Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, May 16, 1941, Volume 28, Part 2

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606

A meeting of the Board of Governors of the Federal Reserve
SYstem

Was

held in rashington on Friday, May 16, 1941, at 11:30 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Szymczak
McKee
Draper

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 hereinafter referred to
was taken by the Board:
The minutes of the meeting of the Board of Governors of the
Pederal
Reserve

System held on May 15, 1941, were approved unani-

taQUelY.
Telegrams to Mr. Young, President of the Federal Reserve Bank
Of Boat°II,
Messrs. Sanford, Post, McCravey, and Dillard, Secretaries
Of the
Federal Reserve Banks of New York, Philadelphia, Atlanta, and
Chica
go, respectively, Mr. Caldwell, Chairman of the Federal Reserve
tax*
of Kansas City, Mr. Gilbert, President of the Federal Reserve
tank
of Dallas, and Mr. West, Vice President of the Federal Reserve
talyk of
San Francisco, stating that the Board approves the establish- %rit •
wItout change by the Federal Reserve Bank of Kansas City on
Ilay.
13 by
the Federal Reserve Banks of New York, Atlanta, Chicago,
Dalaa
'
s and San Francisco on May 15, and by the Federal Reserve Banks
Of 13_

ustc1r1 and Philadelphia today, of the rates of discount and purchase
the -r
existing schedules.




Approved unanimously.

607
5/16/41

0

Telegram to Mr. McCabe, Chairman of the Federal Reserve Bank
Of Philadelphia, reading
as follows:
"Your wire. Board of Governors approves appointment
of Alfred
H. Williams as President of the Federal Reserve
Bank of Philadelphia for unexpired portion of five year
term ending
February 28, 1946, with understanding that
aPPointment will become effective July 1, 1941. Board
approves the salary fixed by your directors for Mr.
nilliams in the new position at the rate of 22,000 per
a,"11111.1111 for the period beginning July 1, 1941, and ending
itpril 30, 1942. It is understood that immediate announcement of appointment will be made by your Bank.
No announcement
being made here."
Approved unanimously.
Letter to Mr. Young, President of the Federal Reserve Bank of
Chico
go, reading as follows:
"In accordance with the suggestion contained in your
letter of May
5 to Mr. Paulger on the subject, the Board
approves the increase
from p5,500 to t6,000 in the maxiillum annual salary rate for the position of examiner
for
Your
bank, and it is requested that you forward copy of
revised Form A page covering such increase.
from ::The Board does not approve, however, the increase
„,- v3,500 to P4,000 in the maximum annual salary rate
-"'er the personnel classification plan for assistant
5Xaminers
which was suggested in another letter of May
'1941 to Mr. Paulger. This disapproval is based on
the
belief that a maximum salary of 3,500 for assistant
exami
„ ners is rather liberal, that, generally speaking,
s aries in excess of that amount should not be paid a
member
of the examining staff unless he is considered
qualified
for a commission as examiner, and that
ri
co exceptional circumstances where a larger salary is
lsidered warranted
2
m
examiner,t
the
fora
an assistant
ter
can be submitted to the Board for approval.
"The increase in the annual salary rate for the po1c3n of examiner as approved will cover the proposed
i,t1,
rease of P500 in the annual salary of Examiner Van
'




608
5/16/41

-3-

"Zante. Therefore, individual action on such increase
is not necessary."
Approved unanimously.
Letter to Mr. Young, President of the Federal Reserve Bank of
Chic
agO, reading as follows:
"Reference is made to your letter of May 5 to Mr.
f
l aulger regarding the proposed employment of one of the
board's assistant examiners, Mr. Wishart, as an assistant
eXaminer for your bank.
"The Board approves the appointment of Harvey J.
Ilashart as an assistant examiner for the Federal Reserve
Bank of Chicago, and at an annual salary rate of 31800
which is l',300 in excess of the maximum under the PersonClassification Plan of your bank. Please advise us
of the effective date.
'Your letter contains the suggestion that the maxisalary rate for the position of assistant examiner
?
be
increased from 3,500 to4.,000 per annum. The matter
ls covered in a separate letter to you."
Approved unanimously.
Letter to the board of directors of the "Washington Trust Cornof 1
°I
Nashington, N. J.", Washington, New Jersey, stating that, subieet t° conditions of membership numbered 1 to 6 contained in the
11°41'cits Regulation H and the following special condition, the Board
4PPIN3ves the bank's application for membership in the Federal Reserve
m
e'and for the appropriate amount of stock in the Federal Reserve
tahl.
of New York:
.
117

Prior to admission to membership, such bank, if
it has not already done so, shall charge off or
otherwise eliminate estimated losses of 2,050 as
shown in the report of examination of such bank as
of April 2, 1941, made by an examiner for the Federal Reserve Bank of New York."




