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306 Minutes of actions taken by the Board of Governors of the iliederal Reserve System on Friday, March 5, 1948. The Board met in the Board Room at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman pro tem. Szymczak Draper Evans Clayton Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Parry, Director of the Division of Security Loans Bethea, Director of the Division of Administrative Services Thomas, Director of the Division of Research and Statistics Vest, General Counsel Leonard, Director of the Division of Examinations Nelson, Director of the Division of Personnel Administration Brown, Assistant Director of the Division of Research and Statistics Cherry, Assistant Counsel A meeting of the Personnel Committee, and such other members 7 theB°8-rd as might wish to attend, with the Committee of Direc-ors oti Welfare of Staff of the Federal Reserve Bank of New York 4641beela scheduled for this morning, pursuant to a request from tl"ecleral Reserve Bank of New York which was considered at the 1114t1lag of the Board on January 30, 1948. However, President Sproul eealecl ye sterday afternoon to say that the directors had hoped that 141'114eaelle would attend the meeting, but that since his confirmation 307 3/5/48 -2- 1148 being delayed and he would be fully occupied and would not be ble to be present at the meeting the Committee of directors asked that the meeting be indefinitely postponed, and that the Committee °I44 get in touch with the Board later. Since the meeting with the' Nev York directors was not held this meeting of the Board was Clayton said that Mt. Vardaman was unable to attend the teEtilag and had asked that there be brought up for discussion the 8114'.estion that the Board fix Tuesday and Thursday mornings instead or Tuesday and Friday mornings for the regular meetings of the Board that it be understood that nothing except of a most urgent charte woUld be permitted to interfere with the regular meetings, that 4° oth er meetings or appointments would be made at the regular meet- ing t and that meetings would not be called on short notice un- les the matters to be discussed were urgent. Mr. Vard an's suggestion was discussed and it was the con- N18,4 8 Of the members present that the present schedule for regular Nti Ifts more satisfactory as it enabled the Board to act on 4 matters on the last business day of the week and that if ketti lige were held on Thursday instead of Friday there would be too It ttle time between the Tuesday and Thursday meetings. The 11't Ifae also made that it is now the understanding that the 308 3/5/48 -3- tegIllar meeting times were not to be interfered with, but that this 1114ersta1iding might be more closely observed. There were presented telegrams to the Federal Reserve Banks °I) Nel't York, Philadelphia, Atlanta, Chicago, St. Louis, and San Prez c-Lsco stating that the Board approves the establishment without chann, by the Federal Reserve Banks of Chicago and San Francisco ortme, rch 2) by the Federal Reserve Banks of Atlanta and St. Louis °4 MA --reh 3) and by the Federal Reserve Banks of New York and Phila- 41-Phis. on March 4, 1948, of the rates of discount and purchase in theta. existing schedules. Approved unanimously. Reference was made to a memorandum prepared by the Legal 141181011 under date of February 2, 1948, in which it was recommended 141Ett the Legal Division be authorized to take up with appropriate qtleials of the Wages and Hours Division on behalf of the Federal 11e8eIllre Banks of Cleveland, Richmond, Atlanta, Chicago, St. Louis, ELI4 141141eap011s the question of classification of assistant ex- kilaers as "non-exempt" under the Fair Labor Standards Act. Mr. l'4t stated that the recommendation contained in that wemorandum littcl been approved by the Board on February 20, 1948, but that he T ownsend, who was not able to be present at this meeting b4klise of absence on official business, would like to have a dis11,ssiot. of the Board's views so that in taking the matter up with 309 3/5/48 -4- the /4 ages and Hours Division they would know how far to go in indiEitillsg the possibility of litigation in the event the Wages and 8014,0 ' .uivision did not agree to classify assistant examiners at thesiZ Federal Reserve Banks as "exempt". Mr. Carpenter stated that at the meeting of the Board with the ' residents on February 27, 1948, the Presidents had expressed the lillanimous view that litigation of this question should be 11'44ded, and that Mr. McLarin, President of the Federal Reserve tezit of Atlanta, had stated that, although the board of directors or t 1/4t- ...ank had requested that the question be pursued and if 11"essarY taken into the courts, he did not feel they would insist 11%4 +1, ''at procedure when they learned of the views of the Presi„ all the Federal Reserve Banks. During the discussion, it was stated that the Board's lete t .43 the Federal Reserve Banks on December 5, 1947, asked for ation with respect to the classification of