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1683 A meeting of the Board of Governors of the Federal Reserve SYstem waS held in Washington on Tuesday, November 14, 1944, at 10:30 PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Draper Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Paulger, Director, Division of Examinations Mr. Dreibelbis, General Attorney Mr. Vest, Assistant General Attorney Mr. Morrill stated that Chairman Eccles was occupied with another matter and had asked that the meeting proceed without him. The individual members of the Board had been advised that, When the hearing was held to which reference was made in the order issued by the Board on August 9, 1944, to Messrs. John Agnew and F. O. P4Yerlieather, directors of the Paterson National Bank, Paterson, New jet 's% to show cause why they should not be removed as directors of the national bank, the representatives of the Comptroller of the Curl'eneY failed to carry out the understanding which Mr. Dreibelbis had With Mr uphaz, Deputy Comptroller of the Currency, that the repreerltati/res of the Comptroller's Office would have the responsibility t°1% Presenting evidence in support of the statements contained in the certificate issued by the Comptroller. Mile the respondents were at St g to agree at the hearing to a stipulation of the facts in the a50, the representatives of the Comptroller's Office were unwilling 1.684 11/14/44 to be Parties to such an agreement, and the hearing was adjourned to be reopened at a later date. the —2- These developments presented to the Board question what its procedu re would be from this point on. In an informal discussion by the members of the Board of this clueEtion before this meeting (Mr. IrcKee being out of the city) the cir— ellinsta "es surrounding the cases which had come up under Section 30 *Lee the pas sage of that section of the law in 1933 were reviewed, and it 8 Pointed out that, in each of these cases involving a national the Board had taken the position that, whenever the Comptroller Of the Currency certified the facts in a particular case to the Board, it vas the responsibility of his office, in any proceeding conducted bY the Board, to present evidence to support the statements contained 41 the Comptrollerts certificate. In these circumstances the question before the Board was whether the Board would insist on the office of the Com ptroller of the Currency presenting the evidence in the present ea8e and terminate the proceedings without further action if he failed refUsed to do so, or whether the Board should itself take steps to clelielop the facts in the case and reach a decision on the basis of such tact a. During the informal discussion of this matter, the suggestion had bee 11 made by Chairma n Eccles that the attitude of the Office of the co IriPt1"°11er of the Currency with respect to its responsibility in ect4on 30 Proceedings involving national banks was a matter of policy 1685 11/14/44 —3— that should be discussed, if necessary, directly with the Comptroller Of the Currency and Under Secretary of the Treasury Bell. Mr. Ransom felt that any possible discrimination that might result in this case frara the Board not proceeding further with it, because of the failure of the Comptroller of the Currency to present evidence, was not as Portant as it was to emphasize the impractical nature of division of reaPonsibility between the Board and the Comptroller of the Currency tinder the statute and to stand on the position that the Board had taken 44d adhered to over a nine-year period with respect to the responsibility °Irthe Co mptroller of the Currency. All of the other members of the Board then present felt that, if the Comptroller of the Currency should stand by the position that he would not present evidence to support the statements made in his certificate, the Board should take the necesearY steps to the develop the facts in the case and reach a decision on bof those facts. The reason for this position was that the 1/13ard had ruled in other cases involving similar facts, but which had 40t resiated in a Section 30 proceeding, that such interlocking directorate_ were in violation of Section 32 of the Banking Act of 1933, arid that its failure to follow through in this case when such a proceedinstituted would permit the continuation of the relationships &II the case of these particular directors, in spite of the fact that Other cases, because of the Board's rulings, such relations had been discontinued. 