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1362 A, meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Friday, November 3, 1939, at 11:00 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman (latter part of meeting) Ransom, Vice Chairman Szynczak McKee Davis Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. amead, Chief of the Division of Bank Operations Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Parry, Chief of the Division of Security Loans Mr. Wingfield, Assistant General Counsel Mr. Borbett, Assistant Chief of the Division of Bank Operations Mr. Thomas, Assistant Director of the Division of Research and Statistics Mr. Piser, Senior Economist in the Division of Research and Statistics There were presented telegrams to Mr. Sanford, Assistant Secre' cf the Federal Reserve Bank of New York, Mr. Post, Secretary of the tax, 4cleral Reserve Bank of Philadelphia, Mr. McLarin, First Vice President Of the Federal Reserve Bank of Atlanta, Mr. Olson, Assistant Secretary "the Federal Reserve Bank of Chicago, and Messrs. Leedy and Hale, Secretaries of the Federal Reserve Banks of Kansas City and San Francisco, l'esPectively, stating that the Board approves the establishment without el:1614e by the Federal Reserve Bank of Kansas City on October 28, by the ifICn) 11/3/39 -2- Federal Reserve Bank of San Francisco on October 31, by the Federal Reserve Banks of New York, Atlanta, Chicago and San Francisco on November 2) 1939, and by the Federal Reserve Bank of Philadelphia today, of the rates of discount and purchase in their existing schedules. Approved unanimously. Mr. Davis referred to a memorandum, a copy of which he sent to each member of the Board under date of November 1, 1939, and with which was submitted a draft of a schedule calling for information on consumer loans of banks which would supplement data on consumer credit which the Bureau of the Census proposes to collect from finance cam-Denies and dealers in connection with the 1939-1940 census if it is decided that the information also is to be obtained from banks. The memorandum stated that the schedule was drafted for possible use in connection with the December 1939 call report, that the information developed w°Uld furnish a basis for determining the desirability of calling for 11 similar but possibly condensed schedule in future call reports perone a year, that the purpose of the schedule was to obtain inforInlItion as to the extent to which banks are participating directly in the financing of retail installment sales and the extent to which they Me'ke so-called personal loans, and that the information on personal loans would serve to round out the studies on consumer credit being made by the National Bureau or Economic Research under the auspices of the Association of Reserve City Bankers. The memorandum stated further 1_364 11/3/39 -3- that the schedule was the result of a conference held at the suggestion of the Central Statistical Board which now suggests that the Board endeavor to clear the schedule with the Comptroller of the Currency and the Federal Deposit Insurance Corporation, that Mr. Upham, Deputy Comptroller of the Currency, with whom it had been discussed, was not favorably impressed with the need of obtaining the information but had indicated that the Comptroller's Office would give the matter careful cousideration if the Board felt it was important to have the data collected from all member banks, and that Mr. Thompson, Chief of the Division of Research and Statistics of the Federal Deposit Insurance Corporation, had indicated that if the Board and the Comptroller's °Tfice decided to obtain the information from member banks the Federal Deposit Insurance Corporation would collect the same information from insured nonmember banks. Mr. Davis stated that, unless some of the members of the Board a ' 17 same reason for not asking for the information, it would be his recommendation that the schedule be sent out in connection with the Year-end call for reports of condition. The matter was discussed in the light of complaints received tram time to time from banks that they were called upon by supervisory agehcies to fill out too many reports and of the question whether the l'esulting information would justify the time required to prepare the schedules and to tabulate the results. In this connection it was sag- eeted that banks were expanding their activities in the field of 11/3/39 -4— consumer loans as a means of employing excess funds, that the extent to which this trend had developed was not known, that, therefore, the information would be valuable not only to the supervisory agencies but to the banks themselves, that the National Bureau of Economic Research llad obtained similar information from some 1,200 banks who had furnished the information voluntarily, but that it was not known whether the actiVities of these banks in this field was typical for all banks and it would be desirable to get a comprehensive report of the activity as of 'El given time which would serve as a basis for comparisons with any subsequent reports that might be made. At the conclusion of a discussion, Mr. Snead was requested to prepare letters, to be sent by the Secretary after approval by Mr. Davis, to the Comptroller of the Currency and the Federal Deposit insurance Corporation stating that the Board is of the opinion that this information should be collected for all member and nonmember insured bsnks and that if the other two supervisory agencies are willing to send out the schedule in connection with the December call the Board would be pleased to have Mr. Snead confer with then as to the form of the schedule. In taking this action it was understood that if the Comptroller of the Currency and the _federal Deposit Insurance Corporation agreed to ask for the information Mr. Smead would be authorized to make such minor changes in the form of schedule as might be agreed upon by the representatives of the