Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, November 29, 1941, Volume 28, Part 4

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

1669

A meeting of the Board of Governors of the Federal Reserve
.Irsteill -vias held
in Washington on Saturday, November 29, 1941, at 11:30

PRESENT:

Mr.
Er.
Mr.
Mr.

Eccles, Chairman
Szymczak
McKee
Draper

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

Peder
al Reserve
System held on November 19, 1941, were approved unanin1011817.

The minutes
of the meetings of the Board of Governors of the
4der
al Reserve
System held on November 21, 24, 25, 26, and 28, 1941,
Were .
d-Pproved and the
actions recorded therein were ratified unaniniousiy.

Memorandum dated November 27, 1941, from Mr. Goldenveiser
,
pirector of
the Division of Research and Statistics, recomm
ending that
1488
Carol E.
Hubbard be appointed as a clerk in that Division, with
41a/7 at
the rate of
$1,440 per annum, effective as of the date upon
Itich she
enters upon the perfor
mance of her duties after having passed
sati,sfactorily the
usual physical examination.




Approved unanimously.

1670
11/29/41

-2-

Memorandum dated November 28, 1941, from Mr. Nelson, Assistant Secretary,
recommending that Misses Hazel L. Simpson and Marie
H.
Ferwerda be appointed, on a temporary basis for a period
of not to
exceed six
months, as junior file clerks in the Secretary's Office,
each with
salary at the rate of t1,260 per annum, effective as of the
date
upon which they enter
upon the performance of their duties after
having passed
satisfactorily the usual physical examination, with the
understanding
that if their work is satisfactory during the six months'
Pericld a further reco
endation will be submitted that the appointments
be m.de
Permanent and that their salaries be increased to *,1,4/10
per
antami.

Approved unanimously.
Letter to Mr. Hays,
Vice President and Secretary of the Federal
Ress,, "e bank of
Cleveland, reading as follows:
„ "As
requested in your letter of November 26, 1941,
the
to Board of Governors approves the payment of a salary
sala
n Mr- Fred
Kuehn, Senior Clerk in the Check Collection
tePartment, at the rate
of 2,160 per annum, effective
mn!mber 1, 1941, which
amount
is ,60 in excess of the
Zimilm annual
salary provided in the Bank's personnel
esification plan for the
emPloyee.
n
position occupied by this
Approved unanimously.
Telegram
to Mr.
of
Lassiter, Chairman of the Federal Reserve Bank
Richmo
nd,
reading as follows:
1346.
"17alden's
--zatment John letter November 28. Board approves apH. Zirckel as
Federal Reserve Agent's




1671
11/29/41
"Representative at Baltimore Branch with salary at rate
of $1,740 per annum until December 31, 1941, and at rate
Of $,1,860 per annum thereafter, with understanding that
Zirckel will be placed upon Agent's payroll and be solely
responsible to him, or during vacancy in office of Agent
to Assistant
Federal Reserve Agent, and to Board of Governors for proper performance of duties. When not engaged
in performance of his duties as Federal Reserve Agent's
R
epresentative he may, with approval of Federal Reserve
Agent (or, in his absence, of Assistant Federal Reserve
Agent) and Branch Managing Director, perform such work
Branch as will not be inconsistent with his duties as
Federal Reserve Agent's Representative. Zirckel should
Federal
execute usual oath of office and surety bond in amount of
tl0,000 and he should not enter upon performance of duties
s representative
until bond has been examined by your
ic?-1-11leel to determine whether its execution complies fully
nt1
.1 the rules
printed on reverse side of form of bond fol,
-,
L°171-ng which bond should be forwarded to Board promptly
r approval. Please advise effective date of Zirckel's
a
ppointment."
Approved unanimously.
Letter to the board of directors of "The Farmers Exchange Bank
°f Coeburo,
Coeburn, Virginia, stating that, subject to conditions of
IllexubershiP numbered 1 to 3
contained in the Board's Regulation H, the
aPProves the bank's application for membership in the
Federal Re"
-e System
and for the appropriate amount of stock in the Federal ReBay,L.
of Richmond.
The letter also contained the following special comment:
which"It appears
that the bank possesses certain powers
reoni are not being exercised and which are not
necessarily
pow7-red in the conduct
of a banking business, such as the
e1461 to guarantee the payment of bonds. Attention is invit.
pow: to the fact that
if the bank desires to exercise any
re not
actually exercised at the time of admission to