1683 11/14/44 —4— Messrs. Morrill and Dreibelbis were requested to inform Mr. lie1Ces of the opinions expressed during the informal discussion, which they had done, and at this meeting Mr. McKee said that he felt that, inasmuch as this was an apparent violation of Section 32 of the Bank— illgAct of 1933, the Board was under obligation to follow it through to a conclusion, but that before anything further was done Mr. Dreibelbis 811°111d talk with Mr. Upham on the basis that if he continued his present "tude the Board would feel it necessary to discuss the matter with hie superiors. Mr. Ransom said he did not want to vote to reverse the position " t Lich the Board had adhered for nine years unless there was reason t° do ao, that the Board might not be called upon to do so, and that, should it become necessary to act on the question, he would like to haVe the issue clear—cut so that, should the Board reverse its present 'Position, it wguld do so knowingl,y, and he could vote against such reversal. 141% SzFmczak suggested that the important thing at this point Ikaa a further conference with representatives of the Comptroller's °trice and, if necessary, with Under Secretary Bell in the light of l'ihe't had o ccurred and that, thereafter, the Board could determine 114:It it8 kteht Procedure would be in the present case and other cases that arise in the future. At the end of the discussion, it waS agreed that Mr. Dreibelbis should 168/ 11/14/44 —5— talk again to Mr. Upham, Deputy Comptroller of the Currency, for the purpose of ascertaining why he had changed his position with respect to presenting evidence at the hearing and to inform him that, if he continued to decline to present the evidence, the Board would discuss the matter of policy involved with the Comptroller of the Currency and Under Secretary of the Treasury Bell. This action was taken with the understanding that, following his conversation with Mr. Upham, Mr. Dreibelbis would report to the Board and the matter would then be considered further. At this point Mr. Leonard, Director of the Division of Personnel came into the meeting. There 14.0.0 presented a letter dated November 3, 1944, from Mr. Lichtenste in asking for a list of the subjects which the Board wished the Federal Advisory Council to discuss at its next meeting on December 3-4 '1944. Mr. Morrill stated that Chairman Eccles had suggested that the c -°11neil be requested to give consideration to the following topics, 44c1 that, in connection with the second, there be sent to the members e,ntl the Se cretary of the Federal Advisory Council conies of the memo: 14141114Iftlich he (Chairman Eccles) presented at the meeting of the Fed-1'al °Pen Market Committee on September 21, 1944. debt Does Council think the short-term Government hould be refunded, and if so, why and on what basis? 2at does think about the earnings situa" of commercial Council banks? (a) Problem presented by growing predominance of Government securities in earnings? 