The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
322 A meeting of the Board of Governors of the Federal Reserve 841tall wae held in Washington on Friday, March 1, 1940, at 10:30 eion. PRESM: Mr. Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Davis Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Nin, Wyatt, General Counsel Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Dreibelbis, Assistant General Counsel Mr. Vest, Assistant General Counsel Nleral There were presented telegrams to Mr. Young, President of the Reserve Bank of Boston, Messrs. Post and Hays, Secretaries of the Pecierea Reserve Banks of Philadelphia and Cleveland, respectively, /4' MeLarin, First Vice President of the Federal Reserve Bank of At444 'Mr, Dillard, Secretary of the Federal Reserve Bank of Chicago, 141\ Caldwell, Chairman of the Federal Reserve Bank of Kansas City, 1/4 Mr. Secretary of the Federal Reserve Bank of San Francisco, etlitille that the Board approves the establishment without change by t46 ?ederel Reserve Bank of San Francisco on February 27, by the Fed- 611t1 Neerve Bank of Atlanta on February 28, by the Federal Reserve 11114/3 of C leveland, Chi cam and Kansas City on February 29, 1940, and 11/ tile Pederal Reserve Banks of Boston and Philadelphia today, of the I'lltee Or d .iscount and purchase in their existing schedules. Approved unanimously. 323 -2Reference was made to a memorandum prepared by Mr. Vest under Clie Of February 16, 1940, calling attention to the passage by the House or IlePresentatives on February 9, 1940, of the Ramspeck Civil Service 's/R. 960 and its reference to the Senate Committee on Civil Service /1111.011 4 't is understood Proposes to hold hearings on the bill. Mr. Vest 84ted that if enacted into law the bill would authorize the President to c c)ver into the classified civil service any Government employees, incloa employees of the Board of Governors, and to bring such en14°Pees under the provisions of the Classification Act of 1923, that kb ti, t -" Present time there was some doubt whether the President is auto place employees of the Board in the classified service, bIttllet the Provisions of this bill would make his authority to take kleh action entirely clear. It was unanimously agreed by the members present to take no action at the present time, except that Mr. Vest was requested to prepare a memorandum which could be used by Chairman Eccles in any discussion that he might have with the President should the bill be enacted into law. Mr. Davis stated that replies to inquiries for information of (t h character on matters concerning the Federal Reserve System, -4a4rett1 on of material of an informational character for encyclopedias 44(1 Ira,. °11s annual publications, requests for miscellaneous publicslists for publications, and the proofreading of printed tti $ have been handled in the Board's organization in a scattered 324 -34114 Uno rganized way in the past, some of the work being done in the Seer euarY's Office, some in the Division of Bank Operations and some 111 thA 1%4 jJ4 VI Si On of Research and Statistics, with the cooperation of Othez divisions of the Board's organization, and that, as a result of et4lot es as to how this situation night be corrected, Messrs. Morrill, r414retn Goldenweiser, and anead were in agreement that these activities 8110111d be concentrated in a single unit in the Secretary's Office h ,.c- ""uld be known as the Correspondence and Publications Section of the s 44 ecretary's Office under the general supervision of the Secretary oh would be located in quarters to be assigned to it on the tte— 11°0r of the building. It was contemplated, Mr. Davis said, that the new unit would hee`ded by Bray Hammond, now Technical Assistant in the Division of 4413k 1, °'"ations, assisted by Raman L. Horne, now Senior Economist in t. 1411810n of Research and Statistics, that their titles would be '4'4€6c1 to Chief and Assistant Chief, respectively, of the new sec- etti "d that the transfers of employees who would make up the perOr the section would be made without change in the existing 4 1" EIS : set forth below, although it would be understood that b,, 4el'ete'radr would be authorized to add such amount as he estimated 'Ka be necessary to the 1940 budget for the Secretary's Office to b1.0171 4 tOr non-personal expenses: 325 -4- trame Present Title Rem-amid • L. Techni cal Assi stant Division of Bank Operations Horne 141lieln A. Kline 148. M argaret A. Rice 4.1rt SurgUY Vera R. Glaser T. Glazebrook Thorn Present Salary P5,400 Senior Economist Div. of Research & Statistics 5,000 Printing Clerk Div. of Research & Statistics 2,400 Clerk, Secretary's Office 2,100 Assistant Printing Clerk Div. of Research & Statistics 1,800 Stenographer Div. of Research & Statistics 1,800 Stenographer Division of Bank Operations 1,440 Clerk, Secretary's Office 1,380 Mr. Davis made the further statement that for some time past ""lal experiment had been carried on as to the work of Messrs. °141 and Horne to determine whether or not the change should be made that this °(Illeettration experiment indicated the desirability