The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
782 A meeting of the Board of Governors of the Federal Reserve SiSteni Was held in Washington on Friday, May 24, 1940, at 11:00 a.rrt• PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak Davis Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Goldenweiser, Director, Division of Research and Statistics Mr. Smead, Chief, Division of Bank Operations Mr. Dreibelbis, Assistant General Counsel There were presented telegrams to Mr. Young, President of the Nleral arid Reserve Bank of Boston, Messrs. Kimball, Hays, Dillard, Stewart, Powell, Cleveland, Secretaries of the Federal Reserve Banks of New York, Chicago, St. Louis, and Minneapolis, respectively, Mr. (11(111e1-1, Chad : Gilbert, presi : :: of the Federal Reserve Bank of Kansas City, Mr. Federal Reserve Bank of Dallas, and Mr. Hale, 4el'etarY of the Federal Reserve Bank of San Francisco, sLatinz that the 13°Iscl aPProves the establishment without change by the Federal Reof San Francisco on May 21, by the Federal Reserve Banks of york, Cleveland, Chicago, St. Louis, Minneapolis, Kansas City, and 4114s) °t1 May 23, 1940, and by the Federal Reserve Bank of Boston toOf the rates of discount and purchase in their existing schedules. Approved unanimously. 783 5/24/40 Reference was made to a letter received by the Board under date Or Y 13, 1940, from Mr. Merritt, Chairman of the Federal Reserve Bank or Do, ''as, stating that at the meeting of the board of directors of the 8arlk o m 11 -ay 9 the salaries of officers of the Bank for the year beginruing e I un1940, were fixed at the rates set forth below, subject to 4131/1 1 by the Board of Governors. A copy of the letter had been fur- rlisher'l to each member of the Board before this meeting: 114 P.-• ulabert • Stroud IL 8 17, j. r-Idoiernan • Evans W n Pord 11. ni Uacw. ; We Smyth 11. Hol4-Loway Herttatin 71, ll 8aYles Gentry 1)evfos 1:1* I I -I he by gle Title President First Vice President and General Counsel Vice President Vice President and Secretary of the Board of Directors Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier General Auditor El Paso Branch Managing Director Cashier Houston Branch Managing Director Cashier San Antonio Branch Managing Director Cashier Annual Salqta Present Proposed 20,000 15,000 11,000 17,000 11,000 9,000 6,600 6,000 6,000 4,800 5,000 10,000 9,000 6,60o 6,000 6,000 4,800 5,500 6,000 4,200 6,000 4,200 8,000 4,500 9,000 4,800 7,500 4,500 7,500 4,500 8,500 SzYmczak stated that he had reviewed the proposed salaries 8'ut of the tentative classification of official salaries adopted the Boa and also in the light of the fact that a study of official sala,. , Iea is to be made by the Chairmen of the Federal eserve Banks and 784 5/24/40 that . it was his recommendation that Mr. Merritt be advised that, in of the short period of time that Messrs. Gilbert and Stroud had been Serving in their new positions and of the study of official salles Proposed to be made by the Chairmen, the Board was of the opinion that, the two increases should not be granted at this time. Mr. Szymczak aiso r ec°mmended that the Board approve salaries at the rate of $9,500 Per an num and $8,500 per annum, respectively, for Messrs. W. J. Evans, Vice p . resIdent and Secretary, and W. D. Gentry, Managing Director of the Ho ilston Branch, if fixed by the Board of Directors of the Bank at those rates, and that the remaining salaries of officers of the Dallas Bank b e aPProved at the rates fixed by the directors. Mr. Szymczak's recommendations were approved unanimously. On May 20, 1940, at 12:20 p.m. there was received in Chairman °Ifice through the registered mails a letter dated May 18, °III Senator Wagner, Chairman of the Committee on Banking and renc:f of the United States Senate, which read as follows: Senate Committee on Banking and Currency is author and . ized by Senate Resolution 125 'to conduct a study Dion holu hearings to consider and recommend a national bank e, . tarY and banking policy by which the monetary and authorities of the Federal Government shall be char "ci and car acter governed, and to consider and recommend the of governmental machinery best calculated to Coa°11t such policy'. The resolution requires that the utee 'report to the Senate as soon as practicable the theillts of its study, together with its recommendation for ena ctment of any legislation it may deem necessary'. 785 5/24/40 "The basis for enclosed questionnaire has been prepared as a future studies and hearings. The Committee will be Pleased to have your replies to the questions listed on Pages 21 - 39, Although some of the questions as stated might lend themselves to a 'yes' or 'no' answer, or a mere ”Atement of opinion, the Committee is desirous of having he evidence and reasons constituting the basis for your answers. "The Committee would be pleased to receive such studies You may have in preparation relating to any part of the ;VIIItlyciZd your suggestions of additional monetary problems which may require consideration. me "From time to time, the Committee will direct suppleorntarY inquiries to the same and perhaps to other agencies °Pganizations. In responding to the questionnaire, you .