assistant exand for an expression of their views as to whether the keatte .z)4 11 should be taken up with the Administrator of the Wages °Lll ' s Division, that the replies indicated that at. the FederEti R titez eserve Bank of Boston assistant examiners were classified eniPt with the oral approval of the local office of the Wages ttlIci Ito Ill's Division and the Boston Bank did not wish that situation 310 3/5/48 -5- ciiittirbed, that at all other Federal Reserve Banks such employees vel ' e classified as nonexempt either under rulings of the regional °tticee of the Wages and Hours Division or by determination of the 444) that the New York, Philadelphia, and Dallas Reserve Banks telt the classification was proper and presented no particular 8441illistrative difficulties, that those three Banks and the San 4411c1eco Bank had requested that the Board not take the matter 143 Vitil the Wages and Hours Division on their behalf, that the 4118" City Bank had not requested the Board to take the matter Or its behalf although it expressed the hope that the Board 140-41,1 'be able to convince the Wages and Hours Division that assista4t e xaminers should be classified as exempt, and that the °Ither six Banks had asked that the matter be taken up on their behaa in an effort to have the Wages and Hours Division classify their lissistant examiners as exempt. It was also stated that at thel, ecleral Reserve Bank of Atlanta, where the question had teen t41,1 e'etive discussion in recent months, the regional office of 8.gee and Hours Division had indicated that three of the asS tt ist4 - examiners might be classed as exempt on the baois of the Vork actually performed but that two others were clearly nonexempt, 114 t t ha- -01 earlier discussions the Washington Office of the Wages e.11,1 4°11118 Division had stated that a ruling must depend on the facts 311 3/5/48 -6- illeach Particular case and that it might not necessarily be the 8514e for all Federal Reserve Banks or all persons having the same title. Chairman Eccles stated that even though there had been some as to whether the Fair Labor Standards Act applied to the Fedqral -cleserve Banks, the Board had taken the position that the System voluntarily place itself under the provisions of the, law with 48Pect to the payment of overtime. He also said that the question Of el eesification was one for determination by the Wages and Hours 13444 °13., that since several of the Reserve Banks, including some °t the largest, were finding no serious administrative problems in tl, -esti lig their assistant examiners as nonexempt, it did not seem to 41k th t 5-- the Banks which had raised this question should experience r d ff Liculty in the matter, and that since the Wages and Hours bivisi °4 had already indicated that it could not issue an overall ce.tioll aPPlYing to all Federal Reserve Banks because the classifi°r each assistant examiner must necessarily depend on the 4eta 543P11cable in the particular case, the Federal Reserve Banks eholaa be advised that the Board did not feel it could. take the ketter 4 in an effort to obtain a rule which would exempt all lo ees having that title. Mr. Clayton stated that he agreed except that he would not 312 3/5/48 -7- ' l1811 to take the position that all rulings by another administrative a.gelacY of the Government such as the Wages and Hours Division should necessarily be accepted by the Federal Reserve System. Mr. Szymczak suggested that the matter might again be diselissecl bY the Legal Division with the Washington Office of the Wages 431c111131.11's Division, saying that some assistant examiners did work clearly made them nonexempt, while others did work and had re131)neibilities which made them exempt, and asking how they felt the 11141e1" should be handled. the He added that if the matter was discussed Washington office it might result in their ruling that at '48t Q '°Ine of the assistant examiners at the Boston Bank were nonet whereas the Boston bank did not wish its present situation tUbed It was suggested that a letter should be sent to the Federal Banks reviewing the development of the classification of asexaminers presently in effect at the various Banks and stating ror the reasons discussed, the Board did not feel it should take 11111ith the Wages and Hours Division the matter of having all assistelelainers classified as exempt, but that it would 'lave no objecIto 11107 Reserve Bank obtaining a ruling from the local office of W vA and Hours Division with the understanding that if the Bank riot get an exemption it would abide by the ruling of the local trice c't the Division. 