The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1611 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Wednesday, October 25, 1944, at 12:15 PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman McKee Draper Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Dreibelbis, General Attorney Mr. Van Fossen, Assistant Director, Division of Bank Operations Mr. Cagle, Assistant Director, Division of Examinations Mr. McKee stated that a letter had been received from Mr. Grady, Chair roan of the Federal Reserve Bank of San Francisco, under date of October 17, 1944, with which was enclosed a letter received from C. F. W' Wente, Senior Vice President of the Bank of America National Trust 4nd sa„._ gs Association, dated October 16, 1944, transmitting a cer— tificat e of nomination for a Class B director of the Federal Reserve ' lank oan Francisco. Mr. Grady's letter stated that, since it was the duty of the Board to classify member banks into their respective groltms tor the purposes of elections of directors of Federal Reserve Banks and to determine affiliate relationships between holding companies and ban "'0 and the resulting qualifications of banks to participate in eleoti One, in view of circmstances with which the Board was familiar he 'Nolo rl also appreciate receiving instructions in the premises. Mr. McKee said that he and Mr. Dreibelbis had been discussing the form of 1.618 10/25/44 —2— a reply to be sent to the Bank of America National Trust and Savings Association, and that a draft of a reply had been prepared which he w°11-14 like to have the Board consider with the understanding that, be— l'Ore it was sent, the comments of Mr. Agnew, Counsel for the Federal Reserve Bank of San Francisco, and Mr. Leachmn, Special Counsel for the Board, would be obtained. Mr. Dreibelbis read the letters from. Mr. Grady and Bank of America National Trust and Savings Association referred to above, as well as the draft of a proposed reply that had been prepared. In the ensuing discussion, Mr. McKee stated that the classifi— cation of member banks and procedure for the election of Class A and 13 6J-rectors of Federal Reserve Banks were matters for primary consider— ation and recommendati on to the Board by the Personnel Committee and that, if agreeable to the Personnel Committee, it would be his sug— estion that the matter be handled as outlined above. The members of the Personnel Commit— tee having indicated their agreement, the draft of letter to the Bank of America Na— tional Trust and Savings Association was approved unanimously, subject to such changes in form as might be agreed upon by Mr. Dreibelbis with Messrs. Agnew and Leachman, With the approval of Mr. McKee, and with the understanding that, if it were thought necessary to make any changes in the sub— stance of the reply, it would be resubmitted to the Board by Mr. Dreibelbis for further consideration. Secretary's Note: The letter sent to Mr. Carl F. Wente, Senior Vice President of 161” 10/25/44 -3Bank of America National Trust and Savings Association on October 27, 1944, in accordance with this action, read as follows: "This is in response to your letter of October 16, 1944, to Mr. H. F. Grady, Chairman of the Board of Directors of the Federal Reserve Bank of San Francisco tendering a nomination by your bank of a Class B director of the Federal Reserve Bank of San Francisco, Group No. 1. "Chairman Grady has referred your letter to this Board ince it is solely the duty of the Board to classify member !0).nks into their respective groups for the purpose of elec61ons of directors of Federal Reserve Banks and since it is also solely the duty of the Board to determine affiliate relationships between holding companies and banks and the resulting qualifications of banks to participate in elecIt3ions. As you have been advised on other occasions, this as required by section 4 of the Federal Reserve Act, h"rd, as classified banks of the Twelfth District into three general groups. This classification is subject, however, to the proviso at the end of the sixteenth paragraph of section 4 of the Federal Reserve Act reading as follows: 'That whenever any two or more member banks within the same Federal reserve district are affiliated with the same holding company affiliate, Participation by such member banks in any such nomination or election shall be confined to one of such banks, which may be designated for the purpose by such holding company affiliate.' T'-LS proviso was enacted for the obvious purpose of seeing 0 it that where a bank holding company is involved, but Bae tl vote in the election of directors of Federal Reserve —flks Would go to one management. Your bank, through manage?Lent which is common to that of Transamerica Corporation, °11°w5 that the latter, ' in accordance with the above-quoted visol has designated another bank of the Transamerica '°uP_tc participa te in the election in question. "The same contention which your bank now makes was made 01-1 two former occasions November 1943 