Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, November 12, 1943, Volume 30, Part 4

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

1668

A meeting of the Board of Governors of the Federal Reserve
SYstem was held in Washington
on Friday, November 12, 1943, at 11:00

PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Ransom, Vice Chairman
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 respect to each of the matters hereinafter referred to was taken by the Board:
The minutes of the meeting of the Board of Governors of the
Federal Reserve
System held on November 11, 1943, were approved unaniIllousiy.
Telegrams to Mr. Paddock, President of the Federal Reserve
8alik of
Boston, Mr. Treiber, Secretary of the Federal Reserve Bank
of New York, Messrs. Leach and McLarin, Presidents of the Federal Re8el*
"Baof Richmond and Atlanta, respectively, Mr. Dillard, Vice
Pitesident of the Federal Reserve Bank of Chicago, Mr. Stewart, Secretary
of the Federal Reserve Bank of St. Louis, Mr. Ziemer, Vice President of the Federal Reserve Bank of Minneapolis, Mr. Gilbert, Presi"of the Federal Reserve Bank of Dallas, and Mr. Hale, Secretary
de
°f the
Federal Reserve Bank of San Francisco, stating that the Board
111311°7es the establishment without change by the Federal Reserve




I'69
W12/43

—2—

Bank of San
Francisco on November 9, by the Federal Reserve Banks of
blew York, Atlanta, Chicago, and Minneapolis on November 10, by the
Federal Reserve Banks of Richmond and Dallas on November 11, and by
the

Federal Reserve Banks of Boston and St. Louis today, of the rates

°f discount
and purchase in their existing schedules.
Approved unanimously.
Memorandum dated November 9, 1943, from Mr. Paulger, Chief of
the Division of Examinations, recommending that the temporary appoint—
ment of
Miss Audrey L. Moye as a stenographer in that Division be made
Permanent and
that her basic salary be increased from $1,440 to

1,620

Per annum,
effective November 16, 1943.
Approved unanimously.
Memorandum dated November 9, 1943, from Mr. Morrill, recommend—
i4g that
Seaton Dyson, a messenger in the Secretary's Office who reached

the r
etirement age of 65 on July 4, 1942, and whose retention in active
'v-Lee through
December 31, 1943, had been approved by the Board, be
retained in
active service on a temporary basis, at his present basic
841arY of 1,600 per annum, for a further period of not to exceed one
Year beginning
January 1, 1944/ his continuance in employment during
that
Period to depend upon the need for his services and his ability
to render
them satisfactorily.

The memorandum stated that Dyson had

been fully
informed of the benefits available to him as a retired mem—
ber
of the
Federal Reserve retirement system as compared with the




1.670
11/12/43

-3-

benefits available if he continued as an active member of the retirement system, and that it was his wish to continue in his present position.
Approved unanimously.
Memorandum of this date from Mr. Morrill, submitting the resifAiation of

Ralph Matthews as a cafeteria helper in the Secretary's

°ffice, to become effective as of the close of business on November
'1943, and recommending that the resignation be accepted as of
15
that date.
The resignation was accepted.
Memorandum dated November 11, 1943, from Mr. Morrill, recom°lending, for the reason stated in the memorandum, that the employment
of Robert
E. Betz as a laborer in the Secretary's Office be terminated
at

the close
of business on November 4, 1943.
Approved unanimously.
Letter to Mr. Young, President of the Federal Reserve Bank of

Chica

go, reading
as follows:

"In accordance with the requests contained in your
three letters dated October 29, 1943, the Board of Govrflors approves the payment of salaries to Messrs. 0. J.
N
?tterstrom, Vice President, and F. L. Purrington, As!lstant Vice President, at the rates of $12,000 and
;58,500 per annum, respectively, for the period November
1943 to March 31, 1944, inclusive. The Board of Governors also
approves the payment of a salary to Mr. Paul
Hodge as Assistant General Counsel at his present rate
%,000 per annum for the period October 28, 1943 to
March 31, 1
944, inclusive."




Approved unanimously.