of the proposed of this type of work. He added that the members of the 4etl°/a woUld continue the work that they had been doing heretofore, e613t that the stenographic work might be done by other stenographers the S ecretary's Office assigned for the purpose whenever neces41 that services of Messrs. Hammond and Horne would be available t"14e tenth: of the Board and its staff to the same extent as heretot, 6 ' and that it was contemplated that, upon receipt by any member 326 z/1/40 -5"tile Board or staff of matters of the kind which Messrs. Hammond krtd -urne had been handling in the past these would be routed in each 414 to the new section through the Secretary's Office and replies kokild be prepared for the signature of the Secretary or an Assistant aeer unless the person sending the item to the section indicated Otherwi e There ensued a discussion of the nature of the work that the new section would be expected to perform and the need which it would fill, at the conclusion of which Mr. Davis moved that the creation of the new section be authorized and that the transfer of the employees listed above be approved as outlined by him, the change to become effective as soon as the necessary arrangements could be made. Carried unanimously. At this point Messrs. Wyatt, Goldenweiser, Dreibelbis and lat e the meeting and the action stated with respect to each of the 144ttere hereinafter referred to was taken by the Board, Chairman too .kee th was not available when the meeting convened participating: 1oe 41411 The minutes of the meeting of the Board of Governors of the F-eserve System held on February 29, 1940, were approved unani- tow Letter to the board of directors of "The Peoples Savings Bank”, b 111(51c1111e, Ohio, stating that, subject to conditions of membership 144 "1 to 3 contained in the Board's Regulation H and the following `27 -681)ecial condition, the Board approves the bank's application for mem,le'4111141D in the Federal Reserve System and for the appropriate amount "stock in the Federal Reserve Bank of Cleveland: "4. Such bank shall make adequate provision for depreciation in its banking house and furniture and fixtures." Approved unanimously for transmission through the Federal Reserve Bank of Cleveland. Letter to the board of directors of "The Mbrrice State Bank", 43rrice, 1 Michigan, stating that, subject to conditions of membership bel ' ed 1 to 7 contained in the Board's Regulation H and the followS Peciel condition, the Board approves the bank's application for 14111161‘81111) in the Federal Reserve System and for the appropriate amount Of took in the Federal Reserve Bank of Chicago: 4. Such bank shall make adequate provision for depreciation in its banking house and furniture and fixtures." Approved unanimously, together with a letter to Mr. Schaller, President of the Federal Reserve Bank of Chicago, reading as follows: tat "The Board of Governors of the Federal Reserve Sysmo aPProves the application of 'The MorTice State Bank', s i0e, Michigan, for membership in the Federal Reserve subject to the conditions prescribed in the en' to sed letter which you are reauested to forward to the eti'd of Directors of the institution. TWO copies of letter are also enclosed, one of which is for your to ' 4es and the other of which you are requested to forward ro the Commissioner of Banking for the State of Michigan 1* his information. 328 V1/40 -7"Since the amount of estimated losses classified in the report of examination for membership is only nominal, the usual condition of membership regarding the elimination of estimated losses has not been prescribed. "It is understood that your office intends to fol}ow closely the matter of the bank's making the needed 1MProvements in its internal operations. . "It is noted that on page 16 of the report of exeThination for membership, in answer to the cluestion ctIncerninP the number of days' notice -provided for in !?nilection with savings deposits withdrawals, it is ated that the minimum is 10 days on accounts under 00 It is assumed that the bank's attention will be ealied to the provisions of Regulation Q requiring a Minimum of 30 days." 4 Letter to Mr. Fitt, First Vice President of the Federal Reserve or St. Louis, reading as follows: "In accordance with the request contained in your tetter of February 28 on the subject, the Board extends 130 APril 1, 1940 the time within which the 'Xersey State 1111°, Jersevville, Illinois, ray accomplish membership it the System*." Approved unanimously. Oho, Letter to "The Citizens National Bank of Norwalk", Norwalk, l'eading as follows: tem u"The Board of Governors of the Federal Reserve Sys- eta uaq given consideration to your application for fidui, 17 Powers, end grants you authority to act, when not 0" contravention of State or local law, as trustee, ex: c t01', administrator, registrar of stocks and bonds, ri:!dian of estates, assignee, receiver, or in any other orw4ciarY capacity in which State banks, trust companies 44Other corporations which came into competition with tl:lonal banks are permitted to act under the laws of 'e State Of Ohio, the exercise