1672
11/29/41

-4-

membership, it will be necessary under condition of membership numbered 1 to obtain the permission of the Board
of Governors
before exercising them. In this connection
the Board
understands that there has been no change in the
scope of the corporate powers exercised by the bank since
the date of its
application for membership."
Approved unanimously for transl
through the Federal Reserve Ban of
Richmond.
Telegram to Mr. Brainard, Federal Reserve Agent at the Federal
Reserve Bank of
Cleveland, stating that, subject to the conditions set
forth in
the telegram, the Board of Governors
of the Federal Reserve
SYstem a
uthorizes the issuance of a general voting permit, under the
Provisions of
Section 5144 of the Revised Statutes of the United States,
tO1..„„
t
"

"Banco Corporation", Columbus, Ohio, entitling such organization to
vote the
stock which it owns or controls of "The Farmers &
Uerchants Bank
of Logan", Logan, Ohio, at all meetings of shareholders
°I' such bank,
and that the period within which a permit may be issued
Nrsuant to
the
authorization contained in the telegram is limited to
thirtY days
from the date of the
telegram unless an extension of time
gl
'anted ,y
1-

the Board. The conditions contained in the
telegram upon
1111.°h the permit
was authorized were as follows:
"1.
Prior to
issuance of general voting permit authord herein,
applicant shall execute and deliver
Zeto You
in duplicate an agreement in same form as
a
that which
applicant executed on December 11, 1939,
4,a1;rtion to issuance of permit dated December
"2,
Prior

to or
simultaneously with issuance of general
Ing permit authorized herein, The Farmers
& Merchants
Bank of Logan shall be admitted to
membership

T




1_673
11/29/41

-5"in the Federal Reserve System."

The

telegram also contained the following statement:
"Since applicant's dividend and service charge policies have been
subject to criticism in report of examination of
applicant as of October 21, 1940, and in conferences in
Washington with Mr. Kelley and Mr. Fletcher, Board
desires that, when applicant is
advised of Board's action
upon its
application, applicant be reminded of pertinent
provisions of its applications for voting permits and
its
agreements executed in connection with issuance of
general
'voting
permits, and that applicant be informed that Board
does not
consider applicant's past record satisfactory and
that applicant's policies in future will be
such
tnat
that
dividends paid by it and dividends and service fees
received by it
from subsidiary banks will be kept in approate
relationship to earnings and capital positions of
sznks. Also,
please advise applicant that Board underfrom
to"ds
a further discussion at Vashington conferences that steps
disassociate BancOhio Securities Company from
_PI:Ill-cant and its
subsidiary banks are receiving applicant's
'iTliasideration and that, in this connection, Board
emphasizes
an1
,
31°rtance of changing
name
of
BancOhio
Securities
Company
LL
arrangements under which subsidiary banks
rentterminating
desk space to
BancOhio Securities Company representatives.”

r

Approved unanimously, together with
a letter
to the board of directors of "The
Farmers & Merchants Bank of Logan",
Logan,
Oho,
stating that, subject to conditions
of
membership numbered 1 to 3 contained in
the Board's
the bank's Regulation H, the Board approves
the Federalapplication for membership in
Reserve System and for the appropriate amount of stock in the Federal
Reserve Bank of
Cleveland.
The letter also
contained the following special
comment:
i!i In view of
the fact that the BancOhio Corporation
°eoome a
holding company affiliate of your bank upon
Clev
."
18sion to
membership, the Federal Reserve Bank of
erai'-and has
been informed that, before stock in
the Fede5 Reserve Bank is
issued
to
bank,
your
it
will
be
necMY for the
BancOhio Corporation to comply with any




1C74
11/29/41

-6--

"Conditions to the issuance of a general voting permit
entitling it to vote the stock which it owns or controls
of your bank."
Unanimous approval was also given
to a letter to Mr. Fleming, President
of the Federal Reserve Bank of Cleveland,
reading as follows:
"The Board of Governors of the Federal Reserve System
approves the application of 'The Farmers & Merchants
Bank of Logan',
Logan, Ohio, 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
' 11-es and the other of which you are
requested to forward
t? the
Superintendent of Banks for the State of Ohio for
Ills
information.
"Before issuing stock in the Federal Reserve Bank
of
to The Farmers & Merchants Bank of Logan,
You are
requested to satisfy yourself that the BancOhio
rporation
has complied with any conditions to the isi lance of a
general voting permit entitling it to vote
Idle stock
which it owns or controls of such bank."