168S 11/14/44 -6(b) Instead of increased dividends should a larger portion of earnings be retained for additions to capital and surplus? (c) Does Council feel that nothing should be done? At the conclusion of a discussion, during which it was agreed that certain other suggested topics should not be referred to the Council for consideration at this time, Chairman Eccles suggestion was approved unanimously, with the understanding that the Secretary would send the two topics to Mr. Lichtenstein, as Secretary of the Council, by wire, and that copies of the memorandum referred to above would be sent to each member of the Council and to Mr. Lichtenstein by mail. At this point Messrs. Paulger, Dreibelbis, Leonard, and Vest Ilithdrew from the meeting. The action taken with respect to each of the matters hereinafter r eferred to was taken by the Board, Chairman Eccles participat- The 431414 . minutes of the meeting of the Board of Governors of the Reserve System held on November 13/ 1944, were approved unani- Me morandum dated November 11, 1944, from Mr. Morrill reading 48 to," "I-LOWS: "In accordance with the plan which I have discussed re,c)rinallY with each of the Members of the Board, it is beiorrtmended that the organizational changes set forth °11 be approved, effective November 16, 1944: int 1689 11/14/44 -7- "1. Establish on the same administrative level as Other divisions of the Board's staff a new Division entitled 'Division of Administrative Services' to which Mr. Lethea will be transferred as Director and Mr. Nelson will oe t ransferred as Assistant Director. To this new Division would be assigned the administrative, financial, budgetary, accounting service and building functions of the Secretary's fice Which are included in the following sections or 2lts: Accounting; Procurement; Duplicating and Mails; c;;encgraphic Pool; Telegraph Office; Telephone Exchange! t auffeurs; Pages; Cafeteria; Building Operation and Mainlance; and the functions of the present Correspondence .?1:1(11 Publications Section relating to the handling of publications. In this connection, it is contemplated that at a.later date to be fixed by the Board the functions of the Board's , r :iscal Agent will also be transferred to the Divi.V-°n of Administrative Services. The personnel to be transerred to the new Division from the Secretary's Office are oIeted, together with their titles and annual base salaries, trl a statement attached. Mr. Bethea would retain authority aPProve pay roll and other vouchers for payment and to rUntere checks covering authorized expenditures of the He would also continue to be the Board's Budget wa lcer and the Alternate Member of the Interdepartmental 84 Savings Bond Committee. Mr. Nelson would serve as Mr. hers assistant in all these matters. 00 , '2. Change the designation of Mr. Hammond from 'Chief, roj espondence and Publications Section' to 'Assistant SeclAtivefr• Mr. Hammond would continue to perform the duties act:" ne now has relating to foreign accounts and transand relations with foreign bankers and similar funcse--arles. Mr. Carpenter and Mr. Hammond, as assistant ticretaries under mydirection, mould take over all functh:ne heretofore performed by Mr. Bethea with respect to c clearance of Board correspondence and the War Loans °Mmittee. tra "3. Authorize the working out of the details of the divrfer, including the rearrangement of office space, r414,!;°n of budget items, etc., on a basis which will be -4-1-7 agreeable to Mr. Bethea and myself. It is cor.10iy-Lated that budget items covering non-personal services pria Feneral character, such, for example, as the cost of rep ing the Federal Reserve Bulletin, Annual Report and blZ4"!ti°ns, postage, etc., will be provided for in the ' ' e of the Division of Administrative Services. T 1_690 11/14/44 "All personnel not covered by the attached list for transfer to the new Division would, of course, remain in the Secretary's Office." Approved unanimously, Mr. Evans having informed Mr. Morrill before he left the city that he approved the recommendation contained in the memorandum. The list of personnel attached to the memorandum was as follows: Name Bethea, L. P. Nelson, F. A. Kelleher, Joseph E. Stewart, Phyllis E. Wolcott, Helen B. Bass, Sampson H. Title Assistant Secretary Assistant Secretary Administrative Assistant Secretary to Mr. Nelson Secretary to Mr. Bethea Annual Base SalPrir $9,000 7,500 3,800 2,700 2,300 Supervisor, Accounting Section Accountant Accounting Clerk Clerk Accounting Clerk Clerk 4,000 3,400 2,100 1,920 1,920 1,7q) M. D Pl uBose orence, Frances B. Staley, Enid W. %lien, Helen L. Printing and Publications Clerk Clerk Clerk-Stenographer Clerk-Stenographer Clerk-Typist 2,300 2,300 1,800 1,680 1,560 ." ?