-I , feel free to submit answers to questions specifically ' tressed to others. fer "The Committee contemplates arranging a series of conti, erIces in the near future with those to whom the quesrnnn `i aire is addressed, with a view to formulating suppleen ' jarY questions and organizing the answering material." Z Copies of the letter and enclosure, as well as copies of a 151‘e88 statement issued by the Senate Banking and Currency Committee in c°41-lecti°11 with the questionnaire were sent to the members of the Board taptly upo receipt. Nn The questionnaire was discussed and there was agreement to the ellgeestion that it would be difficult, if not impossible, to answer sati8f act°1 "ilY the questions in the questionnaire without formulating 4 le glalativ e program upon which the Board could agree in order that the bli:estions could be answered in the light of the changes that should agree : e irl the whole banking and credit picture. There was also general ellt to the suggestion that, in view of the changed conditions with the c°1111trY is now confronted and the possibility that action fl'4Y h li a e to be taken in the field of banking legislation before the 786 5/24/40 -5- 8tillY contemplated by the Vagner Resolution could be undertaken as (*igillallY planned, no purpose would be served in the Board's attempting t° answer immediately the large number of questions contained in the questionnaire, but that, instead, it would be helpful to prepare cil'art of a legislative program which could be suggested by the Board t°1‘e.c1°Pti°t1 in the event of an emergency requiring such action. In connection with the third paragraph of Senator lagner's tter 14r. Ransom inquired whether there was any objection to sendto the Banking and Currency Committee the banking studies which 41clbeen Prepared by the staff and Mr. Goldenweiser expressed the °Piniori that the studies should be sent to the Committee as soon as theyhiie been edited, which would require six weeks or more. It was agreed unanimously that copies of the studies should be sent to the Senate Banking and Currency Committee as soon as they are ready for Printing. . At the conclusion of the discusson, upon motion by Mr. Szymczak, and by- unnimous vote, the Senior Staff was requested to draft a legislative program covering the banking, credit, monetary and fiscal field which might be presented for consideration in the event of the termination of the war in the near future, as well as a program which might be considered in the event of a war of long duration. In taking this action, it was understood that members of the Board should make such suggestions to the Staff with respect to the program as they may desire to offer, and that as the program develops 787 5/24/40 —6— the questions presented would be discussed at meetings of the Board. Also upon motion by Mr. Szymczak, and by unanimous vote, the Legal Division was requested to make an analysis of the existing emergency legislation with respect to banking for the purpose of determining the Powers of the President, the Secretary of the Treasury and Federal banking agencies over the supervision and operation of banking institutions in the United States which could be exercised in the event of need for immediate action, and what, if any, additional legislation is necessary to permit complete coordination of Federal supervision of banking and credit functions. It was agreed unanimously that the letter from Senator Wagner should be acknowledged and that he should be advised that, in accordance with the last paragraph of his letter, representatives of the Board would be glad to meet with members of the Senate Banking and Currency Committee at any time that Gould be mutually convenient. era". Cons ideration was given to the statements submitted by the FedAdiris°rY Council to the Board at the meeting on May 21, 190. The Secretary was requested to prepare a draft of letter to Mr. Lichtenstein, Secretary of the Federal Advisory Council, along the lines suggested during the discussion . The following additional actions with respect to the statements submitted by the Council were also taken: Mr. Parry, Chief of the Division of Security Loans, was requested to prepare a recommendation to the Board with respect to the amendment to Regulation U, Loans by 788 5/24/40 -7Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange, suggested by the Council which would authorize a bank to take over an undermargined loan from a broker. The Legal Division was requested to make a study of the provisions of Section 3477 of the Revised Statutes which in effect prohibits the assignment of claims against the United States and to prepare for consideration by the Board a statement of the objections, if any, that might be advanced to the amendment of the section so as to permit the assignment of such claims to the extent recommended by the Federal Advisory Council. The Division of Research and Statistics was requested to prepare a statement which Would set forth fully the Board's view with respect to the easy money policy followed by the Federal Reserve System and the Administration in the past and the present easy money situation, the statement to be in such form that it can be published with the statement Ilbmitted by the Council on the same subject In the event the Council at its September meeting or subsequently thereto should request that its statement be released. 