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990 A meeting of the Board of Governors of the Federal Reserve aYstem was held in Washington on Wednesday, June 20, 1945, at 2:00 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Thurston, 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 Nes_ ' aaReserve System held on June 19, 1945, were approved unanimously. Memorandum dated June 16, 1945, from Mr. Smead, Director of the to 17ision of Bank Operations, recommending that John DeLaMater, '1113eriri ' c°r of Service Functions in that Division, be retained in ac— tilre s ellrice on a month to month basis, for a period of not to exceed 8 m onths in the aggregate beginning July 1, 1945, with no change in Present be basic salary at the rate of $4,000 per annum and with the 'ed understanding that payment of his retirement allowance will 'lciended until his employment is terminated. Approved unanimously. Letter to Mr. Rounds, First Vice President of the Federal Re— 41,1„ el3ank of New York, reading as follows: 991 6/20/45 -2- "This refers to your letter of June 1, 1945, enclosing a certificate setting forth the increases which your Bank proposes to make in the salaries of employees in the Positions of Guardsman, Sergeant, Second Lieutenant, Registered Mail Convoy, Bank Messenger, and Chauffeur-Guard. "It is noted that the proposed increases are within t• he maximum salaries for such positions covered by certif-cate8 approved February 17, 1945 and March 13, 1945 which were transmitted to the Ear Labor Board. In the circumstances, it would seem that the proposed increases are in order." Approved unanimously. Letter to Mr. Clark, Vice President of the Federal Reserve Bank Atianta, reading as follows: ."Reference is made to your letter of June 13, 1945, bmltting the request of the Pan American Bank of Miami, Florida, for extension of the time within which it '4aY accomplish membership in the Federal Reserve System. 4_ "In view of the reasons set forth by the bank, and accordance with your recommendation, the Board extends e. 1November 1, 1945, the time within which the Pan Amen Bank of Miami may accomplish membership." Approved unanimously. Or toe Letter to Mr. Flanders, President of the Federal Reserve Bank t°n, reading as follows: ."Reference is made to your letter of June 8, 1945, at ng the request of The Merrill Trust Company, Bangor, ttrti asine, for approval of the proposed purchase of assets and calUTption of deposit liabilities of the National Bank of in 3-3, Calais, Maine, and the establishment of a branch bankalais in the quarters now occupied by the national ai - It is understood that approval of the Bank Commis- °fler of the State of Maine has been obtained. or In accordance with your recommendation, the Board Governors will interpose no objection to completion 992 6/20/45 —3— "of the transaction involving the acquisition of assets assumption of deposit liabilities of the National sank L'ank of Calais by The Merrill Trust Company substantially "proposed, and the Board also approves the establish— nt and operation of a branch in Calais by the Trust 2111PanY, provided counsel for the Reserve Bank will re— v-Lel/Tall steps taken to establish the branch and satisfy himself as to the legality thereof." r Approved unanimously. Letter to Mr. Hill, Vice President of the Federal Reserve Bank or phii_ aclelphia, reading as follows: "Reference is made to your letter of June 12, 1945, eu bmitting for the consideration of the Board the proposal 2f the Curwensville State Bank, Curwensville, Pennsylvania, ° the acceptable assets and assume the deposit ;ia 4..Purchase • . bilities, amounting to approximately $960,000, of its 1°cal competitor, the Curwensville National Bank. "On the basis of the information submitted, which included recent reports of examination of both banks by )lur examiners, the Board concurs in your conclusion that 4,e Proposed transaction will not result in any change in " u e geaeral character of the business of the Curwensville State Bank nor in the scope of the powers exercised by it vrithin the meaning of condition of membership numbered 1 acrlicable to the State member bank and will interpose no asaection to completion of the transaction substantially th Proposed. It has been noted that in connection with adri4abscrption e the State member bank is to sell $50,000 ' it -tional common stock at a premium of $25,000, and that as , 1, 11-11 acquire only such assets from the national bank Resuave been classed as acceptable by an examiner for the 8 erve Bank; and it is assumed that counsel for the Re— e Bank will " ye review the steps taken in the transaction and satisfy himself as to the legality thereof." t Approved unanimously. 993 6120/45 —4— Under date of June 19, 19451 a wire was sent to the Presidents qthe had Federal Reserve Banks stating that the Presidents' Conference approved the following draft of letter (which had been prepared m. ' eers. McKee, Morrill and Vest in accordance with the action taken at the meeting of the Board on June 8, 1945) to be used by the Federal " re Banks as a covering letter in connection with a proposed letter Inithe Board in the form of a statement concerning the absorption t 'change charges. The telegram stated that the plan which was being 17°Ilked out contemplated that the Federal Reserve Bank letter would be lecI loY the President of the Bank and would be dated June 251 1945, that the Board's statement would be dated June 221 1945, and that the 1)11)°8ed Federal Reserve Bank letter was being wired in order to give the Reserve Banks adequate time to prepare it for mailing: "Attached hereto is a statement of the Board of rernors of the Federal Reserve System under date of elle 22, 1945, with respect to the absorption of exchange which is self—explanatory. 