„erll, Harry E. l'aYlor, Franklin Uottett, Bruce L. Niirst, Donald Ilairley, Virginia Purchasing Clerk Supply Clerk Supply Clerk Clerk Clerk 2,040 1,680 1,620 1,620 1,560 Supervisor, Stenographic Section Stenographer 2,400 1,920 Pollard, Wayne A. Kramer, Fannie A. Bocuilis, Adela 21'082 Susie T. moon, Donald W. Carmichael, Elizabeth L. odlo Goebel, vivienne 0' 1631 11/14/44 —9-Name Title ontinued) tiaa: Huffman, Margaret, C. (C Stenographer Arason, Marylou Stenographer COrLleY, Helen Stenographer Davey, Beverly jStenographer Benders, Mary Elizabeth Stenographer Dodge, Jane Gray Stenographer 71care, Margaret L. Stenographer omey, Raymond C. Baker, Seburn Watkins, F. L. Warwick, Howard L., Jr. Constable, Frank W. Yilek, J. J. Brundage, Mary A. Dyson, Nelson SPletcher, Wilson T. ,B,errY, Benjamin ;rickson, Dorothy Trlieheart, Lynwood Sherrod, Ralph A. Barnes, Ott, H. Bricen $1,920 1,800 1,800 1,800 1,800 1,680 1,680 2,600 2,500 1,980 1,900 1,860 1,860 1,800 1,800 1,800 1,680 1,680 1,660 1,620 1,320 S . 8M. B411, L. L. age, Supervisor, Duplicating and Mail Section Foreman Operator (Duplicat— ing Devices) Senior Mail Clerk Operator (Duplicating Devices) Operator (Duplicating Devices) Operator (Duplicating Devices) Clerk Operator (Duplicating Devices) Operator (Duplicating Devices) Mail Clerk Clerk Junior Operator (Duplicat— ing Devices) Operator (Duplicating Devices) Junior Mail Clerk Annua,1 Base Salary M G: P • Supervisor, Telegraph Section Assistant Supervisor, Telegraph Section Telegraph Operator Telegraph Operator 2,800 2,300 2,300 2,160 1692 11/14/44 -10-- Name PousQ ol, S. Seagle, Mary S. Tanner, J. E. Title (Continued) Telegraph Operator Teletype Operator Telegraph Operator Griffith, Flora J Brown, Rushia H. Brooks, Rae M. Bell, J. Frank Stial, Howard W. Levis, John V. 44a4; Bare, Edith Caughron, Jean .r.?rs, Anna Mae :11-111 Goldia Reba 'leallle5r, Dorothy dings, Mildred Schutrumpf, Doris erawford, Mary Harrison, Dora IMhoff, Anna Jones, Pearl Bissett, Alvin trovn, Eva Renson, gyrtle lierrman, Violet 81,4- Winnie Irnma i'aYlor, Harry 0G1111 Katie 4 cVearry, 1? ooks, Florence Ruby y 4a, Geraldine A. Annual Base Salary 82,160 1,920 1,680 Chief Telephone Operator Telephone Operator Telephone Operator 1,920 1,500 1,440 Chauffeur Chauffeur Chauffeur 1,620 1,620 1,440 Page Page Page Page Page 1,380 1,380 1,380 1,260 1,260 Messenger 1,600 Supervisor, Cafeteria Assistant Supervisor, Cafeteria Head Cook Junior Supervisor Cook Cook Cook Cafeteria Helper Cafeteria Helper Cafeteria Helper Cafeteria Helper Head Cook Cafeteria Helper Cafeteria Helper Cafeteria Helper Cafeteria Helper Cafeteria Helper 2,600 1,860 1,620 1,560 1,500 1,500 1,380 1,380 1,380 1,380 1,380 1,620 1,320 1,260 1,260 1,200 1,200 169:. 11/14/44 Name Cafeteria: (Continued) 114110/1V, Charlotte A. Tavenner, Mary K. Payne, Della Wetnight Rosemary Broadhurst, Blanche I. Payne, Grace M. -11- Title Cafeteria Cafeteria Cafeteria Cafeteria Cafeteria Cafeteria Helper Helper Helper Helper Helper Helper Annual Bast 3a,lary $1,200 1,200 1,200 1,200 1,080 1,080 Young, Jitchazijaa: Herbert W. Lindamood, Charles D. Glotfelty, Joseph T. Storm, Charles W. Murphy, Royal J. Bash, John Jordan) E. I)* Boothe, Woodley Mechanical Superintendent Operating Engineer Operating Engineer Maintenance Mechanic Marble Mason Painter Operating Engineer General Mechanic 3,200 2,700 2,600 2,300 2,160 2,100 1,980 1,920 UaYhew, Morris Shipp, Arad B. Gardener Gardener 1,740 1,740 Anderson, E. F. Drators= Acting Captain of the Guard Unger, L. HYde, Senior Guard Sulllham Senior Guard ivan, David Senior Guard Rauser, Adam V. Guard MYers, Clifford B. Guard Nichols, Charles R. Guard Deakins, Thomas R. Guard Parquette, Fred Guard Snouffer, Paul Guard Steger, Karl J. Guard Gardner, William Guard er,N"den, Leonard A. Guard TrkV William J. Guard kil4ms, John l