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633 A meeting of the Board of Governors of the Federal Reserve S7"e1 was held in Washington on Tuesday, May 7, 1940, at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak McKee Davis Draper Mr. Morrill, Secretary Mr. Bethee, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Smead, Chief of the Division of Bank Operations Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Dreibelbis, Assistant General Counsel M. the Fed era" or orti the re Szymczak stated that recommendations had been received from Reserve Banks of Atlanta and Kansas City covering salaries cers Of the Banks for the year beginning Tune 1, 1940, and that e°ramendations included the following salary increases: Federal Reserve Bank of Atlanta 11, s,Ne:m m m. R. BeLarin, sr. rYan L. k. Clerk Shaw k• Lootey. Title First Vice President Vice President New Orleans Branch Managing Director Cashier Savannah Agency Assistant Manager Salary Increase From To $10,500 ‘q1,500 7,500 8,100 10,000 4,000 11,000 4,300 2,100 2,400 634 5/7/40 -2Federal Reserve Bank of Kansas City Neme D. w q, • "oolley B. Robb Title Assistant Cashier Manager, Research and Statistical Department Denver Branch Cashier Si A. Brown 0, P. CordillOmaha Branch Assistant Cashier Salary Increase To From 5,400 .,000 5,400 6,000 4,800 5,400 4,700 4,800 Szymczak stated that the salary proposed for Mr. Cordill was it exceSs cr the maximum of $4,500 per annum provided in the tentative c4ssitication adopted by the Board but that in view of the surrounding ell'elirnstances, he felt the increase was justified. Ile 44 He also stated that reviewed the canments of the Board's examiners with respect to the, officers of these banks and in the light of the examiner's comments had A4 --lecassed with President Hamilton of the Federal Reserve Bank of kailses City over the telephone the increase proposed for Mr. Brown, ellIdth" President Hamilton indicated that he would be satisfied if the B°41'd approved an increase of 0200 to $5,000 per annum in Mr. 4c)/vIll BelerY f did feel that in the circumstances to which Ile referred some athOUghh Increaseeshould be granted. Mr. Szymczak stated that he 17°111d recommend approval of all of the increases proposed with the elceel;Iti°11 of the increase proposed for Mr. Brown and that he would Iteectrnerld an increase to 45,000 Der annum in that case with the undert1c1111R that he (Mr. Szymczak) would discuss the matter with Mr. C41dwell, Chairman of the Kansas City Bank, before the letter to the 635 5/7/40 -3Xansas City Bank advising of the Board's action is sent. Mr. Szymczak's recommendations were approved unanimously, with the understanding that the letters to the Federal Reserve Banks of Atlenta and Kansas City would be prepared and submitted to the Board for approval. Following the meeting of the Board on May 3, 1940, the draft Of letter to the Bureau of the Budget with respect to section 5 of a 131111P"ed bill which would amend section 24 of the Federal Reserve Act t°Pexyait national banks to make real estate loans for a term of fifteen Yseers Provided 60 per cent of the Principal amount of the loan was re11"cl within that period, was revised and circulated among the members the Board and was placed on the docket for this meeting for her e°118ideration. rorth The revised draft of letter stated that, for the reasons therein, it was the Board's view that section 5 should be °Itted fram the proposed bill. In connection with a discussion of this matter Mr. Eccles refor the information of the other members of the Board a conWhich he had yesterdaY with Mr. Jones, Federal Loan Administl'"or, with respect to this bill and also with regard to the latest clI*art (31" the Mead bill which would amend section 13b of the Federal 11e8erve Act relating to industrial loans by Federal Reserve Banks. There ensued a discussion of the Position the Board should take in replying to the request from the Bureau of the Budget and Counsel's office was requested to prepare a draft of reply 636 5/7/40 -4along lines agreed upon during the discussion for consideration by the Board. Further reference was made to the draft of letter to the Chairell Federal Reserve Banks, which was discussed at the meeting "the Board on May 3, 1.940, and which requested any canments that the directors of the banks may wish to make with respect to the latest " d of the Mead bill on industrial loans by Federal Reserve Banks. Consideration was given to the letter in the light of the question whether there is any Possibility of the bill being considered at this asesiCongress and, therefore, whether any useful purpose would be se rred at this time in asking the Federal Reserve Banks for their ccilnraeilt 8. The suggestion was made that, if sent, the letter to the bam,_ should review briefly the backgraund of the present bill end l'eter to -roPcsals recently made with respect to the creation of an tlidePen dent sYstem of banks to make industrial loans. At the conclusion of the discussion, it was agreed that the canments of the Federal Reserve Banks should be invited, the letter to the Banks to be in a form to be approved by Mr. Draper. turing the discussion of the above matter Mr. Vest and Mr. %rdner joined the meeting. Mr. Eccles stated that H. Merle Cochran, Technical Assistant t° the Secretary of the Treasury, called him on the telephone yesterEltd said that, because of conditions in %rope, the Bank for Tiltel'"°7181 Settlements was considering the