Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, May 18, 1944, Volume 31, Part 2

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787

A meetin
F of the Board of Governors of the Federal Reserve
SYstem was
held in Washington on Thursday, May 1. 1944, at 11:00

PRESENT:

Mr.
Mr.
Mr.
Mr.

Szymczak
McKee
Draper
Evans

Mr.
Mr.
Mr.
Mr.

Morrill, Secretary
Bethea, Assistant Secretary
Carpenter, Assistant Secretary
Clayton, Assistant to the Chairman

The action
stated with resrect to each of the matters herein'4rtsr

referred to was taken by the Board:

Pederai.

The minutes of the
meeting of the Board of Governors of the
Reserve Stem held
on May 17, 1944, were approved unanimously.

Memorandum dated May 16,
1944/ from Mr. Leonard, Director of
the D sion
of Personnel
Administration, recommending that the basic
41.arY' of
Mrs. Helen
Braden, nurse in charge of the Board's emergency
/1°°1118 and
health service, be
increased from 1,860 to kl.,980 per annum,

"rective june 1, 1944.
Approved unanimously.
Letter t0
kin

-ago,

Mr. Young,

President of the Federal Reserve Bank of

reading as follows:

" accordance
letteIn
with the request contained in yourMellt r of MaY 13, 1944, the Board approves the appoint
Ex:
c)f Dwight L. Crays, at
__mine
present a Federal Reserve
r on the staff
eX
of
the
Board of Governors, as an
arkiner for
advise
the Federal Reserve Bank of Chicago. Please
Us of the
effect
date upon which the appointment becomes
'lye and also as
to the salary rate."




Approved unanimously.

788
5/18/44
-2Letter to Mr. Earhart, Vice President of the Federn1 Peerve

Bank

of San FrPIncisco,
reading as follows:
"This is in reply to your letter of April 7 to Mr.
Leon
_ard, regarding paym
ent of overtime to exempt employees.
7e regre
t that we have not been able to answer your quest
T'ims before this
but Mr. Leonard and our counsel wished
r discuss the
questions with the representative of the
thrice Of the Commissioner of Internal Revenue with whom
nal authorization had been worked out, and were
not le
.toarrange for such a meeting until just the
Other day
The
diseussed specific questions raised in your letter were
and we were informed that:
1. Under the over-all provisions (paragraph 3 of S-670) payments to exempt employee
s
may be made to compensa
te for adjustments for
back overtime pay to employees properly recl
assified from exempt to nonexemp
t on the basis
of findings of the WatTe
and Hour Division of
the Depa
rtment of Labor.
2. The over-all provision authoriz
ing
additional equalizing payment may be used to
determine an hourly overtime rate.
In the example cited in your letter, both
exempt and a nonexempt employee receive the
sarae salary of $275 a month and the hourly rate
2f overtime
for the exempt employee would be
'1-73 under the
provisions of paragraph (1) of
-670, and the hourly rate of overtime for the
nonexempt employee woul be $2.38, bein time
d
g
lid one-half on the whole salary. It was agre
ed
at the
exempt employee might be paid overtime
!t, the rate
of 42.38 per hour even though the
eMployees do not actually work the same
thatber of hours overtime. (It is felt, however,
the nonexempt empl
oyees whose salaries are
Used as the
basi
s
for
the equalizing payments
ofauld be
employees who work substantial amounts
_avertime and
Inrrequent1,7 or not those who work overtime only
in comparatively small amounts,)