313 3/5/48 -8Upon motion by Mr. Szymczak, it was agreed unanimously that a draft of such a letter should be prepared by the staff and submitted to the Board for consideration. Mr. Cherry left the meeting at this point and Mr. Solomon, keilistatt co e_, 1 entered the room. Mr. Draper stated that, for reasons which he discussed, he 11°Uld like to have the Board consider an amendment to Regulation T, 4tebk04 Ox and Maintenance of Credit by Brokers, Dealers, and Members "14"lional Securities Exchanges, and Regulation Ur, Loans by Banks tM' Ille NrPose of Purchasing or Carrying Stocks Registered on a National leS ,z,Achange, to permit the substitution of securities in under4141114ed accounts. At Mr. Draper's request, Mr. Parry read a memorandum pre44(1111Y him and Mr. Solomon under date of March 4, 1948, in which 141% were discussed proposed amendments which would permit the Of stock held in undermargined accounts to sell one security 414 141rChase r°1' another of equal value or to substitute one security kllother in the account, but which would not permit the sale of 4eqtrity and the withdrawal of the proceeds in cash so long as tk Etecoutt remained undermargined. Mr. Parry said if the suggested 41°4kelits were made they would be acceptable to those who were inSIN the right to substitute securities but would not be 314 3/5/48 -9 4ecePtable to those who felt that they should have the right to sell secUrities and withdraw the proceeds. Chairman Eccles stated that when the "incidental squeeze" re.81111t into effect in July 1945, conditions were quite different tt°131 those now existing, that at that time margin requirements were bet, '444 increased as a means of reducing the inflationary expansion c't sto-0- market credit, and that the increases in margin require- 1%t8 would have given holders of old undermargined accounts an a.civialate•ge over persons opening new accounts had the rules against 81ktitution not been incorporated in the regulations. He added thet zargin requirements had been reduced from 100 per cent to 75 r Cent last year, that the volume of activity on security ''hazges hB.d continued at a relatively low level since that re41kt1or1, and that the amount of credit used in purchasing and 4471'1111g securities had shown no tendency to increase over a pe/ 11 4 or 1/Pel more than a year during which period it had been at a substantially lower than in 1945 when the rule was made He went on to say that he felt a change in the rule tol'erMit substitutions of securities within the limitption pro114s4 would remove what had become an irritating factor to many 14est°1.8 and one which had prevented certain desirable shifts 14 Beellrities by estates and individuals, but would not increase 315 38/48 the -10- siaount of credit used to carry securities. He stated, however, that he felt a change which would permit the withdrawal of proceeds ND' the sale of securities in undermargined accounts would be un- desirable for the reason that, without reducing the customer's debt, the 'acts could be spent thus adding to the inflationary pressures, would be contrary to the existing policies of the System which Vere d esigned to reduce such pressures. Mr. Szymczak asked if there were other amendments to Regu14t10 11s T and U that should be made at this time and Mr. Parry ex- loressed the view that the suggested amendments were the only ones tileLt should be made until such time as a further reduction of margin retillirelnents was called for. tr Lhe There was also a discussion of Mt. Szymczak's question whethamendments should be discussed with the Securities and Exchange co rktssion or the trade, and it was agreed that that need not be done. Following the discussion, Mr. Draper moved that the following amendments to Regulations T, Extension and Maintenance Of Credit by Brokers, Dealers, and Members of National Securities Exchanges, and U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on . a National Securities Exchange, be approved to become effective April 1, 1948: "AMENDMENT NO. 7 TO REGULATION T "Regulation T is hereby amended by striking out the ti rSt sentence of the second paragraph of section 3(b) :316 3/5/48 -11- and amending the remaining sentence of such paragraph so that the paragraph will read as follows: 'No withdrawal of cash or registered or exempted securities shall be permissible if the account, after such withdrawal, would have an adjusted debit balance exceeding the maximum loan value of the securities in the account, except that (1) cash may be withdrawn upon the deposit in the account of securities having maximum loan value at least as great as the amount of such cash, or (2) securities may be withdrawn upon the deposit in the account of cash, securities, or both, such that the maximum loan value of the securities deposited (plus the amount of any cash deposited) is at least as great as the maximum loan value of the securities withdrawn, and the current market value Of the securities deposited (plus the amount of any cash deposited) is at least as great as the current market value of the securities withdrawn.'" "AMENDMENT NO. 8 TO REGULATION U "Regulation U is hereby amended by striking out the third 1)aragraph of section 1 and substituting therefor the following 138-ragraph: 'While a bank maintains any such loan, whenever made, the bank shall not at any time permit any withdrawal or substitution of collateral if, after such withdrawal or sUbstitution, the