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1760 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Tuesday, November 6, 1945, at 10:30 a..m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman McKee Draper Evans Mr. Carpenter, Secretary Mr. Connell, General Assistant, Office of the Secretary Mr. Morrill, Special Adviser Mr. Thurston, Assistant to the Chairman Mr. Smead, Director of the Division of Bank Operations Mr. Leonard, Director of the Division of Personnel Administration Mr. Thomas, Director of the Division of Research and Statistics Mr. Vest, General Attorney Mr. Wyatt, General Counsel Reference was made to a memorandum dated October 31, 1945, from 4T eq„ ---"ard, Director of the Division of Personnel Administration, to WIItch w as attached a letter from Mr. Young, President of the Federal ileSen? 'e Bank of Chicago, under date of October 25, 1945, advising that, 31thieet -0 the approval of the Board of Governors, the directors had reco— uwnerided the follov* g salary increases for officers of the Bank. The etter also stated that Mr. Hodge had been advanced from Assistant Coilnee, tc) General Counsel, effective as of the date on which the ap11(lirltat e-- of Mr. Dunn as First Vice President, formerly General Couneel Of the Bank, was approved: 1761 11/6/45 -2- Name Title B. C. Harris 0. J. A. T. Netterstrom Sihler Paul C. Hodge Vice President in charge of the Detroit Branch Vice President Vice President General Counsel Salary Increase To From $15,000 14,000 15,000 9,000 $16,500 15,500 16,500 10,500 Ur. Leonard's memorandum had been circulated among the members ()lithe Board prior to the meeting and the matter was placed on the cl°cIcet at the request of Chairman Eccles. The first three of the proPosed a,Jus uJ tments were discussed in the light of the salary history of 4essrs. Netterstrom and Sihler and what the maximum salaries should be 41' o fficers in charge of branches of Reserve Banks, and it was agreed that action on all four of the proposed changes should be deferred pend14e a discussion of the matter by Mr. Eccles with Mr. Szymczak. Consideration was then given to a memorandum dated October 29, 1945 f -rail*. tist4 _8 4.e 1 Thomas, Director of the Division of Research and Sta- recommending approval of the temporary appointment for a pe- "not to exceed one year of Mr. Ali Resai Bengur, a citizen of rike as an Economic Specialist in the Division of Research and Sta'istie 8, with salary at the rate of $3,640 per annum, effective as of the date Upon which he enters upon the performance of his duties after ge satisfactorily the usual physical examination. hatthe Eccles said that when the file came to him he had felt Board should staff its organization vith permanent employees 1762 11/6/45 —3— arld,, that therefore, he was inclined to question the wisdom of tempo— liarY appointments of this kind. Mr. Thomas explained that Mr. Bengur had been sent to this e°1111tr7 in 1940 by the central bank of Turkey to pursue a course of 8.4dY at Princeton University, that more recently he had been attached to the lurkish Embassy in Washington, and that before returning to the centr41 bank of Turkey he would like to obtain some experience in the 13°41"(1/8 research organization. Mr. Thomas also stated that there was tleed in the International Section of the Division of Research and Sta— a tor man of Mr. Bengur's training and experience, that his serv— ices e°uld be utilized to advantage in work on economic developments in the 13alka1 countries and in the near East in which field there was a 8..rtity of qualified help, and that since he had a definite commitment to return to the central bank of Turkey his service with the Board would 4N-et in establishing a broader basis for the Board's relations with that the institution. It was also pointed out that the salary proposed for 13engur was the salary that would be required for someone else with qualifications necessary for the work that he would do, and that thetemporary appointment would be in general accord with the policy (11* the Board as stated at the meetings on December 121 1943, and June 1945, with respect to the temporary employment of Latin Americans. • At the conclusion of a discussion, the appointment was approved unanimously as recommended, it being understood that Mr. Bengur would not become a member of the Federal Reserve retirement system in view of the temporary nature of his ap— pointment. 