Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, May 23, 1939, Volume 26, Part 2

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667

A. meeting of the Board of Governors of the Federal Reserve
SYstem was held
in Washington on Tuesday, May 23, 1939, at 10:15 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Ransom, Vi ce Chairman
McKee
Draper

Mr. Bethea, Assistant Secretary
Mr. Cerpenter, Assistant Secretary
Mr. Clayton, Assistant to the Chairman
The action stated with respect to each of the matters hereinreferred to was taken by the Board:
The minutes of the meeting of the Board of Governors of the
4dsral Reserve
System held on May 19, 1939, were approved unanimously.
Memorandum dated May 20, 1939, from Mr. Bethea, Assistant
SeclietarY, recommending that, for the reason stated in the memorandum,
B. Hammond, elevator operator, be promoted to the position of
easistant chauffeur, with salary at the rate of $1,260 per annum, eftective as of June 1, 1939, and that Richard E. Ball, Jr., be appointed
"an

elevator operator, with salary at the rate of 4,200 per annum,

tractive as of the date upon which he enters upon the performance of
hie duties
after having passed satisfactorily the usual physical ex-

The recommendations were approved unanimously.
Memorandum dated May 18, 1939, from Mr. &Dead, Chief of the
1)111210n of Bank Operations, submitting a letter dated May 13 from Mr.




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-2-

Preston, First Vice President of the Federal Reserve Bank of Chicago,
which requested approval by the Board of
a change in the personnel
elsesification plan of the bank to provide for the establishment of a
new position in
the Research and Statistics Department of the bank of
"Statistical Adviser" to the Board of Directors, with a maximum annual
salary of
been

5,400.

The memorandum stated that the proposed change had

reviewed and recommended that it be approved.
Approved unanimously.
Letter to the board of directors of the "Farmers State Bank
afield, Lakefield, Minnesota, stating that subject to condi-

ti°118 of membership
rmmbered 1 to 3 contained in the Board's Regaleti011 }I and the following special conditions
, the Board approves the
1384ki s aPplication for membership in the Federal Reserve System and
felr

the appropriate amount of stock in the Federal Reserve Bank of

141111eaPoli s:
"4. Such bank shall make adequate provision for depreciation in its banking house.
Prior to admission to membership such bank, if it
has not already done so, shall charge off or otherwise eliminate estimated losses of 4650, as Shown
in the report of examination of such bank as of
March 1, 1939, made by an examiner for the Federal
Reserve Bank of Minneapolis.
1%.
Prior to admission of such bank to membership, First
Bank Stock Corporation Shall have complied with any
conditions to the issuance of a general voting permit
entitling it to vote the stock which it owns or controls of such bank."




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5/23/39

-3Approved unanimously, together with a
letter to Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, reading
as follows:

"The Board of Governors of the /ederal Reserve Sysapproves the application of the '/4armers State Bank of
Lakefield',
Lakefield, Minnesota, for membership in the
ederal Reserve System, subject to the conditions prescribed
1/1 the enclosed letter which you are requested to forward
to the Board of
Directors or the institution. Two copies
°f. such letter are also enclosed, one of which is for your
files and the other of which you are requested to forward
tO the
Comidissioner of Banks for the State of Minnesota
for his information.
"It will be noted that the Board has not prescribed
that part of the special condition recommended by the ReServe bank regarding An annual depreciation charge-off on
tho Parcel of
other real estate owned. This matter would
Seem to be more oroperly an administrative matter than the
subject of a condition of membership.”
Letter to the board of directors of the "Citizens State Bank
Of 101

Dorado", El Dorado, Kansas, stating that, subject to conditions
(311 Membership numbered 1 to 3 contained in the Board's Regulation H
1111d the following special condition, the Board approves the bank's ap111124t1 on for
membership in the Federal Reserve System and for the
Pp
r°Priate amount of stock in the Federal Reserve Bank of Kansas
City:
"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
Kansas City.