141'. Dreibelbis referred to the questions which had arisen re: e1114 ' e t the Federal Reserve Bank of New York with respect to the bY the New York Bank of accounts of central banks located in colattries invaded by Germany and stated that he had been in touch with 41'*141gar13 V. President and General Counsel of the New York Bank, by telePh°11e regarding the various questions as they arose and that the 417e1°Prilettts in the case of the Nederlandsc he Bank account had reached the l'cjitt wherethere was a question whether it was not in fact an 789 5/2 4/40 -8Of the Dutch Government rather than the central bank. He 41`1° said that the account of the Sveriges Fiksbank was being operated by the Swedish Minister and the Commercial Counselor of the Swedish flbaesY and that the question was presented to the New York Bank whether 48110111d continue to handle these accounts and, if so, in what manner. 11*e was a discussion of the authority of the Federal Reserve Bank of 14e17York to handle the accounts and Mr. Dreibelbis expressed the opini"hat there were two or three ways in which the accounts could be e°11tirlued by the New York Bank and still satisfy the requirements of the law even though the accounts were controlled by the respective forei G°vernments. Certain steps that could be taken to comply with the applicable provisions of law were suggested and discussed. Mr. 1)Nbelbis made the further statement that the question presented 8°rue difficulty for the reason that for a number of years the position hacl been taken that the Federal Reserve Banks were without authority intain accounts for foreign governments, that he was merely bring- the tune matter to the attention of the Board so that it might be in- °f the d evelopments but that no action was called for at this a8 the Mew York Bank had not presented any of the questions involvec, Consideration by the Board. At this point Messrs. Thurston, Goldenweiser, Smead, and 1) /'elbeibis left the meeting and the action stated with respect to e`lell of the toardt matters hereinafter referred to was then taken by the 790 5124/4o -9The minutes of the meeting of the Board of Governors of the Peeral Reserve System held on May 23, 190 were approved unanimously. Letter to Mr. Roman L. Horne, Assistant Chief, Correspondence all( 'Pub • lications Section of the Secretary's Office, reading as follows: "In accordance with your request of May 22, 190 Your resignation from the staff of the Board of Goverriors e, of the Federal Reserve System has been accepted ! ective as of the close of business on June 17 in order that you may accept an appointment with the Ten''?ssee Valley Authority, where you desire to begin servIce on June 18, 1940. In accepting your resignation, our best wishes for Your success in your new connection go with you." Approved unanimously. Memorandum dated May 22, 1940, from Mr. Morrill, recommending tileLtY for the reason stated in the memorandum, Edward E. Stocker be 413P0 Inted On a temporary basis for a period of not to exceed four 431Thils te a8 a Page in the Office of the Secretary, with salary at the per month, effective as of the date upon which he enters 1113°n the perfo nce of his duties. Approved unanimously. Letter Ot p to Mr. Sinclair, President of the Federal Reserve Bank adelphia, reading as follows: the "The salaries fixed by your Board of Directors for eft, officers of the Federal Reserve Bank of Philadelphia, May 17111e May 1, 190, as submitted in your letter of fol.:101'4:1940, are approved by the Board of Governors as 5/24/40 —10— "Name Annual Salary Title J. S. 25,000 President P. j . Sinclair 16,000 President Drinnen First Vice C. A. 13,200 Vice President and Cashier McIlhenny j. Davis 13,000 Vice President E. c. Hill 10,000 Vice President Vi• G. 9,000 Assistant Vice President McCreedy C• A. President 8,000 Assistant Vice Sienkiewicz L. R. Donaldson 6,500 Assistant Vice President Toy 8,000 Assistant Cashier A. E. Post 3,500 Secretary P• Poorman 6,500 Auditor "The above salary approvals are for the period May 1, 1940, to April 30, 1941, subject in the case of the President and First Vice President to their reappointment -with the ap— Proval of the Board of Governors upon the expiration of their Pl'esent terms of office." Approved unanimously. Memorandum dated May 24, 1940, from Mr. Smead, Chief of the u_ 143/1 of Bank Operations, submitting a letter dated May 21 from 44‘ 'illorthin8ton First Vice President of the Federal Reserve Bank of "CitY, which recommended approval by the Board of changes in the Poter:h7e1 classification plan of the Bank to provide for the creation new te4t