Thomas Guard 1eehan, E lizabeth M. Elevator Operator Elizabeth Elevator Operator M. .114/6.1er 4, Nellie Gray Elevator Operator 2,200 1,860 1,800 1,800 1,680 1,680 1,680 1,620 1,620 1,620 1,620 1,560 1,560 1,500 1,500 1,200 1,200 1,200 16M 11/14/44 —12— Title Riston, Percy C. Weeks, E. J., Sr. Morley, Michael Tobler, Herman L. Macklin, James H. Beach, Ida M. Bertolini, Madalena Cooke, Clara Ray Corbin, Sarah F. Enrico, Mary J. Fowler, Preston E. Jones, Everett Ratliff, Lee Rogers, Dorothy Spicer, Libbie L. Steiner, Almeda Sunderman, Ethel M. Carter, Robert B. Dalton, Margaret Peacock, Blanche E. Thorne, Grace L. klliams, Y°1111g, E Elizabeth lizabeth M. Cr°well, Teresa F. Annual Base Salary Foreman of Laborers Assistant Foreman of Laborers Laborer Laborer Laborer Charwoman Charwoman Charwoman Charwoman Charwoman Laborer Laborer Laborer Charwoman Charwoman Charwoman Charwoman Laborer Charwoman - Charwoman Charwoman Charwoman Charwoman Charwoman M,920 1,740 1,440 1,440 1,380 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,20 1,320 1,320 1,320 1,320 1,260 1,200 1,200 1,200 1,200 1,200 Memorandum dated November 13, 1944/ from Mr. Morrill recommend— ft that the basic salary of Mrs. Frances B. Florence, a clerk—stenog— Nher the Secretary's Office, be increased from $1,800 to $1,920 Aer 411111mil effective November 16, 1944. Approved unanimously. Letter to Mr. Clark, Vice President of the Federal Reserve Bank "Ati nt ay reading as follows: 1944, zLeference is made to your letter of October 25, and enclosure, regarding the proposed expansion 1695 1V114/44 -13- of the Georgia,operations of Motor Contract Company, Savannah, a company orned by Trust Company of Georgia AsPciates which is in turn owned by the Trust Company of veorgia, Atlanta, Georgia. "According to the information in the Board's files, the Motor Contract Company was organized in 1935 and all of the stock of the company was acquired by Trust Company f Georgia of Associates. In connection with the question c, whether the o acquisition of the stock by a subsidiary awned by the member trust company was contrary to the 4girit and purpose of applicable provisions of law, since t.e member institution could not itself lenlly have purchased the stock, the Board advised the Reserve Bank that 84 would not insist at that time upon disposition of the ,,With the understanding that Motor Contract Company confine its operations to the territory served by the Trust Company of Georgia group of banks and to the rchase of wle group ofautomobile paper solely for the benefit of banks. "It is understood that the operations of the Motor Contra,nt Company have been entirely in accordance with the above und erstanding, but it is now proposed to expand the ations of the company so that it may purchase, in add!aion to automobile paper as heretofore, farm equipment, tri rPilaney household electrical and gas appliances, induscusZ4- machinery, and such other types of paper as are °marilY financed on an installment basis. Subject to the res co ntinuance of the original understanding in all other Boerts, and in accordance with your recommendation, the Of 411' will interpose no objection to the proposed expansion the vue operations of the Motor Contract Company to include Purchase of the other types of installment paper." n tr Approved unanimously. Letter to "The First National Bank of Fairmont", Fairmont, reading as follows: 1944 "This refers to the resolution adopted on ,!'un? 20, the' , 1 by the board of directors of your bank, sigt:lifyil:Ig cia,:allk i s desire to surrender its right to exercise fidu'd Powers heretofore granted to it. 1696 11/14/44 —14— "The Board, understanding that your bank has been ulecharged or otherwise properly relieved in accordance with the law of all of its duties as fiduciary, has issued !formal certificate to your bank certifying that it is '10 longer authorized to exercise any of the fiduciary Powers covered by the provisions of section 11(k) of the Federal Reserve Act, as amended. This certificate is enclosed herewith. 