609

5/16/41

-4The letter also contained the following special comment:

. "It appears that the bank possesses certain powers
which are not being exercised and which are not necessarily
required in the conduct of a banking and trust business,
such as the powers to act as surety and to guarantee real
estate titles. Attention is invited to the fact that if
tlie bank desires to exercise any powers not actually exercised at the time of admission to membership, it will be
necessary under condition of membership numbered 1 to obtin the permission of the Board of Governors before exercising them. In this connection, the Board understands
that there has been no change in the scope of the corporate
Powers exercised by the bank since the date of its application for membership."
Approved unanimously, together with
a letter to Mr. Sproul, President of the
Federal Reserve Bank of New York, reading
as follows:
"The Board of Governors of the Federal Reserve Syste
m approves the application of the 'Washington Trust ComPanY, of Washington, N. J.', Washington, New Jersey, for
me
mbership in the Federal Reserve System, subject to the
conditions prescribed in the enclosed letter which you
.1‘e requested to forward to the Board of Directors of the
Institution. Two copies of such letter are also enclosed,
e of which is for your files and the other of which you
,,.? requested to forward to the Commissioner of Banking
lc Insurance for the State of New Jersey for his informauion•
"It has been noted that following the examination
for
1.,
membership the president of the bank was called in
conference on the matters which the supervising examer for the Federal Deposit Insurance Corporation ad!Ised had been repeatedly criticized, and that Mr. Gidney
'ae assured that prompt and effective attention would be
:
iven such matters. It is assumed that of course the Recerve Bank will follow the situation and see that the
?rrectiens are made in accordance with the assurances
given.fl

r

Letter to the board of directors of "The Niles Bank Company",
stating that, subject to conditions of membership numbered




610

5/16/41

-5-

-0 3 contained in the Board's Regulation HI the Board approves the
13441°8 application for membership in the Federal Reserve System and
for the

appropriate amount of stock in the Federal Reserve Bank of

Cl
eveland.
Approved unanimously, together with
a letter to Mr. Fleming, President of the
Federal Reserve Bank of Cleveland, reading as follows:
"The Board of Governors of the Federal Reserve SysaPproves the application of 'The Niles Bank Company',
-les, Ohio, for membership in the Federal Reserve Syssubject to the conditions prescribed in the enclosed
let
'
twhich you are requested to forward to the Board
.otif Directors of the institution. Two copies of such let,e_r are also enclosed, one of which is for your files and
,re other of which you are requested to forward to the
°11
State of Ohio for his inf Perintendent of Banks for the
ormation.
"It is noted that, with respect to savings deposits
vIthdrawals,
the examiner states that 'savings pass book
,
1)r°171des
4
that president or directors may restrict with'
akrawals for a reasonable time.' However, it does not
PPear that the bank reserves the right to require the
csiepositor
to give notice in writing of an intended withnot less than 30 days before such withdrawal is
a de, as required by the Board's Regulation Q. It is
41eUmed, therefore, that this matter will be brought to
t e bank's attention for such action as may be necessary
i° comply with the requirements of the Board's regulation
fn,his regard. It is also assumed that your office will
the matter of the bank's bringing into conformity
"I:1th the
provisions of law and the Board's regulations
re
account in the name of the Ohio Galvanizing
or Manufacturing Company, listed on page 16 of the report
e
xamination for membership."

