary payments (at his present rate of compensation of 43,700 per year) Itade to Mr. Collado during the period he is here, the bank's usual Contributions to the Retirement System for Mr. Collado, a subsistence York bank) allowance of 46.00 per calendar day (the usual rate at the New 6/20/38 -2- and transportation costs between New York and Washington in accordance with the Board's travel regulations. The memorandum stated that Messrs. SProul, First Vice President, and Williams, Vice President of the Federal Reserve Bank of New York, had approved the temporary transfer. Approved unanimously. Letter dated June 18, 1938, to "The City National Bank of South Bend", South Bend, Indiana, reading as follows: "The Board of Governors of the Federal Reserve System has given consideration to your application for Permission to exercise fiduciary powers, end grants you authority, effective if and when the proposed consolidation of The City National Bank of South Bend and the Citizens Trust & Savings Bank, both of South Bend, Indiana, is authorized by the Comptroller of the Currency and you commence business as The City National Bank and Trust Company of South Bend, to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust . companies or other corporations which came into competition With national banks are permitted to act under the laws of the State of Indiana, the exercise of all each rights to be subject to the provisions of the Federal Reserve Act and the regulations of the Board of Governors of the Federal Reserve System. "Upon receipt of advice from the Comptroller of the Currency that the proposed consolidation has been effected, a formal certificate evidencing your right to exercise fiduciary powers will be forwarded to you." Approved unanimously. Letter to Mr. Peyton, President of the Federal Reserve Bank of 141nneepo1is, reading as follows: dated "Reference is made to Mr. Swanson's letters 675 -3- 6/20/38 "January 21 and March 7, 1938, with inclosures, setting forth information regarding compliance with paragraphs numbered 1 and 2 of the agreement executed by 'Bank Shares Corporation', Minneapolis, Minnesota, in consideration of the granting of a general voting permit to such corporation. "Based upon the information furnished and data contained in reports of examination of institutions in the Bank Shares Corporation group, the Board considers that the provisions of paragraphs numbered 1 and 2 of the agreement referred to, executed on December 17, 1935, and modified on June 30, 1937, have been complied with and are therefore no longer binding upon the corporation. In the absence of any reason to the contrary which you feel you should communicate to the Board, you are authorized to inform Bank Shares Corporation of the Board's decision in this matter. "The information submitted showed that Bank Shares Corporation paid dividends of $14,039.04 on August 3, 1937, and 517,548.81 on January 12, 1938. On the basis of the balance sheets and operating statements of the corporation, it appears that a capital impairment existed, which would make the payment of dividends a violation of paragraph 7 of the voting permit application (Form P-1) executed by the corporation. Please call this matter to the attention of the corporation, and ascertain and inform us as to what plans the corporation has to cure its capital impairment or to cease the payment of dividends until a correction has been effected." Approved unanimously. Telegram dated June 18, 1938, to Mr. Sihler, Assistant Vice l'reaident of the Federal Reserve Bank of Chicago, reading as follows: "This is in reply to your letter of June 14, requesting interpretation of Regulation T with respect to case of broker who, while carrying registered stock for customer in a 'restricted account', has received and holds in the account subscription rights issued to holders of such stock. Board is of the opinion that, if in these circumstances such rights are sold, the broker may not remit to customer more than 40 per cent of proceeds, except to the extent the account becomes unrestricted." Approved unanimously. 676 6/20/38 -4Letter to Mr. M. P. Marcus, Brooklyn, New York, reading as follows: "This refers to your letter of June 14, with respect to the submission of signature cards by the organization with which you are connected to various banks throughout the country. "While all National banks and most of the large State banks are members of the Federal Reserve System, the total number of member banks is only about 6,300 compared with a total of about 8,400 banks (other than mutual savings and private banks) not members of the Federal Reserve System. In the circumstances, it would appear to the Board that it might be well for you to write to the American Bankers Association, 22 East 40th Street, New York City, with respect to your problem, as that association would sean to be the one best adapted to advise With you with respect thereto." Approved unanimously. Thereupon the meeting adjourned. 460.eter)h101111:JZ1 1 / 9 ecretary. Chairman.
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