loan exceeds the maximum loan value °f the collateral, except that the bank may permit such a withdrawal or substitution provided the loan is reduced, other collateral is deposited, or both, such that the maximum loan value of the collateral deposited (Plus the amount of any reduction in the loan) is at least as great as the maximum loan value of the collateral withdrawn, and the current market value of the collateral deposited (plus the amount of any reduction in the loan) is at least as great as the curre.nt market value of the collateral withdrawn. If the maximum lOan value of the collateral has become less than the 8410unt of the loan, such amount may nevertheless be increased if there is provided additional collateral having a maximum loan value at least equal to the a Mount of the increase.'" , 317 3/5/48 -12Mr. Draper's motion was put by the Chair and carried unanimously. Unanimous approval also was given to a statement for publication in the Federal Register which, after quoting the amendments, read as follows: "The notice, public participation, and deferred effective date described in section 4 of the Administrative Procedure Act are not followed in connection with these amendments for the reasons and good cause f°144, as stated in section 2(e) of the Board's Rules °f Procedure (12CFR 262.2(e)), and especially because in connection with these amendments which relieves certain restrictions such procedures are unnecessary 118 they would not aid the persons affected and would serve no other useful purpose." The following announcement of the Board's action was also approved unanimously, with the understanding that it would be released to the press after the Close of business on Monday, March 8 for Publication in the morning papers of Tuesday, March 9, 1948, and that it would be sent by telegram to the Federal Reserve Banks this afternoon with the request that they print the amendments and send them to Interested parties in their respective districts: "Effective April 1, 1948, the Board of Governors of .Z1le Federal Reserve System has made technical amendments itS Regulations T and U in order to permit a customer la° make substitutions in an undermargined account (one ring a margin of less than 75 per cent) without.having ° 4 supply additional margin. Such substitutions in an eccoUnt may be made, for example, by the sale of one seand the purchase of another. Previously such subwere limited by the rule that the proceeds of 'les of securities in an undermargined account be used o te ropi.the extent necessary to increase the margin on the re-111-ing securities until it is on the 75 per cent basis. j 318 3/5/48 -13- "The amendments do not add to the amount of credit available for stock market transactions under existing regulations.fl Messrs. Parry, Brown, and Solomon then withdrew. Chairman Eccles stated that, after the Board's letter of Feb1111q7 19, 1948, was mailed to Mr. Calkins, Acting Chairman of the °'ciere.1 Reserve Bank of New York, in reply to his letter dated Jan- 8, 1948, criticizing the statement of responsibilities of di- l'etc)118 of Federal Reserve Banks and their relation to the Board of Gov._ 'Illors which was distributed with the Board's letter of December 22, 1947 he asked Mt. Townsend, Associate Counsel, to make some stions with respect to revisions in the statement in the light or co lialllents received from the Chairmen since December 22. He added that —e statement had been under consideration at the time he was 413Pe4r. ing before the committees of Congress on the special reserve alld for that reason he had not read the statement before it Sellt Out, but that he had read it carefully since Mr. Calkins' * .tte Was received, that he felt it was unnecessarily irritating to so of the Federal Reserve Bank directors and officers, and that i t seemed to him that a revision of the statement.should be N)a. red. and submitted to the Chairmen of the Federal Reserve Banks 111'°411)t1-Y for their suggestions. Mr. Szymczak said that if a revised statement were issued 319 315A8 1lYthe Board now after having just sent out the letter of Febru4r,719, 1948, to the directors of the Federal Reserve Bank of New Y°11t it would be a sign of weakness, that there would be objection toatv statement that might be written particularly since the Presi- detts were of the opinion that no statement should be sent to new 4rectors by the Board, and that the statement sent out over the Year_ elld had been submitted to all of the members of the Board 414 e th- senior staff and copies were distributed at the December Of the Chairmen's Conference and all of the Chairmen were an oPportunity to make suggestions with respect to it. He 4.