V

tatik or

Letter to Mr. Clerk, First Vice President of the Federal Reserve
San Francisco, reading as follows:
"This refers to your letter of May 10, 1941, regardCooperation with the State banking departments with




611
5/16/a

-6-

respect to applications for membership.
"The Board concurs in the thought that it is desirable to discontinue notifying the State authorities concurrently with forwarding an application to the Board of
the conditions of membership recommended by your Executive
C?mmittee. Instead, however, of asking the State authorit es if there are any conditions of membership which they
itlsh to have considered, as you propose to do, it is behat it would be better to ask for their views in
T°re general terms, since it might lead to resentment on
the Part of the State authorities if suggested conditions
submitted by
them in response to a specific request were
not adopted or were greatly modified."
Approved unanimously.
Letter to Mr. Hill, Vice President of the Federal Reserve Bank
Or phi).

adelphia, reading as follows:
"Enclosed herewith is a copy of a letter dated May
'1941, from Mr. Holstein DeHaven Fox, Philadelphia,
'ennsylvania, inquiring whether a stockholder of a State
Illember bank who is not a director can obtain copies of
:!
1 P°rts of examinations of the bank and making a suggestion
:ilat the Board
prescribe certain requirements with respect
L? the
solicitation of proxies by all member banks. It
_ 11 be appreciated if you will advise Yr. Fox with reupect to these matters.
."As you know, in view of the purposes for which such
tcaminations are made and the confidential nature of the
format
contained in the reports, copies of the report
1?orts of examinations to which Mr. Fox refers are furnished
°IllY to the bank managements and appropriate Governmental
ut
horities and agencies. Also, the Board is not authorto require, as Mr. Fox suggests, that all member
. nks, in soliciting proxies for annual meetings, conform
NI:th.the regulations of the Securities and Exchange Comcess?on with respect to information to be furnished conrnlng the names and stockholdings of directors standing
for
re-election. In the latter connection, you may wish
to cal
Mr. Fox's attention to the provisions of sections
rel°
,and 5146 of the Revised Statutes of the United States
a'ing, respectively, to the maintenance of lists of
holders of national banks and the qualifications of

2

l




612
5/16/41

—7—

"directors of such banks, and to suggest that, in the case
Of a State bank, there may be pertinent provisions in the
aPplicable State statutes or the bank's articles of incorporation or by-laws."
Approved unanimously.
Letter to Mr. Fletcher, Vice President of the Federal Reserve
of Cleveland, reading as follows:
"Enclosed is a copy of a letter of April 3, 1941,
±- r:ora Mr. Julian Miller, Trust Department, Peoples!'lttsburgh Trust Company, Pittsburgh, Pennsylvania, reto the interpretation of the underscored portion
°I- the following provisions of section 17(c)(5) of Regulation F:
'No funds of any trust shall be invested
in a participation in a Common Trust Fund if
such investment would result in such trust having an interest in the Common Trust Fund in
excess of 10 per cent of the value of the assets of the Common Trust Fund, as determined
by the trust investment committee, or the sum
of !t25,000, whichever is less at the time of
investment. * * * In applying the limitations
contained in this Daraaraph, if two or more
trusts are created by the same settlor or settlors and as much as one-half of the income
az-alinaiall_g_n_koth of each trust is payable
9X-app1icab1e to the use of the same Person or
Zerson,g4 such trust shall be considered as one.'
"After a careful study of the questions presented by
Miller and other related questions, which has necessied some delay, it is the Board's conclusion that the
no trusts should not be considered as one for the purpose
°I the above
-quoted provisions of the regulation in either
°r the following situations described by him:
'(1) A settlor creates two trusts of
^
25,000 each. In one trust the life tenant is
::44-", and in the other the life tenant is "B".
upon the death of each life tenant, the principal
in each trust is payable to "C".
'(2) A settlor creates two trusts of
25,000 each. In one trust the life tenant is




613

""A", upon whose death the principal is payable
to "C". The life tenant of the other is "B",
Upon whose death the principal is payable to
or if "D" be not living, to "C".'
It is understood, of course, that the information submitted
was complete and that there are no additional facts with
respect to
powers of revocation or otherwise which might
have a bearing on the matter.
"It will be appreciated if you will advise Mr. Miller
14.accordance with the foregoing. He has been advised of
this reference."




Approved unanimously.

Thereupon the meeting adjourned.

-Weduet.hlo-vv-e-P

Secretary.

Chairman.