Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, November 27, 1940, Volume 27, Part 4

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A meeting of the Board of Governors of the Federal Reserve
System was held in Washington on Wednesday, November 27, 1940, at
2:20 p.m.
PRESENT: Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Ransom, Vice Chairman
Szymczak
McKee
Davis
Draper

Mr. Morrill, Secretary
Mr. Bethea, Assistant Secretary
Mr. Carpenter, Assistant Secretary
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 26, 1940, were approved unanimously.
Memorandum dated November 20, 1940, from Mr. Nelson, Assistant
Secretary, recornmending that, effective December 1, 1940, P. V‘arren
ICidwell be promoted to
the position of junior operator, duplicating
c/evicee in the Duplicating, Mails and Supplies Section of the SecretarY's Office, with salary at the rate of '31,320 per annum; that Harry
E. Kern be transferred to the Duplicating, Mails and Supplies Section
Of the
Secretary's Office as a supply clerk, with salary at the rate
of 1,380 per annum; that Leroy H. Cooley be promoted to the position
c)f guard in the Building Operation and Maintenance Section of the
SeeretarY's Office, with salary at the rate of .'',11380 per annum; and
that
effective as of the date upon which they enter upon the performance




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of their duties, Hubert T. Mount and Robert M. Garner be appointed
on a temporary basis for a period of not to exceed one year as elevator operators in the Building Operation and Maintenance Section of
the Secretary's Office, each with salary at the rate of q1200 per

an.num.
Approved unanimously.
Letter to the board of directors of the "Early Savings Bank",
Early, Iowa, stating that, subject to conditions of membership 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 Chicago.
Approved unanimously for transmission through the Federal Reserve Bank of
Chicago.
Letter to Mr. Young, President of the Federal Reserve Bank
°f Boston, reading as follows:
"Enclosed is a copy of a letter of November 8, 1940,
from The Factory Point National Bank, Manchester Center,
Vermont, inquiring whether the assignment of savings bank
deposits to the bank's trust department will satisfy the
requirement that the bank deposit securities in its trust
department to secure trust funds used by it in the conduct
of its business.
.
"The Board has not heretofore had occasion to consider whether savings deposits meet the requirements of
section 11(k) and the Board's Regulation F; and, among
Other things, it would be necessary to determine whether
the savings deposits involved could be considered securities within the meaning of section 11(k) and the Board's




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"Regulation F. It appears doubtful that any savings deposits should be considered securities of the kind prescribed by Regulation F; but, before ruling definitely on
this matter, it would be desirable to have information as
to the nature of the savings deposits involved in the inquiry. It is suggested, therefore, that you discuss the
matter with the bank and if, after such further consideration, it appears desirable for the Board to make a
ruling on the matter, please, with the assistance of your
counsel, furnish the Board with full information as to
the facts in this case upon which such a ruling might be
based."
Approved unanimously.
Letter to Mr. J. Edgar Hoover, Director of the Federal Bureau
of Investigation, reading as follows:
"Reference is made to your circular letter of November 9, 1940, to all fingerprint contributors, advising
that in view of the increased volume of work devolving
Upon the Identification Division no replies will be trans'flitted, for the present, to the Bureau's correspondents
ln cases concerning applicant fingerprint cards where no
identification is made in the Bureau's fingerprint files.
.
"The Federal Reserve Bank of Minneapolis advises us,
With respect to the above-mentioned letter, that from time
to time it has been saved from serious exposure by checking fingerprints of applicants for positions with the Federal Bureau of Investigation; that it has been the Bank's
custan to send the fingerprints to the Bureau and the
Bureau, up to this time, has returned the fingerprints
With a letter advising whether the individual had a criminal record or not; and that from the Bank's point of view
it is essential that it know the card has been checked,
even if no derogatory evidence appears as it does not like
to put a man to work until it has had assurance that he
has no criminal record.
"In their capacity as fiscal agents, custodians, and
depositaries of the United States, the Federal Reserve
Banks employ a considerable number of persons for Government work, much of which is of a confidential nature. It
would be greatly appreciated, therefore, if you could see




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"your way clear to continue to furnish advices to the Federal Reserve Bank of Minneapolis as in the past. We feel
sure that in order to simplify your work as much as possible the Federal Reserve Bank would be willing to forward
with the fingerprints a form of advice for return to the
Bank and also, if desired, a self-addressed envelope."
Approved unanimously.
Letter to Mr. David S. Ludlum, Philadelphia, Pennsylvania,
reading as follows:
"Receipt is acknowledged of your letter of November
15, 1940, with further reference to the suggestion contained in your letter of November 26, 1934, that the Federal Reserve Banks decline to clear checks on any bank
unless it is a member of the System or unless it prints
on its checks the name of the Federal Reserve Bank member
through which its checks are payable.
"While, as stated in the Board's letter to you of December 24, 1934, many advantages would accrue from the
bringing of all commercial banks into a unified system,
it is doubtful whether the policy you suggest would further this objective. It should be borne in mind that
the Federal Reserve Banks do not accept checks for collection from nonmember banks except from the less than
250 nonmember clearing banks, each of which maintains a
'clearing balance' with the Federal Reserve Bank. They
do not novi receive checks from member banks drawn on any
of the over 2,600 nonmember banks not on the par list,
and they handle checks drawn on par-remitting nonmember
banks only as a service to their members. The adoption
of your suggestion would probably result in a substantial
reduction in the number of banks on which the Federal
Reserve Banks could collect checks and consequently in
an impairment of the check collection services rendered
to member banks, since many of the approximately 5,400
nonmember banks now on the par list probably would not
care to print the name of another bank on their checks.
"The Board realizes that notwithstanding the important
improvements made by Congress in recent years certain defects still exist in our banking machinery from the monetary, credit, and supervisory point of view and in its




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"Annual Report for 1938 presented to Congress a picture
of certain banking problems. In view of your expressed
interest in the System, there is enclosed a pamphlet entitled 'Problems of Banking and Bank Supervision', which
consists of excerpts from the above-mentioned report.
There is also enclosed a copy of a reprint from the Federal Reserve Bulletin for February 1940 entitled The
Par Collection System of the Federal Reserve Banks',
Which it is thought may be of interest to you."
Approved unanimously.
Letter to Mr. McCabe, Chairman of the Chairmen's Conference,
reading as follows:
"Your letter of November 20 to Chairman Eccles was
brought to the attention of the other members of the
Board and I have been requested to advise you that it
will be satisfactory to the Board if the Chairmen decide
to hold their conference at Washington on December 9 and
10, as you propose.
"It will be appreciated if you will advise us as
soon as you ascertain definitely whether this is also
agreeable to the Chairmen."
Approved unanimously.
Letter to The Honorable, The Comptroller of the Currency, reading as
follows:
"It is respectfully requested that you place an order with the Bureau of Engraving and Printing, supplementing the order requested June 19, 1940, for the printing
of Federal reserve notes of the 1934 Series in the amounts
and denominations stated for the Federal Reserve Bank of
San Francisco:
Number of
DenomiAmount
sheets
nation
61000,000
500
1,000
12,000,000"
1000
1,000




Approved unanimously.




Thereupon the meeting adjourned.