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629 A meeting of the Board of Governors of the Federal Reserve Sys" t was held in Washincton on Tuesday, May 4, 1937, at 10:15 a. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Broderick Szymczak McKee Davis Mr. Mr. Mr. Mr. Morrill, 'Secretary bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter reto and the action stated with respect thereto was taken by the BOard: The minutes of the meeting of the Board of Governors of the Fed- ''6'11 Re -s i8° Ve System held on May 3, 1937, were approved unanimously. .mLe.Legram. to Mr. Sargent, Secretary of the Federal Reserve Bank Or Sexi -rancisco, stating that the Board approves the establishment without eh -Etnge by the bank today of the rates of discount and purchase tn its existing schedule. Approved unanimously. Letter to the board of directors of the "Chester-Schroon-HoriEallk", Chestertown, New York, stating that, subject to the conditions or Itienthe,ship t e numbered 1 to 3 contained in the Board's Regulation H and rollowing special condition, the Board approves the bank's apolicatic% raembership in the Federal Reserve System and for the appro1111 Eite eziount of stock in the Federal Reserve Bank of New York: 640 5/4/37 "4- -2Such bank shall make adequate provision for depreciation in its furniture and fixtures." Approved unanimously, together with a letter to Mr. Harrison, President of the Federal Reserve Bank of New York, reading as follows: "The Board of Governors of the Federal Reserve System Proves the application of the 'Chester-Schroon-Horicon nk's Chestertown, New York, for membership in the Federal Reserve System, subject to the conditions prescribed in the closed letter which you are requested to forward to the board of directors of the institution. Two copies of such letter are also inclosed, one of which is for your files and the other of which you are requested to forward to the Superintendent of Banks for the State of New York for his information. 2 "It will be noted that, instead of prescribing a special ; °ndition of membership to require the bank to agree not to : tire any of the capital debentures without the Board's approval, standard condition of membership numbered 2 has been modified to make the condition applicable also to a 'eduction in the capital debentures held locally. "The Board has not prescribed the special condition reo to almended by the Reserve Bank requiring the bank to reduce of 811 amount not in excess of cost the carrying value of any the bonds still owned which were recently written up on the j. books of the bank. The omission of such a condition or not to be considered as condoning the general practice 1 up securities above cost. In this case, however, it ,71ting be,,n noted that on date of examination the securities ac -eaeount t reflected a total net appreciation of *140; that or? h°uCh certain bonds had been written up approximately other bonds had been written down at the same time 4Proxtmately a7,900, and that the apparent effect of the t ke,iustment had been to show the bonds at not more than marsh Price at the time of adjustment. The bank, of course, ,„2111d make adequate provision for amortization of the i;ounts above par at which the bonds are being carried. It is llnaerstood that the omission of the proposed condition be satisfactory to Mr. Gidney, with whom the matter has en i nformally discussed by members of the Board's staff. It has been reported that, as a result of the severe bond 401, 1c3eses sustained in the past, neither the directors 1,es the cashier of the bank appear willing to assume the P°11sibility of handling the bond account. In the cir- 641 5/4/37 -3"cumstances it appears essential that the bank avail itself of competent investment counsel, and it is assumed that if the bank is admitted to membership the Federal reserve bank will endeavor to see that this is done. , "The papers submitted with the application of the bank aid not include a copy of the form of Class B debentures ich it issued in December, 1934. It will be appreciIvated -f you will forward such a copy to the Board for its r ecords." Telegrams to Mr. Stewart, Federal Reserve Agent at the Federal R"erve Bank of San Francisco, authorizing him to modify the general 7c/ti11g permits issued to Transamerica Corporation and Inter-America Cor Poration on April 28, 1937, by deleting the words "San Francisco, Cali forni a" and inserting in lieu thereof the words "a Delaware corporaThe Should telegrams stated that if new permits were issued they bedated April 28, 1937, and that the old permits should be re- tilrIled to the Federal reserve agent to be forwarded to the Board. Approved unanimously. Letter to Reerire Mr. V4orthington, First Vice President of the Federal Bank of Kansas City, reading as follows: "Reference is made to your letter of April 23, 1937, „ Einfi * ' 1, You made reference to the Board's letter X-7390 of" eSked if it is intended that copies of written reports at 11, a_riod1c departmental audits of the several departments ci,411e head office of the Federal Reserve Bank of Kansas 'Y !3,e forwarded to the Board. rice _ Since, as you stated, general audits of the head ofco . ere not made by your auditor, it is desirable that se las of reports of periodic departmental audits of the BoZal departments at the head office be forwarded to the thZ"4 It is also desired that you continue to forward to 7ar.Board copies of the reports of general audits of the branches, as well as copies of any written comments in presenting all audit reports to your board of ' dira e torc Approved unanimously. 642 Thereupon the meeting adjourned.
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