positions of "Mechanic" and "Oiler" in the Building Depart— 'and for an increase in the maximum salary from P,1,620 to 1.,680 annum p_r The raemortIthe an -L o dili position of "Engineer" in the Building Department. Per stated that the proposed changes had been reviewed and l'ecortirtierided that they be approved. Approved unanimously. Letter to the board of directors of "The Southern Missouri cola PanY", Springfield, Missouri, stating that, subject to 792 5/24/40 ec3nditions -11of membership numbered 1 to 3 contained in the Board's Regulation H, the Board approves the bank's application for member8114 in the Federal Reserve System and for the appropriate amount of 143ek in the Federal Reserve Bank of St. Louis. The letter also contained the following special comments: e "It appears that the bank has the authority to ex: else fiduciary powers but is not doing so, and that it q:s Ee d:s certain other powers, none of which is being exwhich are not incidental to either a banking or te-8u business, such as the power to act as surety. AtIS invited to the fact that if the bank desires t. exercise any powers not actually exercised at the of admission to membership, it will be necessary pern' condition of membership numbered 1 to obtain the 1"-Lssion of the Board of Governors before exercising gem. In this connection, the Board of Governors underds that there has been no change in the scope of the . ()_113orate powers exercised by the bank since the date of ciPPlication for membership." Approved unanimously, together with a letter to Er. Martin, President of the Federal Reserve Bank of St. Louis, reading as follows: tem a"The Board of Governors of the Federal Reserve Sysrir°ves the application of 'The Southern Missouri Trusi_PP the '_mPany', Springfield, Missouri, for membership in eueral Reserve System, subject to the conditions preacri-ed ; in the enclosed letter which you are requested to ,No'orward to the Board of Directors of the institution. is feoPies of such letter are also enclosed, one of which to for Your files and the other of which you are requested Or 14?rWard to the Commissioner of Finance for the State 1.8S?uri for his information. the,Since the amount of estimated losses classified in erwo;e13°rt of examination for membership is relatively eliZa!" the usual condition of membership regarding the ation of estimated losses has not been prescribed." 793 5/24/40 -12Telegram to Mr. Gidney, Vice President of the Federal Reserve of New York, reading as follows: "In view of your recommendation and the information the Board will interpose no objection under the Pr°71sions of condition of membership numbered 4 to the r0osed absorption of The Kingsboro National Bank of 4oklyn in New York by Colonial Trust Company, New York, rl a tiersccordance with the program as outlined in your letS n t Approved unanimously. Of Rici_ Letter to Mr. Fry, Vice President of the Federal Reserve Bank "laand, reading as follows: a b ."Reference is made to your letter of May 20, 1940, !?-tting for consideration as required by Section 24A the Federal Reserve Act, the proposed expenditure by e1;ashington Loan and Trust Company, Washington, D. 9., pr amount not to exceed ''80,000 for the purpose of imat°:;i1ng and enlarging its West-End branch office located J-7th and G Streets. ap , "In accordance with your recommendation, the Board ' it: l°'Iree the proposed expenditure for such purpose and It 31, -. 8 , requested that you advise the bank accordingly. of 8 been noted that the office of the Comptroller Currency has likewise approved the proposed exPencliture Approved unanimously. ktik Lett er to Mr. Gidney, Vice President of the Federal Reserve Of ew York, reading as follows: elk : Reference is made to your letter of May 16, 1940, . NewraPing the request of The Summit Trust Company, Summit, Of ti, - er eY, for permission to continue the existing status trtIn';e trust company as majority stockholder of, arid and-k;ee for the outstanding bonds of, the Summit Title such-°1:tgage Guaranty Company, Summit, New Jersey, for Of th°411e as may be necessary to complete the liquidation -e mortgage company. 794 5/24/40 —13— "In view of your recommendation and the information available, the Board waives, for the time being, the re— quirement contained in condition of membership numbered 18, that the stock of the mortgage company be disposed of by a,stiPulated date. This action is taken with the under— s atlding that the liquidation of the mortgage company 1111- be pursued vigorously and that the Board reserves the right to fix a definite period within which disposal °f the stock shell be effected under the condition of t Tbership. The Board also waives, for the time during ? which the requirement of condition of membership numbered ls Waived, compliance with condition of membership "limbered 19 in connection with obligations of the mortgage ,(311TarlY which were outstanding when the trust company was ,adiratted to membership." 7 Approved unanimously. Thereupon the meeting adjourned. fhatiff.;11-1A 2 Secretary. S cretary. Chairman.
@FedFRASER