e

Z




789
5/18/44
"3. The over-all provision authorizing an
additional equalizing payment may not be used to
Pay the same hourly rate of overtime to an exempt
employee as to a nonexempt employee who receives
a lower salary than the exempt employee.
It was agreed, however, that, as suggested
in your letter, overtime may be paid to an exempt
employee at the hourly rate permitted by paragraph (1) of S-670 up to the point where the
total
compensation of the exempt and nonexempt
employee would be equal, and that thereafter under the
overtime
may be over-all equalizing provision
paid the exempt employee at the rate paid
the nonexempt
employee. In the example cited in
Your letter, the hourly rate of overtime for the
exempt employee would be $1.73 per hour for the
first 8.9 hours of overtime per week and at the
rate
8.9 °I* U.';8 per hour for overtime in excess of
hours of overtime per week. (In making comrlsons between exempt and nonexempt employees,
411e Same reservations apply as are indicated in
''fle parenthetical comment at the end of paragraph
2.)
rill "We trust
that these interpretntions will prove help—
If we can be of any further assistance, please let
aboknow. Please let us know also what you decide to do
ut o
vertime and how it works out."
Approved unanimously.
Letter to the
board of directors of the "Bank of Urich", Urich,
kieR •
-011r1,
stating that, subject to conditions of membership numbered 1
t° 3
contained in the
Board's Regulation H, the Board approves the bank's
4PPlication for
membership in the Federal Reserve System and for the apPl"()Priate
amount of stock
in the Federal Reserve Bank of St. Louis.
Approved unanimously, for transmisslon throurth
the Federal Reserve Bank of
St.
Louis.'




790

5/18/44
Telegram to
Mr. Clark, Vice President of the Federal Reserve
Bank

01 Atlanta,
reading as follows:
"Relet May 15. In view of nresent asset condition
Of Union Trust
Compamr, St. Petersburg, Florida, and
Character of
bank's management, and in accordance with
79.211r re
commendation, Board will interpose no objection
o e
Xecution of proposed lease agreement with option to
Purchase, it being understood that matter will be reeUbmitted to
Board prior to actual purchase."
Approved unanimously.

Letter to Mr. Wheeler McDougal, Chief of the Division of Liquidation
'Federal Deposit Insurance Corporation, Chicago, Illinois, reading
as foilows

"This refers to your letter of May 2, 1944, relatg to the release
to your Corporation of securities of
the
t
department of The National Bank of Westfield,
New York, held by the Superintendent of Banks
of the
tIT1
Banking Department of New York State.
The last
Rese
paragraph of section 11(k) of the Federal
d
rve Act
provides that any national banking association
4:11
;!-.7g to surrender its right to exercise trust powers
"
se
-L-Le with the
Board of Governors of the Federal Reofi
'
ve SYstem a
certified
cony of a resolution of its board
viddirectors
signifying such desire. The paragraph proes further that
upon receipt of such resolution, the
!rd of
Gover ors, after satisfying itself that such
n
bank
al has been
n relieved in accordance with State law of
iduci -if duties, may in its discretion issue a cerci-leloate that
such bank is no longer authorized to exereuatel the powers 7-roanted by this subsection. Upon the
have
"of such certtficate, the bank shall be entitled to
posi+returned to it any securities which it may have depriv'ed with the
State authorities for the protection of
a. ,e or
court trusts.
satisj°u will note that it is necessary for the Board to
I itself that the national bank has been relieved
in




791
5/18/44
"in
accordance with State law of al] fiduciary duties,
and the usual
nractice is to request the Comptroller
of the
Currencir upon the occasion of the next regular
examination
of the national hank to have the examiner
ake an investigation of its trust department records
fl
order to determine whether it appears that the bank
'
as ever undertaken
to act in any fiduciary capacity,
and, if
so, whether in the case of each trust accepted
or u
ndertaken, it appears from the bank's records:
(1) That all assets and papers belonging
to the trust
estate have been delivered by the
bank to the person
or persons entitled to receive them; and
(2) that the duties of the hank as fiduciarY have been completely performed and that
the bank has
been discharged or otherwise properly relieved of all its duties as fiduciary.
w, IrV;e are
s placed ininformed that The National Bank of Westfield
voluntary liquidation in 190, and was abNerbed bY the Union Trust Company of Jamestown, Jamestown,
trU'rk
'a nonmember bank. In view of this, the CompreowTer of the Currenc7 will not have occasion to make a
mogj-ar examinatiln of the national bank and it would seem
of - "ProPriate to reouest your Corporation to have one
804r,
examiners develop the information required by the
tif. as a prerequisite to the
issuance of a formal cerfate t
erminating the right of the national bank to
dres
exellcise fiduciary powers. Therefore, we have today adquesZ?d a letter to
the Comptroller of the Currency rethe Ing advice as
to
whether there is any objection to
being
handled in this manner, and upon receipt
the"ch !dvice we will communicate with you further. In
,
1'ime, in order to expedite this matter and in order
tO clio/p71
oiate7-!-v with the
requirements of law, it will be appre(3f the lf You will arrange to have the board of directors
bardos national bank execute a resolution signifying the
Powers ,, eire to surrender its right to exercise trust