1671
11/12/43

-4-

Letter to Mr. Meyer, Assistant Cashier of the Federal Reserve
Ballk of Chicago, reading as follows:
"The Board of Governors approves the changes in
the personnel classification plan of the Federal Reserve
Bank of Chicago, involving the establishment of ten positions in the Lithheld Tax Department, as submitted
With your letter of November 5, 1943."
Approved unanimously.
Letter to Mr. Hitt, First Vice President of the Federal Reserve

Batik of St.
Louis, reading as follows:
"In accordance with the request contained in your
letter of November 3, 1943, the Board of Governors apProves the payment of a salary to Mr. Edwin S. Coombs
as Senior Credit Investigator in the Credit-Discount
D
epartment, for a further period of six months ending
May 16, 1
944, at the rate of $',6,000 per annum, which is
!2,000 in excess of the maximum annual salary provided
in the personnel classification plan for the position
tO which
he is assigned."
Approved unanimously.
Letter to Mr. Leedy, President of the Federal Reserve Bank of
44sas City, reading as follows:
"In accordance with the action of the Board of Directors of the Federal Reserve Bank of Kansas City, as
Indicated in
your letter of November 6, 1943, the Board
of Governors
approves the payment of a salary to Mr. E.
U.
Sherman, Assistant Cashier, at the rate of $5,100 per
annum for the period October 1, 1943 to May 31, 1944,
i
nclusive."
Approved unanimously.
Letter to the board of directors of the "Fidelity State Bank",
Dodge

City, Kansas, stating that, subject to conditions of membership




1_672
11/12/43

-5-

numbered 1 to 3 contained in the Board's Regulation H, 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
Kansas City.
Approved unanimously, together with
a letter to Mr. Leedy, President of the
Federal Reserve Bank of Kansas City, reading as follows:
"The Board of Governors of the Federal Reserve System approves the application of the 'Fidelity State Bank',
Dodge city, Kansas, for membership in 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 Kansas,
for his informat
ion.
"It is assumed that you will follow the matter of
the bank's
bringing into conformity with the provisions
°f law and the Board's regulations the savings accounts
listed on page 16(1) of the report of examination for
m
embership.
"The memorandum accompanying the application for
Te
mbership states that on January 2, 1933, The State
Bank of Dodge City
and The Kansas State Bank were consolidated and
continued operations under the charter of
itpe latter
bank and under the name Fidelity State Bank,
ut no further
information as to the nature and effect
9f the transaction has
been furnished. It would seem
that the records maintain
ed by the banking authorities
of the State of
Kansas would contain copies of the agreements entered into between these two banks, and possibly
amendment to the charter of The Kansas State Bank as
tts capital was then increase
d, at least temporarily, to
2100,000. It is assumed that this matter was considered
'Y. Your counsel, and the application has been approved
the understanding that the consolidation had no efrect upon the
corporate existence or powers of Fidelity
State Bank."




1673
11/12/43

-6-

Telegram to the Presidents of all the Federal Reserve Banks,
reading as follows:
"When information comes to your attention regarding any clearing house action in your district providing
for the discontinuance of absorption of exchange and collection charges in view of the Board's recent ruling, it
ls suggested that it might be helpful to the other Federal
Reserve Banks if you would advise them and at the same
time send us copies of the form of resolution or other
action taken by the clearing house."
Approved unanimously.
Letter to the Presidents of all the Federal Reserve Banks, reading

as follows:
"In connection with the form of participation certificate to be issued by the Federal Reserve Banks pursuant to section 8 of the standard form of guarantee
aqreement of April 6, 1943, a copy of which was enclosed
With the Board's letter of October 28, 1943 (S-704), there
18 enclosed a copy of a memorandum received by the Board
from the War Department dated November 9, 1943, with
further reference to this matter."
Approved unanimously.
Letter to Admiral E. S. Land, Chairman of the U. S. 'Maritime

C°Innliesion, reading as follows:
"Since receipt of Mr. Anderson's letter of October
30, 1943, addressed to the Acting Administrator, War
'c'ans Committee, with respect to salary and dividend
Payments of borrowers on Regulation V loans guaranteed
RY the Maritime Commission, the matter has been considered by the members of our War Loans Committee and
by the
Board of Governors.
"As you are aware, it has always been the practice of the Federal
Reserve Banks to analyze carefully
each application
for a Regulation V guaranteed loan.