(idea that the Board's letter of February 19 to the directors of f1le 11. ell. York Bank contemplated that the suggestions made by the ChEL1.1.14ell which were received too late for consideration in con' 4cti°11 with the final draft of the statement, as well as the 114esti°ris made by the New York directors, would be taken into eOliz4 “ leration in connection with any revision of the statement fliEtt nlight be undertaken and that it would be his suggestion f4t the statement be revised so that it could be presented to "an for discussion at the Chairmen's Conference in May. elt: vtich 4 statement, he said, would be carefully prepared and the liece881E Y time could be given to it to make sure that it would 4Dt liscessary to change it again. 3/5/48 -15Chairman Eccles expressed the opinion that a statement 811°111d be sent out promptly for the reason that the Chairmen had l'eceived a copy of the Board's letter to the Federal Reserve Bank or New York and while that letter was still fresh in their minds e it Quid, b well to send a statement which would meet some of the that the Chairmen had made. Such a procedure, he said, itake Wo it clear that the revision was in response to the Board's 121tl1se to consider the Chairmen's suggestions and not because Mr. ' liceabe had become a member of the Board and had suggested a revi- 81°4 or the statement. rt °f He also said that a copy of Mr. Townsend's the revised statement had been given to Messrs. Morrill 6.11 m, 'llarston and that they had done some work on it and that he suggest that copies of a revision be furnished to the members or the Board and that it be sent to the Chairmen of all of the FedReserve Banks with a request that they forward any suggestions that t he- might have to reach the Board within 60 days. Nehea kty Mr. Szymozak suggested that the statement should not be 'and that since the Chairmen's Conference would be held in the draft be completed in time to be furnished to the Chairmen hat ber°re the Conference. Neri He felt that that would be a more Y Procedure and would result in a more satisfactory statement. During the discussion Mr. Carpenter read a letter dated 31V48 -16- 1441.°11 4) 1948, and received during the meeting from Deputy Chairman 141ers of the Federal Reserve Bank of New York acknowledging the 4ard I S letter of February 19, 1948, and stating that, after read- 14g that Ot the letter and further discussing the statement, the directors New York Bank still did not think it would contribute to that I. uarmonious integration and effective coordination of all parts or the Federal Reserve System which can and should be the source of its ,— exeatest strength because the statement seemed to minimize the reqoas ibilities of a new director and his opportunities for public ce, instead of inspiring him by emphasizing his possible conons to the work of the System. At the conclusion of the discussion of Chairman Eccles' suggestion, upon motion by Mr. Draper, it was understood that a draft of a revised statement would be prepared and distributed to the members of the Board early next week and that, if possible, it would be considered at a meeting on Friday, March 12, 1948. connection with the discussion of the above matter, Mr. suggested that the Board resume the practice of inviting 'lass C te . BOEIrd °11 the directors to Washington before they were appointed by and that consideration be given also to having a member Board visit the Federal Reserve Bank when a new Class C director was sworn in so that an opportunity would be afforded to cliscuss with the new director the nature of his duties and the 34 1 2 3/V48 -17- l'elationship or the boards of directors of the Federal Reserve Banks to #1, "lieBoard of Governors. This suggestion was discussed but no ac- t1011 was taken with respect to it. At this point Messrs. Bethea, Thomas, Vest, Leonard, and 440 II withdrew and the action stated with respect to each of the 414tters hereinafter set forth was taken by the Board: Minutes of actions taken by the Board of Governors of the ?ecier 41 Reserve System on March 4, 1948, were approved unanimously. Memorandum dated March 1, 1948, from Mr. Vardaman recom1111404 g that the basic salary of Miss Dorothy Hoffman, Secretary t°141i' Vardaman be increased from $3,898.80 to $4,500 per "teetive March 7, 1948. Approved unanimously. Memorandum dated February 18, 1948, from Mr. Thomas, DiNtol, - of the Division of Research and Statistics, recommending hicre 48es in the basic annual salaries of the following employees ti 4t Division, effective March 7, 1948: Designation lithert A. Rennie Racz Economist Clerk Salary Increase To From $4,61.20 $4,902.00 2,469.24 2,644.80 Approved unanimously. Memorandum dated February 19, 1948, from Mt. Thomas, Di- r'eetor the Division of Research and Statistics, recommending 34:3 VW48 -18- that the basic salary of Mrs. Florence R. Cox, a clerk-stenographer that Division, be increased from $2,619.72 to $2,694.96 per annum, etrective March 7, 1948. Approved unanimously. Memorandum dated February 18, 1948, from Mr. Bethea, Director the Division of Administrative Services, recommending in- erellses in the basic annual salaries of the following employees 111 thq+ -- Division effective March 7, 1948. The memorandum also rec, 'Intetided that the status of Miss Leone W. Klaprat be changed from temPorary indefinite to permanent, effective