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1282

A meeting of the Board of Governors of the Federal Reserve
System was held in Washington on Monday, October 16, 1939, at 2:30
P.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Ransom, Vice Chairman
Szymczak
McKee
Davis
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
Federal Reserve Systan held on October 14, 1939, were approved unanimously.
Memorandum dated October 10, 1939, from Mr. Goldenweiser,
Director of the Division of Research and Statistics, recommending,
for the reason stated in the memorandum, that Philip M. Kaiser be
appointed on a permanent basis as an economic assistant in the Division, with salary at the rate of 42,400 per annum, effective as of
the date upon which he enters upon the performance of his duties
after having passed satisfactorily the usual physical examination.
Approved unanimously.
Memorandum dated October 12, 1939, from Mr. Goldenweiser,
Director of the Division of Research and Statistics, recommending




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0111,..,•••

that, for the reason stated in the memorandum Miss Sudith M. Fishburn,
who is at present employed on a temporary basis as a clerk in the
Division, be appointed on a permanent basis, with salary at the rate
Of $1,800 per annum, effective as of October 16, 1939, subject to her
passing satisfactorily the usual physical examination.
Approved unanimously.
Memorandum dated October 13, 1939, from Chairman Eccles to
all division heads reading as follows:
"Reference is made to my memorandum to division
heads dated February 4, 1936, setting forth the procedure to be followed thereafter in connection with all
applications for employment by the Board and recommendations submitted to the Board as to appointments. Since
that memorandum was written the Board has received several
recommendations for the employment of persons from the
outside to fill vacancies when it might have been possible upon thorough investigation to fill the vacancies
with qualified persons already in the Board's employ.
These incidents have suggested the advisability of expanding the instructions contained in the foregoing memorandum to make it entirely clear that it is the policy
of the Board that promotions be made from within the organization, even if they involve a transfer from one
division to another, in preference to employing people
from the outside, whenever there is some person within
the organization who could qualify to fill the vacant
position.
"I stated in my memorandum of February 4, 1936 that
'the Board has placed on the head of each division the
responsibility of making his selections solely on the
basis of merit and only of the persons shown to be the
best qualified to fill the positions after a thorough
canvass of all persons known to be available. Therefore,
when it appears that there is likely to be a need in
his division for filling a particular position he will
be expected to review all applications for appointment
to such a position which have been filed at least within
the preceding six months.' Hereafter a division head




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"who is confronted with the problem of filling 8 vacancy
or of employing additional people will be expected to consult with other division heads and to canvass the existing
organization carefully before recommending persons on the
outside. Strict adherence to this procedure will constitute an important contribution to maintaining a high
morale within the organization and make it possible more
generally for the Board to obtain the practical benefit
of the training and experience of existing employees.
"In the future, therefore, memoranda recommending to
the Board the employment of persons from the outside should
not only state that the person recommended is the best
qualified for the position of all available applicants
but should state there is no person already in the Board's
employ available for promotion who could fill the position equally as well."
Approved unanimously.
Telegram dated October 14, 1939, to Mr. Swanson, Vice President
of the Federal Reserve Bank of Minneapolis, reading as follows:
"In accordance with, your recommendation, Board extends to November 15, 1939, time within which 'State Bank
of Rockville', Rockville, Minnesota, may accomplish membership in the System."
Approved unanimously.
Letter to the Secretary of State, reading as follows:
"The National City Bank of New York has made application to the Board of Governors of the Federal Reserve
System for permission to establish a new branch office in
Shanghai, China, to supplement the facilities of the existing branch. In view of the situation existing in
Shanghai, the Board of Governors will appreciate your
advice as to whether the Department of State has any
reason for feeling that the permission applied for should
not be granted.
"For some years the National City Bank of New York
has maintained a branch in Shanghai at 1-A. Kiukiang Road
and it is anticipated that the new branch, to be operated