1_674
11/12/43

-7-

"Careful consideration is given to the condition of the
applicant, the quality of its management, its prospects
of successfully performing the contracts financed, and
of paying off borrowings under guaranteed loans. In this
connection, the Federal Reserve Banks have from time to
time made recommendations with respect to both salary and
dividend payments. Where salaries appeared to be excessive in relation to the character and volume of business
done, recommendations have been made with respect to
their limitation or subordination to the loan. Likewise,
in certain cases recommendations have been made that a
guarantee be authorized on condition that no dividends
be paid by the borrower,
or that dividends be limited to
Specified amounts, during the life of the loan. Furthermore, guarantee agreements contain the standard conditions
adopted by the Maritime Commission on May 14, 1943, and
forwarded by us to the Federal Reserve Banks, the first
two of which read as follows:
'1. The borrower shall pay no dividends
unless the same are approved by the financing
institution.
'2. Present executive officers' salaries,
fees, bonuses, commissions, etc. are deemed to
be reasonable by the financing institution and
shall not be increased.'
"After a thorough review of this matter, the Board's
War Loans Committee, and the Board itself, feels that the
present procedure followed by financing institutions and
the Federal
Reserve Banks is adequate from a credit standPoint. To ask them to make specific recommendations with
respect to salaries of !,5,000, or more, would not be
nelPful but in many cases might lead to less satisfactory
results than are obtained under present practice. In
InanY cases a salary of less than t25,000 may be relatively
m?re excessive than a salary of 'J'25,000 or more, when
viewed in the light of the quality of the management and
the character and
volume of the business of the borrower.
"The Board of Governors does not feel, therefore,
that it
would be justified in asking either the Federal
lijserve Banks or the financing institutions to make spefic recommendations relating to an administrative policy
01 the guarantor of the kind set forth in the second
Paragraph
of Mr. Anderson's letter. It believes that
wle administration of any such policy can best be handled




1675

11/12/43

-8-

"here in Washington by the Commission."
Approved unanimously.
Letter prepared for the signature of Mr. Ransom to Mr. Louis
8* Goodenough, Editor of Retailing, New York, New York, reading as
follows:
"I appreciate sincerely your invitation to me to
contribute an article on Regulation t to the post-war
Planning issue of RETAILING, but after careful consideration I have come to the conclusion that for me to
accept this invitation would be inadvisable.
"We are aware that there has been discussion in
trade circles for Some time of the question whether consumer credit regulation by the Federal Government should
be.continued after the war, and we have been following
,1118 discussion carefully, but we have taken no part in
It
ourselves. My own feeling is that I should continue
to stay out of the discussion until and unless, as is
not now the case, the Board should develop a policy on
the subject."
Approved unanimously.
Letter to Honorable D. W. Bell, Under Secretary of the TreasUrY,

prepared for the signature of Chairman Eccles in accordance with

the action taken at
the meeting of the Board on October 22, 1943, readitIg as
follows:

"Pursuant to the suggestion made in your letter of
September 23, the Board has decided, subject to clearance
With the Bureau of the Budget, to request all weekly reporting member banks to report separately the amounts of
1,:cans to brokers and dealers and to others, respectively,
or the purpose
of purchasing or carrying Government securities.
t.

"If agreeable to you, the Board will have the banks
rgin reporting the new data as of the first report date
'fl January 1944. As you know, the weekly reports are




1676
11/
12/43

-9-

Collected by the Reserve Banks and, where practicable,
it is desirable to give them ample time to prepare new
report forms and instructions for the guidance of the
reporting banks. It is also desirable to give the reporting banks advance notice so that they will have ample
time to make the necessary arrangements to compile the
additional information. This procedure will, of course,
Provide the desired figures well in advance of the beginning of the next War Loan campaign."

"

Approved unanimously.
Letter prepared for the signature of Chairman Eccles to Honorble Nellie Tayloe Ross, Director of the Mint, reading as follows:
"Receipt is acknowledged of your letter of November
8, 1943, in which you refer to the critical situation with
respect to minor coins.
"It is understood that the Under Secretary of the
Treasury recently authorized the Federal Reserve Banks to
request all banking institutions in their respective disricts to return to them, or to their branches, all pennies
ln excess of immediate needs. Pursuant to the Under Secretary? s
request, the Federal Reserve Banks are sending cir?ulars to all banking institutions in their districts urging
them to send in their excess pennies.
"A copy of your letter is being sent to each Federal
Reserve Bank for its information and you may be assured of
their continued cooperation."
Approved unanimously.
Memorandum dated November 11, 1943, from Mr. Carpenter, recom,_
441g that the Board authorize the paymentof a charge of P10 for the
ental of a
room which was engaged at the Hotel Statler for a meeting
of the
executive committee of the Chairmen's Conference on November 7,

1943.




Approved unanimously.

1677

12/43




-10-

Thereupon the meting adjourned.

Chairman.