GO
5/23/39

-4Letter to the board of directors of the "Fairview State Bank

°t Fairview, Okla.", Fairview, Oklahoma, stating that, subject to
c°11(1 tions of
membership numbered 1 to 3 contained in the Board's
Reg
Illation H and the following special condition, the Board approves
the bank's application for membership in the Federal Reserve System
and

for the appropriate amount of stock in the Federal Reserve Bank

Of ICallaaa City:
"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. Hamilton, President of
the Federal Reserve Bank of Kansas City,
reading as follows:

"The Board of Governors of the Federal Reserve Sysapproves the application of the 'Fairview State Bank
Of
Fairview, Okla.', Fairview, Oklahoma, for membership
iU the Federal Reserve System,
subject to the conditions
Prescribed in the enclosed letter which you are requested
to forward to the board of directors of the institution.
Two copies of such letter are also enclosed, one of which
is for your files and the other of which you are requested
tO forward to the Bank Commissioner for the State of Oklahoma for his information.
"As pointed out in the presentation memorandum accompanying the bank's application, the usual condition of
7.e 1bership regarding the elimination of estimated losses
u°as not seem necessary because of the nominal amount
involved.
"You will note that we have treated 'Fairview State
enk of Fairview, Okla.' as the corporate title of the
l'ank. However, there appears to be some question concernrig the
matter and, for record purposes, advice will be
ePPreciated if your counsel does not consider this the
correct corporate title."




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5/23/39

-5Telegram to Mr. McConnell, Assistant Federal Reserve Agent at

the Federal Reserve Bank of Minneapolis, stating that,
subject to the
condi.tions set forth in the telegram, the Board of Governors of the
Federal

Reserve System authorizes the issuance of a general voting

Perrnit) under the provisions of section 5144 of the Revised Statutes
(1)1' the United States,
to the "First Bank Stock Corporation", Minneapolis,
Minnes°ta, entitling such organization to vote the stock which it owns
°r controls
of the "Farmers State Bank of Lakefield", Lakefield,
Millaesota, at all meeting
s of shareholders of such bank.

The condi-

ti°118 contained
in the telegram upon which the permit was authorized
were as
follows:
ttl.

Prior to the issuance of general voting permit authorized herein, applicant shall execute and deliver
to you in duplicate an agreement in form accompanying Board's letter X-9385, except that (a) paragraphs
numbered 1, 2, 4, and 5 shall be omitted and remaining numbered paragraphs appropriately renumbered,
and (b) all lettered paragraphs and introductory
sentence immediately preceding them shall be omitted.
et2.
Prior to the issuance of general voting permit authorized herein, applicant shall deliver to you in
duplicate Exhibit L (Form P-3) executed by The First
State Bank of Benson, Benson, Minnesota, Potter
County Bank, Gettysburg, South Dakota, The First
State Bank in Paynesville, Paynesville, Minnesota,
The First State Bank of Cando, Cando, North Dakota,
The First State Bank of Park River,
Park River,
North Dakota, Merchants and Farmers Bank of Cavalier,
Cavalier, North Dakota, State Bank of Glen Ullin,




672
5/23/39

-6"GlenIELLin, North Dakota, Farmers and Merchants
State Bank of Minneota, Minneota, Minnesota, First
State Bank of Hebron, Hebron, North Dakota, First
State Bank of Graceville, Graceville, Minnesota,
First State Bank of Wheaton, Wheaton, Minnesota,
The First State Bank of Cooperstown, Cooperstown,
North Dakota, and First State Bank of Highmore,
Highmore, South Dakota, and Exhibit N (Form P-4)
executed by applicant and consented to by such organizations, or furnish assurances satisfactory to
You that it will deliver such exhibits to you within
30 days after issuance of general voting permit authorized herein.
Prior to issuance of general voting permit authorized herein, Federal Reserve Bank of Minneapolis
shall ascertain and be satisfied that all provisions
of voting permit application executed by applicant
on September 30, 1933, and of agreement executed by
applicant on February 11, 1936, as modified by agreement dated June 22, 1937, have been complied with.