the same date: lItMe 14 11ecte W. Klaprat 'e/PelilY A. Carter Salary Increase To From Designation Clerk Mail Clerk $2,694.96 $2,770.20 2,168.28 2,243.52 Approved unanimously. Letter to Mr. Woolley, Vice President and Cashier of the Nerec 1 Reserve Bank of Kansas City, reading as follows: lq, "Reference is made to your letter of February 26, G-4-8, submitting for the consideration of the Board of t°vernors the transaction effected January 17, 1948, ichrough which the American State Bank, Great Bend, . ./11s4s, purchased assets and assumed the 1( Kansas, Heizer, Bank, State l b a t i s o p e d of the Heizer 1h 1°1-member, uninsured State bank which entered vol: -4ta•rY liquidation. "The Board is advised that the Federal Deposit th:Urance Corporation has approved the assumption of s dePosits of the uninsured State bank by the inIlred State member bank and understands that there 3$4,4 3/5/48 -19- been no change in the general character of member Ilank's business or in the scope of the corporate powers exercised by it within the meaning of condition of membership numbered 1 to which it is subject. "In view of your recommendation, the Board will interpose no objection to the transaction as completed." Approved unanimously. Letter to Transamerica Corporation, San Francisco, California, -Lng as follows: "This refers to the schedule which you submitted to the Federal Reserve Bank of San Francisco listing the assets owned by your Corporation at the end of ea.ch. month from January to October 1947 which you re1E,_Mrded as meeting the requirements of section 5144 of 11.e Revised Statutes of the United States with respect sO the readily marketable assets which must be possesea. by a holding company affiliate which holds a voting Permit. , "The listed assets include all of the stock of )ccidental Life Insurance Company of California and ; acific National Fire Insurance Company, large amounts ,f the stock of General Metals Corporation and Columbia (1 , -yer Packers Association, Inc., and several million 011ars of 'conventional mortgage loans'. All of the illed corporations are subsidiaries of your Corporation. 1,ecidental Life Insurance Company of California and bacific National Fire Insurance Company are wholly owned Your Corporation and, according to our latest inforsZti°n, your Corporation owns approximately 90% of the of General Metals Corporation and, together with subsidiaries, owns approximately 75% of the stock Columbia River Packers Association, Inc. With reto the 'conventional mortgage loans', it is.asathIleel that these are ordinary real estate mortgage loans d that the term 'conventional' is used merely to dist nguish them from mortgage loans which are insured by s'e Federal Housing Administration or are similarly inor guaranteed. a ruling published in the Federal Reserve Bul"In le • tln for March 1938 at page 192, the Board stated that V e j 3'46 3/5/48 -20- • determining whether assets are readily marketable assets within the meaning of section 5144, it should be borne in mind that the law apparently contemplates that 'the assets shall be of such a nature that their fair market value can be easily ascertained with reasonable accuracy and can be readily realized in the market It is difficult to conceive of circumat anY time. stances in which the stock of a wholly owned subsidiary Properly could be regarded as having these characteristi", and there is nothing to indicate that they are 1)c)ssessed by the stock of Occidental Life Insurance n°111PanY of California or Pacific National Fire Insurance -°mPanY. Furthermore, the limited public distribution .2f the stocks of General Metals Corporation and Columbia ver Packers Association, Inc., and the small amount of trading in them on securities exchanges would not appear t° afford any substantial basis for differentiating be/leen your Corporation's large holdings of these stocks and stocks of wholly owned subsidiaries. In the case of t ynventional mortgage loans', it is believed that, while sre may be investment demand for sound loans, uninsured seal estate mortgage loans are not customarily bought and ' i la in the market in such a manner as to justify their c.c) jassification as readily marketable assets. ' on the basis of the available informatio "Accordingly, 11, the Board does not regard any of these assets as sneadilY marketable; and, during most of the period in estion, th,, other assets listed in the schedule fell of the required amount of readily marketable ast8 as computed by you." V j g Approved unanimously. Letter to the Honorable Tom C. Clark, Attorney General of t/ley, 'Ilited States, reading as follows: "It has come to the Board's attention that the T, illnited States District Judge at Baltimore, Maryland, stated that he feels that criminal cases involving s leged violations of Federal banking laws occurring in • b ate member banks of the Federal Reserve System should be Prosecuted in the State courts and should not be °11ght in the United States district courts. We underand also that in at least one