and May 1944. On each , scasion this Board pointed out that Transamerica Corporation, a,holding company affiliate of your bank, had applied for, re, Bo ' -e-Lved, and continued to hold a voting permit issued by this ha!,:rd- It also pointed out that such information as the Board 1121Tdid not indicate that the control of Bank of America S. A. had changed by reason of the reduction in the T2 r 16u 10/25/44 -4- "number of shares of the bank held by Transamerica Corporation nor that the control of the bank was exercised in any different manner than was the case lAhen the application for the voting permit was filed and the voting permit granted. Transamerica Corporation, through management which is common to that of your bank, is aware of the Board's views in this respect. "Moreover, when the voting permit was granted, Transamerica Corporation was advised that this Board would con_,1.-der the agreements, which were contained in the application or were made as a condition to the granting of a voting Permit, terminated when the voting permit issued to Transamerica Corporation was revoked or was surrendered with the approval of the Board. Transamerica Corporation was also advised that the Board would approve a surrender of the permit when it was satisfied that Transamerica Corporac n was no longer a holding company affiliate. Your bank, t' n r°11gh management which is common to that of Transamerica ‘-'0rporation, is aware of this fact. While the qualifications Of Bank of America N. T. & S. A. to participate in an election of a director of the Federal Reserve Bank of San Franare not governed by whether Transamerica Corporation has a permit to vote its stock in that bank, it is significant that Transamerica Corporation continues to exercise the Privileges granted by the permit and has not asked the Board _o.aPprove its surrender. Nor has the Board received any evidence which would cause it to change the views heretofore xPressed in its -Ares of November 5, 1943, and May 30, 1944, addressed to the Federal Reserve Bank of San Francisco, the Contents of which were communicated to you. " a copy of this letter is being delivered Accordingly, to • sea:airma n Grady with this Board's instructions to him that i of America N. T. & S. A. is not qualified to participate a the election in question because Transamerica Corporation hri t designated another bank for such purpose, and that he is 0 re' Ject the nomination tendered by Bank of America N. T. S. A.11 The letter to Mr. Grady, referred to in the last paragraph of the letter to Ir. Wente, was in the following form: 1(1 "Receipt is acknowledged of your letter of October 17, ' 44, enclosing a copy of a letter dated October 16, 1944, 10/25/44 --5— "addressed to you by Mr. Carl F. tente, Senior Vice Presi— Bank of America N. T. & S. A. "A copy of the Board's reply of this date to Mr. Wente is enclosed. In response to your reauest for guidance, you a2:e advised that Bank of America N. T. & S. A. is not quali— led to participate in the election in question and you are instructed to reject the nomination tendered in Mr. Eente's letter.fl For reasons referred to during the dis— cussion of the above matter, it was agreed that a telegram should be prepared to the Presidents of all the Federal Reserve Banks stating that the classification of member banks for election of Class A and B directors heretofore established by the Board would be continued until further notice. At this point Messrs. Dreibelbis, Van Fossen, and Cagle with— drew fram the meeting. The action stated with respect to each of the matters herein— after referred to Was taken by the Board. The minutes of the meeting of the Board of Governors of the Ped-4 —u-171. Reserve System held on October 24, 1944, were approved unani— M°1181Y. Telegram to Mr. Flanders) President of the Federal Reserve 134r1k °f Boston, stating that the Board approves the establishment by the p ederal Reserve Bank of Boston, effective October 27, 1944, of a commitment rate on loans under section 13b of the Federal Re— ellve Act -- guaranteed under Regulation V of 1/4 per cent per annum, based O n the average daily unused balance of the maximum principal I 622 10/25/44 -6- amount of the loan, or in the alternative a flat fee of not to exceed 5(); and that, otherwise, the Board approves the establishment without change by the Federal Reserve Bank of Boston on October 23, 1944, of the rates of discount and purchase in its existing schedule. Approved unanimously. Memorandum dated October 21, 1944, from Mr. Smead, Director of the Division of Bank Operations, recommending that the Board approve the draft of Form F.R. 105 attached to the memorandum for use in obtain- ing reports of condition of State member banks on the forthcoming endcall. 