appointment of T. H. 637 5/7/40 -5McKittrick, sr., an America n, who is now the President of the bank, "Chairman of the board of directors; and that the matter was being 13resented to the Board informally to determine whether it saw any obiection to the appointment. During the discussion which followed, Counsel was requested to look into the legal situation with respect to such appointments and be prepared to report on the matter at a meeting of the Board to be held tomorrow morning at 10:30 a.m. Mr. Dreibelbis stated that yesterday Mr. Logan, Vice Presidett Eind General Counsel of the Federal Reserve Bank of New York, called him on the telephone and stated that a request had been reeeived by the New York Bank that it honor a request to be made under Pcqver of attorney held by the Norwegian Minister in this country r°11 Pertassion to withdraw the funds held by the Federal Reserve Bank "New York in an account maintained by the Bank in the name of Norges 13aialt• the central. bank of Norway it being understood that the funds e° Withchlawn would be deposit ed in a new account set up on the books "the pede__ ral Reserve Bank in the name of the Norwegian Minister. the Dreibe1bis said that Mr. Logan indicated that the Treasury desired Pederal Reserve Bank to handle the account in this manner and had eIRR-e8ted to Mr. Logan that, if the Reserve Bank did not have the 11"e8aary authority to action, it might be proposed by the take such TI'el1811r3r that legislation be enacted to give the bank that power. he qtlestion involved so far as the New York Bank is concerned, Mr. 638 5/7/40 -6Dreibelbis said, was whether it would be justified in recognizing the a uthority of the Norwegian Minister to withdraw the funds of the "litre] . bank and, if that question were answered in the affirmative, Itether the Reserve Bank could establish the account in the name of the tiorwe6ian Minister, Mr. Dreibelbis added that Mr. Logan had said that the matter was being reported to the Board informally at this time because the question were of such importance that the Reserve s 13e*: did not want to act on them without taking the matter Up with the Board. There was a discussion of the problem in the light of the consideration which had been given by the Board some time ago to the opening of special accounts for the Bank of England and the Bank of France in Which transactions of their respective Governments are conducted, and, at the conclusion of the discussion, the staff was requested to investigate the question of the authority of the New York Bank to open the account for the Norwegian Minister as Proposed, it being understood that the matter would be given further consideration at the meeting of the Board to be held tomorrow morning. At this point Messrs. Thurston, Wyatt, ead, Goldenweiser, l'elbelbls) Vest and Gardner left the meeting and the action stated 171th respect to each of the matters hereinafter referred to was then tIk" bY the Board: The minutes of the meeting of the Board of Governors of the Reserve System held on May 3, 1940, were approved unanimously. 639 5/7/40 -7The minutes of the meeting of the Board of Governors of the Pederal Reserve System held on May 4, 1940, were approved and the eetions recorded therein were ratified unanimously. Memorandum dated May 6, 1940, from Mr. Morrill recommending that th e Salary of Lee W. Langham guard, be increased from , 1,380 eilluim to 4,500 per annum, effective as of May 16, 1940. Approved unanimously. Letter dated May 6, 1940, to "The Citizens-State Bank of Strasburg, Ohiwt, s tresbLirg, Ohio, stating that, subject to conditions of membership 11113""ed 1 to :3 containe d in the Board's Regulation H and the following 811ei441 c ondition, the Board approves the bank's application for em4. 1 8hi P in the Federal Reserve System and for the appropriate amount or Stock in the Federal Reserve Bank of Cleveland: 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. Fleming, President of the Federal Reserve Bank of Cleveland, reading as follows: tez a"The Board of Governors of the Federal Reserve Sysot s PProves the application of 'The Citizens-State Bank the trasburg, Ohio', Strasburg, Ohio, for membership in 151, , zederal Reserve System, subject to the conditions eribed in the enclosed letter which you are requested tbe; Two'°rward to the Board of Directors of the institution. is rcopies of such letter are also enclosed, one of which to i,o _r Your files and the other of which you are requested ",-L,vrward to the Superintendent of Banks for the State ohio for his information. 640 5/7/40 -8"It is assumed that your office will follow the Tatter of bringing the savings accounts listed on page r of the report of examination for membership into con16 flitywith with the Board's regulations." Telegram to Mr. Clerk, First Vice President of the Federal Reserve Beutk of San Francisco, referring to the application of the "Currie C°1111tY Bank", Gold Beach, Oregon, for Permission to withdraw imnediately trout mernbership in the Federal Reserve System, and stating that the lloard waives the usual requirement of six months notice of intention t° withdraw, and that, accordingly, upon surrender of the Federal Reserve Bank stock i ssued to the Currie County Bank, the Federal Reserve 13"ic Of San Franci sco is authorized to cancel such stock and make apr°1)1'iate reAind thereon. The telegram also stated that it was underElt00,4 u. that the Currie County Bank desired its withdrawal to became erre ct17e concurrently with the opening of the proposed branch and &te a ccePtance by the Federal Deposit Insurance Corporation as a non' 1n8ured institution. Approved unanimously. Letter dated May 6, 1940, to Sanders & Day, Bluefield, West reading as follows: 19„ This refers to Mr. Sanders' letter of April 25, piTh relating to authority of your client, The eif.” National Banktheof Bluefield, Bluefield, West VirVI;1 1. 