T

Z

or _matte,

Approved unanimourly, together with
letters to the Comptroller of the Currency
requesting advice as to whether there was ?.nY objection to
the matter being handled
1n the manner
outlined in the above letter




792
5/18/Ltt
and to Mr. Gidney, Vice President of the
Federal Reserve Bank of New York, enclos/ TIP coDies of the letters to Mr. McDougal
and the Comptrcller of the Currency for his
information.
Letter to the
Presidents of all the FederP1 Reserve Banks,
l e'ding
'
as
follows:
ivithin the last few days requests have been received
from Congre
ssmen for a draft of a bill which would carry
?ut the Board's
recommendations for bank holding company
gi
slation as made in its Annual Report
for 1943. A
.Iaft of such a bill
had
been
prepared
by
the Bcarcl's
;'eff but the
circumstances
have
not
been
such
that the
2ard felt it
could present the draft to Con cress in coni;;;Zte form.
In response to a reouest from Congressman
larl
copy is being furnished to him for his irformabig' vle do not
know at this time when or whether the
pre
'
Nill be
introduced in the form in which it has been
rae2
G redy but for
:
irour confidential information in the
there is encloqed a
copy.
00 "At the
meeting last Monday of the Federal Advisory
with the Board,
the
the Council asked for copies of
tiont'
l hut in view of the uncertain lep:islative situathe 0
'
did not seem possible at that time to comply with
the IDMIcilt s request. However, if we should learn that
we
is about to be
introduced or has been introduced,
131,4"
"
. 1 advise you
promptly, and you will be free then to
viZg it to
the attention of the member of the Federal Adtionr7 Council from
your District, as well as to the attenof your
board of direcf-rs."

.cr
i

Approved unanimously.
LA44-,

I.^ Honorable
Wright Patman, Hcwse of Representatives, read011 /5:
Me t "Tl-i:rman
t
Eccles who is temporary
il away, has asked
to:
li -c'‘Rowledge
You;
letter
May
of
10,
1W. In response
W tur request,
copies nre Pnclosed of a draft of bill
ell it i
'
-8 belieVed
WrAIld cavn-r out the recommendations




793
5/18/44
—7—
!for bank holding
compan:r leoislation made by the Board
In

its Annual
Report for 1 9/4 3.
h
The draft was prepared with a view to incorporating
R°1ding company provisions in one section of the Federal
,
ese/'Ire Act which
would become section 23A, a section now
-In!voted to
'Relations
with Affiliates' of member bans.
The
Present requirements of section 23A would become sec:
1°;
1.1 !?B and would not be changed substantially except
L'ney .would be made applicable to insured banks rather
""en r11.y to
member banks.
10..44, If You Should wish any information or explanation
ma's" respect to the
draft or any of its provisions, vou
jsYmcommunicate with the Board's General Attorney, Mr.
r.
Dreibelbis."

4

Approved unanimously.
MeftrandUM dated May 17, 190., from Mr. Morrill
recommending,
view of
the fact
that it will be necessary to maintain a substantial
knotItt of
change in the
cafeteria when its operations are taken over by
the
Board on
June 1, 194/4.,
that the Board authorize the establishment of
e4sh fund
of $400 to
be rlaced in the custody of the manager of the
cafeteria, it
beinr_T understood that appropriate steps will be taken to
&NUN
Pr°Per accounting
for funds handled in the cafeteria.
t4

Approved unanimously.
Thereupon the meeting adjourned.

411Proired:




ember.