4, "In this connection, your attention is called to I'Lle fact that, under the provisions of section 11(k) of re Federal Reserve Act, as amended, when such a certifi— ;ate has been issued by the Board of Governors of the rer Reserve System to a national bank, such bank (1) 1P1 no longer be subject to the provisions of section Federal Reserve Act or the regulations of the Boar Governors of the Federal Reserve System to,2 Pursuant thereto, (2) shall be entitled to have to it any securities which it may have deposited with ttn the State or similar authorities for the protection 7of Private or court trusts, and (3) shall not exercise !Tof the powers conferred by section 11(k) of the Fed01: 4 Reserve Act except with the ptermission of the Board uov ernors of the Federal Reserve System. : Approved unanimously. Letter to "The First National Bank of Glenwood Springs", 4e411°°(1 SPrings, Colorado, reading as follows: 1941. "This refers to the resolution adopted on May 26, the , by the board of directors of your bank, simifyino ank's desire to surrender its right to exercise fidu-'"Zwers heretofore granted to it. dischn'Lle Board, understanding that your bank has been Ivith' .4. ged or otherwise properly relieved in accordance the law of all of its duties as fiduciary, has is— •i a formal certificate to your bank certifying that eta 8 no longer authorized to exercise any of the fidu— or j 1,/powers covered by the provisions of section 11(k) is :e Federal Reserve Act, as amended. This certificate IT.osed herewith. thefal er;, this connection, your attention is called toof that, under the provisions of section 11(k) 1697 11414/44 -15- the Federal Reserve Act, as amended, when such a certificate has been issued by the Board of Governors of the Federal Reserve System to a national bank, such bank (1) shall no longer be subject to the provisions of section of the Federal Reserve Act or the rerfulations of Lhe Board the of Governors of the Federal Reserve System made Pursuant thereto, (2) shall be entitled to have returned t'o it anY t, securities which it may have deposited with "? State or similar authorities for the protection of : 0 13 17ate or court trusts, and (3) shall not exercise any R4 the powers conferred by section 11(k) of the Federal , sserve Act except with the permission of the Board of ' °vernors of the Federal Reserve System." Approved unanimously. 11YOVIli Letter to "The First National Bank of Evanston", Evanston, , reading as follows: 191 "This refers to the resolution adopted on June 12, t1 443 bY the board of directors of your bank, signifying c1:1? bank's desire to surrender its right to exercise fidu'arYnpowers heretofore granted to it. actuaThe Board, understanding that your bank has never -Y accented or undertaken the exercise of any trust, th;jesued a formal certificate to your bank certifying fid„It 3-8 no longer authorized to exercise any of the 116X-arY powers covered by the provisions of section .t,4 ) of the Federal Reserve Act, as amended. This cer" - - -1-%.te 4 T enclosed herewith. the f -Ln this connection, your attention is caJled to the act that, under the provisions of section 11(k) of , Dederal Reserve Act, as amended, when such a certifiFZie has v, ,,een issued by the Board of Governors of the rn shalral Reserve System to a national bank, such bank (1) 11(kl- no longer be subject to the provisions of section , of the Federal Reserve Act or the regulations of the T‘ pur,:°ard of Governors of the Federal Reserve System made to iTtlant thereto, (2) shall be entitled to have returned State anY securities which it may have depositedwiththe er or similar authorities for the protection of private Court trusts, and (3) shall not exercise any of the 1698 / -16Powers conferred by section 11(k) of the Federal Reserve /let, except with the permission of the Board of Governors of the Federal Reserv-e System." Approved unanimously. Thereupon the meeting adjcp Vice Chairman. ed.
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