0 exercise fiduciary powers in the State of that "The Board has frequently expressed the opinion ex a netional bank which has received permission to "else fiduciary powers under the provisions of the 641 5/7/4o _9- "Federal Reserve Act may, without other authority, exercise the Powers granted not only in the State in which the bank is located but also in any other State the laws of which do not expressly or by necessary implication prohibit the exercise of those powers by national banks located in other States. The Board has expressed the ) 3Pilli0n, however, that in any such case the national ahk would have to conform to those laws of any such Other State in which it is acting which relate to the exercise of fiduciary powers by a foreign corporation. ere enclosing for your information a copy of a ruling 1 2 this effect published in the Federal Reserve Bulletin rOr July 1921 at page 81.6. pi. "Copies of your letter and this reply are being fnished to the Federal Reserve Bank of Richmond and 7011 have any further auestions concerning the matter it 4.4l is euggested that you communicate with that institution, 7e i Approved unanimously. Letter to Mr. Rounds, Vice President of the Federal Reserve °r New York, reading as follows: This will adknowledge receipt of your letter of 1/11171,3) enclosing a letter Mr. Barrows received from Mr. Th, Br°1`Ine, Director, Management Research Division, `lonference Board, in which he requests that your out the enclosed cuestionnaire on personnel Igketficiels. mr. :The Board sees no objection to your furnishing ti 'rowne with the information as shown on the ques"naire enclosed with your letter. or your information, there is enclosed a copy of 13.2letter we are writing to the other Federal Reserve ' tui "with respect to this matter." Approved unanimously, together with a letter to the Presidents of all Federal Reserve Banks except New York, reading as follows: 33 ere in receipt of a letter from the Federal Reserve"/4a ank of New York, enclosing a letter received from 642 -10"Mr. H. F. Browne, Director, Management Research Division, The National Industrial Conference Board, together With a detailed maestionnaire on personnel practices 'Which he asked the Federal Reserve Bank of New York to rill out. bank :The Board sees no objection to the Federal Reserve 8 furnishing Mr. Browne with the information called 'or in the questionnaire. "If your bank receives such a request, it will be 11PPreciated if Of your reply."you will furnish the Board With 8 copy Letter to Mr. Nardin, Chairman of the Federal Reserve Bank of st, L°415 , reading as follows: enci,7h15 refers to your letter of April a), 1940, with regarding the question whether the service of • dames H. Penick, a director of the Little Rock Branch Your bank, as Chairman of the State Planning Board of '4:s 1 State of Arkansas would be in violation of the resolu✓"of the Board of Governors of December 23, 1915 with :Peet to the holding of political or public office by ficsrs and directors of Federal Reserve Banks. "It is understood that the Arkansas State Planning Bo reerd consists of 15 members, including the Governor, ✓ Presentatives of 7 State offices and departments, a esentative from the College of Agriculture of the GovversitY of Arkansas, and 6 members appointed by the that all members of the Board serve as such compensation; and that in general the function thethe Board is to prepare an official State plan for or Physical development of the State with the purpose ecoeccamplishing a coordinated, adjusted, efficient and youll°nlic development of the State. It is noted from e that in the opinion of your General Counsel or 4nurself the service in question is not in violation 11,e , resolution of the Board of Governors. Boa On the basis of the information stated above, the ser .cil of Governors offers no objection to Mr. Penick's vihiTng as Chairman of the Arkansas State Planning Board e serving as a director of the Little Pock Branch of Your bank.” Z Approved unanimously. 643 5/7/40 -11Letter dated May 6, 1940, to Mr. Lowell Mrellett, Chairman of the (1_, " - 41181 Housing Committee, prepared for the signature of Chainian ecleas reading as follows: "Your request of May 2 for the full time of at least ° rine research person to work two or three months for the 1/4'oramittee on Economics and Statistics has been given careConsideration. We are interested in the problems Ulider review and wish to help in any way possible. Our 15°81tthns however, s somewhat different from that of the t o ireral agencies whose primary concern is with housing. t'Y One of our research people--Mr. Foster--devotes his line Primarily to housing and construction and you will r.ealize, I am sure, that it would not be possible for us Io release him from his regular work here. We shall be however, to have him participate in any conferences that'may be called with regard to the work planned and to help -" anY other way that appears feasible." Approved unanimously. Thereupon the meeting adjourned. Chairman.
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