1763 11/6/45 Mr. Carpenter then read a letter dated November 2, 1945, from ?resident Gidney of the Federal Reserve Bank of Cleveland, advising that *. Hays, First Vice President, had resigned, effective as of 4°Irelaber 30, 1945, to accept a position as executive vice president c't the First National Bank of Cincinnati, Ohio. Noted. At this point Messrs. Smead, Leonard, Thomas, Vest, and Wyatt Withdrew from the meeting. The action stated with respect to each of the matters hereinreferred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Peder , Reserve System held on November 5, 1945, were approved unani43118 4 . Letter to Mr. William L. Clayton, Assistant Secretary of the tePartment of State, reading as follows: "Our reply to your letter of September 27, requesting the release of Mr. Arthur C. Bunce .of our staff for ;_period of six months in order that he might be sent to rea as Economic Adviser to General Hodge, has been detolTed Pending advice as to how your Department wished have the matter handled. pla "We have now been advised that Mr. &ince will be ed on a Special Mission payroll. Accordingly, this is! advise you that the Board of Governors has granted to Bunoe a leave of absence without pay for a period not exceed six rol : months in order that he may undertake the ' sion to Korea as proposed." 4 Approved unanimously. 1764 11/6/45 —5— Letter to Hr. Fletcher, Vice President of the Federal Reserve Bank of Cleveland, reading as follows: "Referring to your letters of August 9 and 17 and October 15, 1945, relating to the status of the Ohio Farm Bureau Federation, Inc., and the Ohio Farm Bureau Corporation, both of Columbus, Ohio, as holding company affiliates of The First National Bank of Grove City, Grove City, Ohio, there is enclosed a letter of this date addressed jointly to the two corporations, advising them of the action taken by the Board with respect to this matter. A copy of the letter is enclosed for your files. "Prom the organization chart enclosed with Mr. 1allard'8 letter of August 2, 1945, it is noted that cerLain insurance companies own most of the preferred stock of the Ohio Farm Bureau Corporation which has voting rights case of default on four consecutive semi-annual dividends, and it is stated in your letter of October 15 that this tock has never been voted. However, attention is directed to the fact that if the preferred stock is in default to 1- 1/le extent that it now has the voting right, additional 1°1ding company affiliate relationships may exist regarde3 of whether the preferred stock has ever been voted. he determinations in the enclosed letter are based on e assumption that the preferred stock of the Corporaorn does not now have the voting right. If, as a matter a it does have such right at present, additional terminations by the Board as to whether one or more of the malinsurance companies is a holding company affiliate also be necessary. "Your letter of October 15 states that the stock of vhe Ohio Farm Bureau Corporation previously owned by the ohr im Bureau Cooperative Association has been sold to the tr 0 Farm Bureau Federation. It is assumed that no conof this stock has been retained by the Association cYllrvirtue of a loan or other advance to the Federation sedeted bY the stock, or in any other manner. Otherwise a r4,?rmination by the Board as to the holding company aft late status of the Association will be necessary before "national bank stock may be legally voted. lett 'The organization chart enclosed with Mr. Ballard's er also indicated some sort of relationship between j 1765 4/6/45 -6— "County Farm Bureaus, apparently 85 in number, and Ohio Farm Bureau Federation, Inc. However, it does not reveal Whether or not any shares of Ohio Farm Bureau Federation, , 1 ,110., are owned by a County Farm Bureau. If any County 'arm Bureau is a corporation, or a similar organization, and controls Ohio Farm Bureau Federation, Inc., a determin— ation of the holding company affiliate status of such Bureau is necessary. Of course, the voting status of the preferred stock of Ohio Farm Bureau Corporation has a bear— , 3-ng upon this question as well as the question discussed Jr,..n.the preceding paragraph, and the question whether the uhlo Farm Bureau Federation, Inc., is actually a holding company affiliate of the national bank. "In view of the fact that it has been necessary to ! rlake the assumptions referred to above, it is suggested that, before the enclosed letter is transmitted to the u rporations to which it is addressed, you have the en— tire matter passed upon by Counsel for your Bank in order that it may be determined whether , the enclosed letter ; .overs the holding company affiliate relationships which In fact exist in this case. "With respect to the question raised in the last para— ,Ph of your letter of October 15 as to the organizations nuch are to be considered as being affiliated with the na— o.on.., bank, the Board will not attempt to answer this I!estion as the national bank is under the supervision of ,r Comptroller of the Currency and affiliate questions should be submitted to his office by the national bank, acc°mPanied by all necessary information." a T Approved unanimously, together with the joint letter, referred to in the first Paragraph of the above letter, to the Ohio Farm Bureau Federation, Inc., and the Ohio Farm Bureau Corporation, of Columbus, Ohio, reading as follows: Lir "This refers to the letter dated August 2, 1945, from p02 1?nrY S. Ballard, General Counsel, Ohio Farm Bureau Cor— ad-WV.