of all such rights to be atibiect to the provisions of the Federal Reserve Act and 329 _8"the regulations of the Board of Governors of the Federal Reserve System. "This letter will be your authority to exercise the fiduciary powers granted by the Board pending the preparation of a formal certificate covering such authorization, *hich will be forwarded to you in due course." Approved unanimously. Letter to Mr. Day, President of the Federal Reserve Bank of 1, l'ancisco, reading as follows: 1 "Reference is made to your letter of January 31, , 940, regarding the investment by The Bank of Carmel, erimel, California, in its new banking premises. "On August 23, 1937, the Board approved the investliTit of 27,000 which had been made by the bank in a 'te for a proposed new bank building and the proposed nvestment of approximately 35,000 for improvements, 2th the understanding that the profit, estimated at ,0,000, to be derived from the sale of the old bank vranises would be applied to reduce the carrying value ;f* the bank's investment in banking house and fixtures, 4118 bringing the total down to approximately $42,000. e "The expenditures actually made, however, greatly ulcceeded the amount estimated by the bank and approved i the Board. According to the information submitted, new quarters, furniture and fixtures, cost approxiblY $92,500 and the investment is carried on the : o ult s books at approximately .168,700, the reduction f23,800 having been accomplished through application : 0 the profit of $8,400 received from the sale of part 1 the old property, a charge of t14,100 to undivided 1;,rofits,and depreciation of $1,300. The profit realized trm the sale of the old banking premises, reported as 4001 includes full allowance for a second mortgage ' t 45,500 on the old premises, which is carried as a nbook asset. It is understood that the bank proposes ) 1 ePPly the proceeds of the $5,500 second mortgage to .4 reduction of the carrying value of the bank premises 1, to continue the regular depreciation of both buildand furniture and fixtures, which it is stated should ' 1401]Mt to at least 2,500 annually under the present i r j j 330 -9"Program. "The expenditures made by the bank over the amount aPPmved by the Board constituted a violation of conditicIn of membership numbered 8 and Section 24A of the FedReserve Act. In view of your recommendation and the information available, the Board approves retroactively the investment in bank premises as reported in your letter J'enuary 31. The approval is subject to the condition, 4ftever, that the proceeds of the ;,5,500 second mortgage referred to in the preceding paragraph are applied to the reduction of the carrying value of the bank premises and satisfactory program of provision for depreciation in king premises and furniture and fixtures is maintained." t Approved unanimously. Letter to French American Banking Corporation, New York, New 's reading as follows: "Receipt is acknowledged of your letter of February 19 10,,,1940, referring to the Board's letter of February 16, iru, in which mention was made that the aggregate lia. 0 1itY of your corporation, as shown by the call report condition submitted as of December 50, 1939, for acrPtances outstanding and total deposits exceeded by apTIXtmately 202,000 the limitation on such aggregate abilitY Provided for in your agreement with the Board. "You advise that your daily statement of condition ,! December 30, 1939, reflected a balance on your books ;' 2,017.75 to your credit with the Guaranty Trust CornOf New York, while that institution's balance on its to your credit amounted to 1.,206,020.47 (which was ,rwil in the call report of condition as an asset), and 1;;11 state that the difference of ?,1,1.44,002.72 was shown Qu the call report as Treasurer's checks payable at the 11171111tY Trust Company and included in your total deposit ' co uilities. It thus appears that the call report of r;Idition in this respect reflected figures different 04111 Yaur books and according to informal information it *lined from Mr. Claflin, Treasurer of your corporation, : tk telephone conversation the situation arose through c1.7:'eaPprehension as to the manner in which the Board bred to have balances with domestic correspondent 411k end officers' checks drawn against such balances 331 z -10reported in the call report of condition. "It is suggested that in future call reports of condition correspondent bank balances be reported net, after deduction of outstanding checks, rather than be reported gross with the autstandina checks included among liabilities. "In the light of the explanation afforded, it appears that the inclusion in the corporation's deposit liability in the call report of condition of unpaid Treasurer's cheCks aggregating $1,144,002.72, drawn against your credit balance with the Guaranty Trust Company, served to inflate such deposit liability and that, in the cir! .trnstances, the apparent violation of the provisions of agreement with the Board referred to above did not exist." Approved unanimously. Thereupon the meetinp c.djourned. fOreAt&jirl — Secrete y.
@FedFRASER