r

Letter to Mr. Gidney,
Vice President of the Federal Reserve
cr New
York, reading as follows:
(I

"Reference is made to your letter of November 14
NO. 37 re Regulation T) asking whether a
offlquirY
member
wL the
, New York Curb
Exchange
may
from
a
borrow
lawyer,
° J-s not a
creditor as defined in Regulation T, for the
ose of
enabling the borrower to make a contribution
„_,capital to a
joint adventure in which the borrower
",;Lc:',g another
member of the exchange are participants, the
adventure consisting of transactions, through a
account,
in securities with respect to which the
Other
a
Participant in the joint adventure is registered
ander
._acts
1.1eti. 0naZII:nj(o)tte=r.
The loan is secured by
ly01114 The only question appears to be whether the
loan
or b 1?e a
borrowing by the member 'in the ordinary course
Ilslness as a
broker or dealer' within the meaning of

Vp




I675

1-1129/41

-7-

"section 8(a) of the
Securities Exchange Act of 1934.
You state that
your view is that the loan should be so
regarded and that it is therefore prohibited.
"The Board agrees with this conclusion."
Approved unanimously.
Letter to Mr. Turman, Counsel of the Federal Reserve
Bank of
Atlanta, reading
as follows:
"This will acknowledge receipt of
your letter of
November 26, 1941 advising
that, under the terms of a
settlement recently agreed upon in connection with
the
foreclosure
proceedings arising out of a default in the
r
?payment of a loan made to the
Birmingham Cotton Mills,
-rmingham, Alabama, by the Federal Reserve
Bank ofAtante-, Reconstruction
Finance Corporation and the First
National Bank of
Birmingham, Alabama, the fee of Mr. D.
McKamY, of the firm of Benner,
Burr, McKay & Forman,
Who had
been retained to represent the
Federal Reserve
l'T-nk as
special counsel in this matter, will be paid by
the
Birmingham Cotton Mills.
"Inasmuch as
this fee will not be paid by the Federalr
Reserve Bank of Atlanta,
it is not necessary for it
be approved by
the Board of Governors of the Federal
System; but we are glad to have your advice
Reservethe cl
as to
/3'2e
sposition of the matter in order to complete the
uard's records
on the subject.
is
noted that you have sent the Board's General
ullnsel an
outline of the terms of settlement."

lp

Approved unanimously.
Letter to Mr.
B. M. Edwards, Assistant to the Secretary
Treas
of the
147, reading
as follows:
response to a telephone request on
ag13 from
November 24/
spe4leasedMr. Hines of the Defense Savings Staff, we
to theto furnish the following information with repa
Zal
rticipation of the personnel of the F?dReserve System
in the voluntary pay roll deduction
2 for the
purchase of Defense Savings Securities:
1°!'al number
of employees
In plan
participating
on November
15, 1941
* 5,846




1676
11/29/41

-8-

"percentage of employees participating
in plan
* 40.4
Gross deductions during month of
November 1941
*$26,661
*Figures do not include substantial cash purchases of savings bonds made regularly over
the counter by Reserve Bank personnel.
"United States Savings Bonds have, of course, been
sold at the Feder
al Reserve Banks since they were first
issued in March 1935, and, perhaps partly due to the natural
familiarity of Reserve Bank personnel with their investment
features and to the facility with which they might be purchased directly over the count
er in the institutions in
Which they were
employed, many officers and employees have
been making
cash purchases of savings bonds regularly for
years and are
continuing to make such purchases. While the
allicunt of cash purchases are not available for all Reserve
B
i anks, as an indication
of their extent one Bank reported
that
during the quarter ending September 30, 1941, they
a
trunted to
60.8 per cent of total purchases made under
roll deduction plan. It is suggested, therefore,
that the
:t
above footnote, or similar explanation, be carried
any table showing
the participation of the personnel of
the
Federal Reserve System in the
pay roll deduction plan.
It is
under
stood
infor
that
mation is for the
this
Conf
ident
ial
111
sd
use
of
the
Depar
Treas
tment and is not to
be
ury
"If we can be
of further service to you, please feel
free to
call upon us."




Approved unanimously.
Thereupon the meeting adjourned.

eoge,A, 1-Nnox-c

Secretary.

Chairman.