"4. Prior
to or simultaneously with issuance of general
voting permit authorized herein, Fanners State Bank
Of Lakefield shall be admitted to membership in the
Federal Reserve System."
14 c°11nact1on with condition numbered (2) the telegram called attention to the Board's letter
of September 19, 1938, to Mr. Swanson, Vice
Ilresident of the Minneapolis benk, concerning
the filing of Exhibits
"d N by the First Bank Stock Corporation and the Northwest BancorP"ation.
Approved unanimously.
Telegram dated May 22, 1939, to Mr. Worthington, First Vice
ill'esidant of the
Federal Reserve Bank of Kansas City, reading as follows:




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5/23/39

-7-

"Your telegram May 19 re Eldorado. Application for
membership of proposed State bank may be made either by
the national bank which
is to be succeeded by the proposed
State bank or by individuals acting as an organization
committee. In a similar case the Board did not act forrnallY upon the application until receipt of advice that
the F.D.I.C.
had approved the bank for deposit insurance
effective upon commencement of business, thereby making
it eligible
for membership. Board's approval was then
made effective if and when the bank was duly authorized
to
commence business by the State Banking Department and
the Reserve Bank was advised that before accepting payment
for stock in
the Federal Reserve Bank counsel for the
Reserve Bank should be satisfied as to the organization
papers and the Reserve Bank should be satisfied that the
capital stock of the proposed bank had been paid in.
Suggest that application and accompanying information
be
forwarded as soon as available."
Approved unanimously.
Letter dated May 20, 1939, to Mr. Young, President of the Fed"al Reserve
Bank of Boston, reading as follows:
"Reference is made to your letter of May 12, 1939,
enclosing a
copy of the resolution of your Board of Directors adopted May 10 providing for the charging off
a loss of 4tl,574.78 on an industrial loan.
"It is noted that this amount represents your bank's
Share of a loss of 43,149.55
on a loan made by The Second
l ational
Bank of Boston to Walker & Pratt Manufacturing
a°111PanY of Watertown, Massachusetts, with respect to which
'
Your bank executed
a commitment, under Section 13b of the
Federal Reserve Act, by which it obligated itself to assume
one half
of any loss on such loan. In view of the cir;amstances outlined in your letter and the enclosures,
he Board of Governors will interpose
no objection to
harging off 0.,574.78 on the books of the Iederal Reserve
,ank of Boston as a loss sustained in connection with such

Z




Approved unanimously.

_ 674
5/23/39

-8Letter to Mr. Young, Chairman of the Federal Reserve Bank of

New York,
reading as follows:
"Reference is made to your letter of May 15, 1939,
in which you agree
with the suggestion that the next meeting of the Chairmen of Federal Reserve banks be deferred
until fall.
"Replies to the Board's letter of May 11, 1939,
have been received from the Chairmen of ten of the Federal Reserve banks and they have concurred in the sagF,ested postponement of the meeting although one of them
exPressed some disappointment that it was necessary to
delEY the next conference until that time inasnuch as he
felt that the last meeting was constructive and had been
very helpful to him.
"The Board of Governors is in complete accord with
the opinion
that more frequent meetings of the Chairmen
are desirable and is making definite plans to call the
next meeting in the early fall."
Approved unanimously, with the understanding that similar letters would
be sent in reply to letters received
from the Chairmen of other Federal Reserve banks except Mr. McCabe, Chairman
of the Federal eserve Bank of Philadelphia. The following letter to Mr.
McCabe was approved unRnimously.
"Your letter of May 12, 1939, cottmenting upon the
Postponement until fall of the next meeting of the Chairmen of the Federal Reserve banks has been brought to the
of the Board. Replies to the Board's letter of
May 11,
MaY
1939, have been received from the Chairmen of
Other Federal Reserve banks and they have concurred
in the suggestion that the meeting be deferred.
"The members of the Board appreciEte very much your
frank comments with respect to the postponement of the
meeting and, as you know, they are in agreement with the
eition that more frequent meetings of the Chairmen are
desirable. They regret that circumstances have made it
necessary to defer the conference and have asked me to
"vise you that definite plans are being made for a meetlne in the
early fall."




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5/23/39

Thereupon

e meeting adjourned.

Assistant Secretary.

App