°n, to the Federal Reserve Bank of Cleveland, and to Re-;;'1°nal information subsequently furnished to the Federal as fve i Bank, relating to the status of your corporations '4301ing company affiliates. Inc, The Board understands that Ohio Farm Bureau Federation, -4 '°wns the common stock of the Ohio Farm Bureau Corporation 1766 —7"Which, in turn, owns more than 50 per cent of the number of shares voted at the latest election of directors of The First National Bank of Grove City, Grove City, Ohio, but neither Ohio Farm Bureau Federation, Inc., nor Ohio Farm Bureau Corporation owns or controls any stock of, or manages or controls, any other banking institution. "In view of these facts, the Board has determined the Ohio Farm Bureau Federation, Inc., and the Ohio Farm Yarm Bureau Corporation are not engaged, directly or inQ.Iirectly, as a business in holding the stock of, or manag, 3.7ng or controlling, banks, banking associations, savings , '..,) 481 or trust companies, within the meaning of section ._(_e) of the Banking Act of 1933, as amended; and, accord,,n61,Y, the Ohio Farm Bureau Federation, Inc., and the u_hlo Farm Bureau Corporation are not holding company af 5,iliates for any purposes other than those of section 43A. of the Federal Reserve Act. "If, however, the Ohio Farm Bureau Federation, Inc., Or the Ohio Farm Bureau Corporation should at any time own or control a substantial portion of the stock of, or manage 31 : 1 control, more than one banking institution, this matter triad again be submitted to the Board for its determina,""In, The Board reserves the right to make a further debermination at any time on the basis of the then existing facts.” Letter to "The First National Bank of Wallace," Wallace, Idaho, reaciin g as follows: "The Board of Governors of the Federal Reserve System has given consideration to your application for permis! icn to act as trustee in certain instances, and grants you ;1.11thority to act, when not in contravention of State or law, as trustee, restricted to the mere holding of cr-Le to real estate for local mining companies, the exerper of such right to be subject to the provisions of the eZeral Reserve Act and the regulations of the Board of Govof the Federal Reserve System. tid "This letter will be your authority to exercise the ti,liciarY power granted by the Board pending the prepara whirl of a formal certificate covering such authorization, ch will be forwarded to you in due course." Approved unanimously. 1_767 11/6/45 -8Letter to Senator E. C. Johnson reading as follows: "This will acknowledge your letter of October 24, relating to the Board's Regulation IV and enclosing let-'ers from. Mr. John T. Liggett, Vice President, Western Acceptance Corporation, Pueblo, Colorado, and Mr. H. R. Roberson, Vice President, Valley Loan Company, Alamosa, Colorado. Both of your correspondents suggest relaxation clf Regulation Wwhich relates to consumer credit. "It is the policy of the Board to relax the requirements of the regulation as rapidly as conditions permit, and on October 15, 1945, an amendment in that direction was adopted. However, the regulation is a part of the antiinflation program of the Government, and it is the IfieW of the Board that while consumer goods are in short "Ply the regulation should be continued in a form which "111 restrict the use of credit in the purchase of such °c/cis as a means of dampening the demand and the resultone pressure on orices. As long as the demand is in exe55 0f the goods available, it is not believed that the egulation will in any way interfere with their production or distribution. The Board has this matter under continuous study, and You may be assured that the comments contained in the 1_,, vt't?re from your correspondents will be given careful con. sideration letters of Messrs. Liggett and Roberson are reed herewith." 1 Approved unanimously, together with similar letter to Congressman J. Edgar Chenoweth. Memorandum dated October 31, 1945, from Mr. Paulger, Director °t the n. -3-vision of Examinations, submitting a voucher for reimburseor traveling expenses incurred by Andrew N. Thompson, Federal Re erve "xarniner, while on official business. The memorandum recomkellded P that the Board allow Mr. Thompson $7.00 per diem during the 1(3c1 he was away from official headquarters (Washington, D. C.) 1768 A/45 —9_ rl ' °In September 27 to October 23, 1945, and an excess charge of $5.45, l'ePresenting his share of a compartment from San Francisco to Salt Lake itY arid from Portland to San Francisco, purchased because of the unalilability of the usual Pullman accommodations allowed by the Board's trairzl regulations, and that the voucher be approved for the full 4ioutt. Approved unanimously. Thereupon the meeting adjourned. Chairman.
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