'In accordance with an understanding between the tilsComptroller of the Currency, the Board of Governors, and Federal Reserve Banks, applicable to all member banks, ilinember bank which absorbs exchange charges for depos— tr°1's will be expected to keep an adequate record of such th'alleactions, showing the amounts and dates thereof and e names of the depositors concerned. be "This record, in the case of State member banks, will at Pected by the examiners of the Federal Reserve Bank 191'ne time of all future examinations after August 1, A similar letter is being sent to all national banks 'Re Comptroller of the Currency. "Your cooperation in this matter will be appreciated." p The program which had been worked out by Mr. McKee with the 994 6/20/45 —5— itaso rIal concurrence of the Comptroller of the Currency, and which he ow 4 Proposed to put into effect immediately, contemplated (1) that a 400ndwire would be sent tomorrow to the President of each Federal Reserve Bank stating that the Board was sending to the Bank today a alericient number of copies of the Board's statement under date of 22, 1945, to enable the Bank to supply P11 State member banks 41d the examiners and officers of the Federal Reserve Bank, that it was understood that the Federal Reserve Bank would transmit a copy °Irthe s tatement to each State member bank with the covering letter °Irer the signature of the President in the form contained in the wire or thine 19, 1945, and that it was requested that the Federal Reserve krIlt advise the Board by wire when that had been done and that a copy 't the Bank's letter be sent to the Board for its records, (2) that t°41°I'l'ovir the following letter would be sent to the Comptroller of the CII‘l'erier, and, (3) that on June 22, 1945, copies of the Board's statetnkrit would be sent to the Chairmen of the Federal Reserve Banks and to , 41s Illeillbers and secretary of the Federal Advisory Council. Mr. McKee 44(1 reP"tecl that he had not been able to discuss with Mr. Crowley the htter Of cooperation by the Federal Deposit Insurance Corporation: "In accordance with a telephone conversation with Robertson, we are sending you today 5,700 copies of the rft. Board's statement under date of June 22, 1945 with : 110ect to the absorption of exchange charges. We have zato each Federal Reserve Bank a supply of copies a;;;I'-?cient for the State member banks in its District Its own examiners and officers. It is understood ur 6/20/45 -6- "that each Federal Reserve Bank will transmit the Board's statement with a covering letter over the signature of the President of the Federal Reserve Bank, under date of June 25)1945, in the following form: 'Attached hereto is a statement of the Board of Governors of the Federal Reserve System under date of June 22, 1945, with respect to the absorption of exchange charges, which is self-explanatory. 'In accordance with an understanding between the Comptroller of the Currency, the Board of Governors, and the Federal Reserve Banks, applicable to all member banks, any member bank Which absorbs exchange charges for depositors Will be expected to keep an adequate record of such transactions, showing the amounts and dates thereof and the names of the depositors concerned. 'This record, in the case of State member banks, will be inspected by the examiners of the Federal Reserve Bank at the time of all future examinations after August 1, 1945. A similar letter is being sent to all national banks by the Comptroller of the Currency. 'Your cooperation in this matter will be appreciated.' a "It is also my understanding that you will transmit coPY a. aub of the Board's statement to each National bank with stantially similar letter over your signature under date of June 25, 1945. 1.4 "Since we have only informal copies of your letter, ll be appreciated if you will send us a record copy. co If you should find that you need any additional of the Board's statement, we will be glad to be tsed and will also be glad to help in any other way &et we can." The proposed statement of the Board was as follows: te, "The Board of Governors of the Federal Reserve Systhe wishes to invite your attention to the provision of pe Federal Reserve Act prohibiting member banks of the po:?Ml Reserve System from paying interest on demand de"Its 'directly or indirectly, by any device whatsoever'. 996 6/20/45 -7"This provision authorizes the Board to determine what shall be deemed to be a payment of interest and to prescribe such rules and regulations as it may deem necessarY to effectuate the purposes of this provision and prevent evasions. The Board's Regulation 'Ql provides that 'within this regulation any payment to or for the account of any depositor as compensation for the use of funds constituting a deposit shall be considered interest' "In developing a program for the enforcement of this Provision of the law with respect to cases involving the , bsorption of exchange charges, it has been pointed out that the discontinuance of the practice of absorbing such Charges in order to conform to the law involves the question whether and to what extent trivial items may be disl'eqarded and also the fixing of a period of time within lch the banks concerned may adjust their practices and, it desirable, advise customers affected. "It will be expected that no member bank in any case 11-11 utilize the absorption of exchange charges as a de : Ice for compensating a depositor for the use of funds in der to obtain or retain demand deposits, but the absorption it of such charges in amounts aggregating not more than '-00 for any one depositor in any calendar month or in other regularly established period of 30 days will tIsi considered as trivial and will be disregarded, provided bank keeps such records as the appropriate supervisory authority may require for reconcilement purposes. It t E)111-cl be clearly understood, however, that if it is ascer...".. 414ed that any member bank has engaged in the practice .wt, a bsorbing exchange charges in amounts aggregating more oralt? $2.00 for any one depositor in any calendar month it 11:1 any other regularly established period of 30 days, 17111 be presumed that the law has been violated. eu ,"The Board has also decided that adequate time for toca adjustments as may be necessary or desirable in order All conform to this decision will be afforded by fixing ba2st 1, 1945 as the date on and after which all member : th is will be expected to comply with this provision of of-r,taw. The Comptroller of the Currency and the Board is 'uvernors are in agreement that if after that date it 1.8 ascertained that any member bank, national or State, exwlabaorbing exchange charges in violation of the law as );"4-ained herein, the measures of enforcement provided by Will be invoked. n ITV' 997 6/20/45 . •1180•11.1. . , "This letter is beingsent to each member bank of the rederal Reserve System." By unanimous vote, the arrangement proposed by Mr. McKee and the communications referred to above were approved. Thereupon the meeting adjourned. Chairman.
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