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"as a sub-branch, will be located approximately at the
intersection of Route Cardinal Mercier and Rue de Bourgeat,
which the Board of Governors understands is in the French
Concession and accessible to the shopping and residential
district of the city.
"It is stated that the facilities of the Shanghai
branch have been heavily burdened due to the increases
in armed forces, influx of refugees and for other reasons
due to disturbed conditions, and in the circumstances,
have proved to be inadequate. The additional office is
said to be needed to relieve the existing branch of the
present heavy volume of routine transactions thus enabling it to more efficiently conduct its commercial banking
business. It is also stated that the business risk at
Shanghai will not be increased by the opening of the proposed new branch since it is not being opened for the
purpose of soliciting new business but to provide more
adequate facilities for handling existing business.
"It is understood that Mr. W. W. Lancaster of Shearman
and Sterling has brought to the attention of Under Secretary Velles the desire of the bank to establish the additional branch heretofore mentioned."
Approved unanimously, together with
a letter to Mr. Preston Delano, Comptroller of the Currency, reading as follows:
"The National City Bank of New York has made application to the Board of Governors of the Federal Reserve
System, pursuant to the provisions of section 25 of the
Federal Reserve Act, for permission to establish an additional branch in Shanghai, China, to supplement the
facilities of the existing branch.
"The bank states that the facilities of the present
Shanghai branch are so overtaxed that the establishment
of another office to be operated as a sub-branch in the
shopping and residential section of the city has became
desirable. It is stated that the bank's business risk
will not be increased by the opening of the proposed new
branch since it is not being opened for the purpose of
soliciting new business but to handle existing business
and relieve the present branch of numerous transactions
so as to permit it to more efficiently conduct its commercial banking business.




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"The Federal Reserve Bank of New York recommends
that the application be approved and it will be appreciated if you will advise Whether you know of any objection to the granting of the permission applied for."
Letter to "The National Bank of Waterloo", Waterloo, Iowa, reading as follows:
"The Board of Governors of the Federal Reserve System has given consideration to your application for fiduciary powers, and grants you authority to act, when not
in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds,
guardian of estates, assignee, receiver, committee of
estates of lunatics, or in any other fiduciary capacity
in which State banks, trust companies or other corporations which came into competition with national banks
are permitted to act under the laws of the State of
Iowa, the exercise of all such rights to be subject to
the provisions of the Federal Reserve Act and the regulations of the Board of Governors of the Federal Reserve
System.
"This letter will be your authority to exercise
the fiduciary powers granted by the Board pending the
preparation of a formal certificate covering such authorization, which will be forwarded to you in due course."
Approved unanimously.
Letter to Mr. E. Jay Dittmar, Assistant Secretary, Wirt G. Bowman
Investment Company, Inc., Nogales, Arizona, reading as follows:
"This refers to your request that the Board determine that your company is not engaged as a business in
holding the stock of, or managing or controlling, banks.
"The Board understands that your company was organized for the purpose of placing certain property jointly
owned by Wirt G. Bowman and Magdalena J. Bowman in trust
for the benefit of their daughters; that a large part of
the assets of your company consists of a hotel, a drugstore, apartment houses, and other real estate; that it
owns or controls 689 of the 1,000 outstanding Shares of
stock of The First National Bank, Nogales, Arizona; and




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"that your company does not own or control any stock of,
or manage or control, any bank other than The First National Bank, Nogales, Arizona.
"In view of these facts, the Board has determined
that your company is not engaged, directly or indirectly,
as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or
trust companies, within the meaning of section 2(c) of
the Banking Act of 1933, as amended, and, therefore, it
is not a holding company affiliate for any purposes other
than those of section 23A of the Federal Reserve Act.
"If, however, the facts should at any time differ
from those set out above to an extent which would indicate that your company might be deemed to be so engaged,
this matter should again be submitted to the Board. The
Board reserves the right to make a further determination
at any time on the basis of the then existing facts."
Approved unianinmusly.
Memorandum dated October 10, 1939, from Mr. Morrill stating
that a review of the budgets of the Board Members' offices and the
Secretary's office indicated that the funds available for expenditures
daring the remaining quarter of the current year for non-personal services were running low in several accounts and that in order to avoid
the necessity for submitting a number of memoranda to the Board requesting increased authorization as the available funds in each acare exhausted it was recommended that the Board authorize an
increase in the budget for Board members' offices of 43,450 and an
increase in the budget for the Secretary's office of 4575.

There was

attached to the memorandum a statement Showing in detail the individual budget classifications involved, together with explanations
Of the increases recommended.




The recommendation was approved unanimously.

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Thereupon the mee ing adjourned.