three agencies and that the schedule thus agreed on would be used in connection with the December call, but that if the Comptroller of the Currency or the Federal Deposit Insurance Corporation were not willing to include the schedule in 1366 11/3/39 -5their December calls in substantially the form submitted, the matter would be taken up with the Board again. At this point Chairman Eccles joined the meeting. Mr. Ransom referred to the consideration which had been given during the past several months by members of the Board and its staff to a request from the Committee on Mortgage Investment Funds of the Pennsylvania Bankers Association for an amendment to the Board's Regulatlon F, Trust Powers of National Banks, to permit the operation of e°11mon trust funds composed principally of mortgages. He stated that Yesterday afternoon he and Mr. Draper and members of the staff discussed the matter again in the light of the representations made by members °D the Association's Committee and that the majority opinion was that the requested amendment to the regulation should not be made at this time. In discussing the matter with representatives of the Board, Mr. Ransom said, the members of the Committee on Mortgage Investment P4Ilds requested that, if the Board should feel that the amendment Should not be made, members of the Committee be granted an opportunity to meet with the Board for the purpose of presenting their views. Mr. Realsam made the further statement that the Office of the Comptroller Of the Currency was opposed to the proposed amendment, that the Com- "ee on Common Trust Funds of the American Bankers Association was illi tmously opposed to it, and that in view of the majority opinion 1_367 11/3/39 -6- of those who considered the matter yesterday it would be his suggestion that the Board advise the chairman of the Committee on Mortgage Investment Funds that the Board will be pleased to afford the Committee an oPPortunity to present its views at a mutually convenient time. Messrs. Morrill and Wingfield were requested to arrange for a satisfactory date to hear the Committee on Mortgage Investment Funds in accordance with Ma.. Ransam's recommendation. At this point Messrs. Thurston, Wyatt, Smead, Goldenweiser, 1)1trrY, Wingfield, Horbett, Thomas and Piser left the meeting and the action stated with respect to each of the matters hereinafter referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the red.eral Reserve System held on November 2, 1939, were approved unanirilo4sly. Memorandum dated October 30, 1939, from Mr. Goldenweiser, lArector of the Division of Research and Statistics, recommending that, for the reason stated in the memorandum, Mrs. Isabelle N. Rhodes, a file clerk in the Office of the Secretary, be transferred to the I/I:vision of Research and Statistics, with salary at the rate of 0.,440 Per annum, and that her title be changed to clerk, both effective as °t November 16, 1939. Approved unanimously. Letter to the board of directors of the "Bank of Smithfield", rt# Act.r) J. 11/3/39 011M. Smithfield, Virginia, stating that, subject to conditions of membership numbered 1 to 3 contained in the Board's Regulation and the following special conditions, the Board approves the bank's application for membership in the Federal Reserve System end for the appropriate amount of stock in the Federal Reserve Bank of Richmond: "4. Such bank shall make adequate Provision for depreciation in its banking house and furniture and fixtures. "5. By not later than December 31, 1939, such bank shall charge off or otherwise eliminate estimated losses of $2,381.16, as shown in the report of examination of such bank as of September 25, 1939, made by an examiner for the Federal Reserve Bank of Richmond." The letter also contained the following special comments: "It has been noted that for a number of years the bank has been holding 26 shares of its own stock as additional Protection on two loans. A bank's own stock is, of course, not desirable as collateral and it will be expected that as soon as practicable some plan will be worked out whereby it Will not be necessary to hold the stock. "It appears that the bank possesses, but at the time of its application for membership was not exercising, certain powers not necessarily required in the conduct of a bankinp: business, such as the power to guarantee the payment Of bonds. Attention is invited to the fact that if the bank desires to exercise any powers not actually exercised at the time of admission to 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. "The Board of Governors sincerely hopes that you will find membership in the System beneficial and the relationships with your Reserve Bank pleasant. The officers of the t It_ 11/3/39 -8- "Federal Reserve bank will be glad to assist you in establishing your relationships with the Federal Reserve System and at any time to discuss with representatives of your bank means for making the services of the System most useful to you." Approved unanimously for transmission through the Federal Reserve Bank of Richmond. Letter to Mr. Leo T. Crowley, Chairman of the Federal Deposit Ilisurance Corporation, reading as follows: "Receipt is acknowledged of your letter of October 31 advising that the Curry County Bank, Gold Beach, Oregon, contemplates Aithdrawinp: from membership in the Federal Reserve System and has made application to continue its status as an insured bank after withdrawal from membership in the System. "As requested in your letter, therefore, the Board of Governors of the Federal Reserve System hereby grants written consent, in accordance with the provisions of subsection (k)(2) of section 12B of the .bederal Reserve Act, for examiners for the Federal Deposit Insurance Corporation to examine the Curry County Bank, Gold Beach, Oregon." Approved unanimously. Thereupon the meeting adjourned. 0-1AA-Rf Secretary. 4PProved: Chairman.
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