case in the State of 4 36 3/5A8 -21- Maryland involving a substantial shortage the State authorities have failed to prosecute, with the result that the offense has not been prosecuted in either Jurisdiction. It also appears that, in view of the Position of the District Judge, the local office of the Federal Bureau of Investigation does not investigate matters of this kind because it would not be possible to prosecute them in the Federal Court in the event the investigation should disclose a probable offens "You can readily see that a situation of this kind, if it should continue or spread, may well encourage a eregard of the criminal provisions of the Federal anking statutes. In enacting these laws Congress, Qf course, was aware that State laws covered the same field but felt that offenses occurring in banks connected with the Federal System should be prosecuted it the Federal courts. "The Board of Governors wishes to bring this matte,. to your attention in the hope that, if possible, .st°me steps can be taken to insure consideration of hese cases in the United States district court." V Approved unanimously. Letter to Mr. Earhart, President of the Federal Reserve Bank or 0 kaali 41 rancisco, reading as follows: "This refers to your letter of February 14, 1948, re qUesting the Board's approval of preliminary plans or the proposed building to house the Seattle Branch. "On the basis of the preliminary plans, cost esti Mates, and other data furnished, the Board authorizes Our Bank to have the final plans and specifications Ier p epared, which should be submitted to the Board for 2 .11sideration before bids are requested. It is underthat additional estimates are being obtained with "Peet to the construction of vaults. "The Board notes that you believe it would be most itle„A uvisable to omit cafeteria facilities in the buildand, that the cost of the equipment other than dishes, at silver, and coffee maker, would be only about $7,000, 327 3/5/48 -22- "much of which would be necessary if a 'snack bar' were Provided instead of cafeteria service. In view of the ?onsiderations outlined in your letter, the Board will interpose no objection to the provision for cafeteria and dining room facilities in the final plans." Approved unanimously. Telegram to Mr. Knoke, Vice President of the Federal Reserve Ballk or New York, reading as follows: "Your letter March 1 regarding gold loans to Bank • Poi4-ski after review of Polish situation and of reasons for renewing these loans beyond one year from date of .riginal loan, Board approves extension to June 9 of ° q'17,000,000 of loans to Bank Polski maturing March 9, bliect to the terms and conditions outlined in your letter of December 12 and the Board's telegram of December 16, 1947. "It is understood that the usual participation will be offered to the other Federal Reserve Banks." Approved unanimously. The remaining members of the staff then withdrew and the 11()ttrd Went into executive session. Following the executive session, the Secretary was informed by Mt. Draper that the Board had approved a memorandum from Mr. Draper dated February 20, 1948, recommending the adoption of a procedure for serving luncheons in the Board members' offices and the purchase of equipment necessary thereto as follows: (1) That the Board authorize the purchase of 4 Stern, c room service tables at a cost of $62.00 each; Sterno food carriers at a cost of $47.50 each; and tll ' small items, including plate covers, soup T'eidental Ilreens, thermos coffee jugs, and Sterno; -23(2) That the appropriate classification in the budget Of the Division of Administrative Services be increased to cover these costs, totaling approximately $700; (3) That the service rendered by the Cafeteria staff be confined to preparing the food and placing it in the carriers, upon reasonable advance notice, to be called or by Board members' messengers not later than 2:00 p.m., Lhe equipment to be returned by the messengers as soon as Practicable; (4) That the service be confined to the offices in the Board members' area on the second floor of the build- f (5) That the private elevator be made available for 8e in carrying meals from the kitchen to the Board mem'ers' area." The Secretary was also informed by Chairman Eccles following the executive session that, at the suggestion of Mr. Evans, the Board agreed that, in order to keep the members of the Board informed and not for the purpose of action by the Board, the International Section of the Division of Research and Statistics, would make a written report to the Board semi-monthly (and oftener if the material to be included in the report was of sufficient interest) on the matters being considered by, and the activities of, the National Advisory Council. Chairman Eccles also advised that he had discussed the matter with Mr. Knapp, Assistant Director of the Division of Research and Statistics in charge of the International Section, and that the reports woul submitted as requested by the Bo Secretary. Chairman pro tem.
@FedFRASER