1) 1943, The proposed form was the same as that used on December except for minor clarifying changes indicated on the revised draft. It was understood that the Comptroller of the Currency and the Federal Deposit Insurance Corporation expected to make similar changes in their call report forms. Approved unanimously, together with a draft of letter to the Presidents of all the Federal Reserve Banks transmitting the revised call report forms and the following letter to Mr. Stuart A. Rice, Assistant Director in Charge of the Division of Statistical Standards of the Bureau of the Budget: dr "There are enclosed for your files two copies of a beait of form F. R. 105 that we expect to have State mem: r lanks use in submitting reports of condition at the for nc oming end-of-year call. Itrn, lae cemuer en proposed form is the same as that used on De1943 with minor changes made in Schedule B and E for the purpose of clarification. We understand Al17'e'-11( ) 10/25/44 -7"hat the Comptroller of the Currency expects to use a similar form in the forthcoming call. "Your office assigned Budget Bureau No. 55-R004.2 to the form that was used on the December 31, 1943 call, and we plan to use this number on the proposed form." Memorandum dated October 25, 1944, from Mr. Morrill recommending that the temporary appointment of Mrs. Blanche E. Peacock, as a charwo man in the Secretary's Office, be extended for an indefinite perioa from October 30/ 1944, with no change in her present basic salary at the rate of 1,200 per annum. The memorandum also recommended that Mrs. Peacock become a member of the Board's retirement system. Approved unanimously. Letter to the Presidents of all the Federal Reserve Banks reading as foilms: "In a letter dated July 13, 1944 (3-776) you were advised that certain data with respect to the number and salariesr of the employees of the Federal Reserve Banks, iu-Lch the Board had been requested by the Civil Service ''ommission to obtain from the Federal Reserve Banks was :° longer needed by the Commission and that accordingly 11°11 reports might be discontinued. "rhe Board has now received a request from the Bureau ine ' rmr erLabor Statistics for monthly reports regardof employees and total pay rolls of the Fed7r1 Reserve Banks. Form F. R. 96 and the pamphlet, 'In6truct10n5 Governing the Preparation of Earnings andExlse Reports and Profit and Loss Statements by the ?leral Reserve Banks', are being revised so as to proi,°e, effective January 1, 1945, for the inclusion in 1 and 2 of Form F.R. 96 all salaries paid by the Federal Reserve Banks, i.e., including salaries paid to cafeteriato D employees and to building employees assigned 96 la: ,L -L;Ldi ngs classed as 'Other real estate', Form F.R. as 4 . -L also be amended to show the number of the last day of the month. Accordingly,employs`) beginning r 10/25/44 "with January 1 945, it will be possible for the Board to furnish the desired information from reports received from the Federal Reserve Banks and Branches on Form F.R. 96. "For the months of September to December, 1944, it is requested that the following information, on the same basis as outlined above, be forwarded to the Board as promptly as possible after the end of each month: Total Gross Pay No. of Employees at End of Month Roll for Month (September 1944) (September 1944) Head Office Branch "The number of employees should include officers as well as employees. Each part-time employee should be counted as one employee. The total pay roll should include basic sal, overtime, supplemental compensation, if any, and be before deductions for retirement, income tax, bond purchases, etc,” Approved unanimously. Letter to Mr. Fitzgerald Hall, Class B director of the Federal Reserv n e Dank of Atlanta, reading as follows: con "Referring once more to the question of an annual tribution by the Federal Reserve Bank of Atlanta to the ca, rvork of the Southern Research Institute, you will refrom our letter of July 28, 1944, that the matter Was referred to the System Research Advisory Committee r a rePort and recommendation. This Committee has reuent4 made the following report: (1) It is the opinion of the System Research Advisory Committee that the Federal ReIserve System should not make contributions to or public agencies organized to provide industrial technological research facilities to business. The Committee recognizes, however, that this is a matter of policy and of law on Which the Committee is not competent to pass and . end must be decided by the System oIrtrLne .gl 111 1625 10/25/44 -9- "(2) The Committee recommends that the Board of Governors and the Federal Reserve Banks give such industrial technological research institutions all of the assistance in the economic research phases of their work as the System's facilities permit and such public relations assistance as the officials of the Board of Governors and of each Bank may approve for their own organizations. (3) The Committee recognizes the importance of industrial technological research to the economic development of the nation and of the various regions and is of the opinion that the Federal Government should stand ready to provide or to assist in providing industrial research facilities, particularly for small business, whenever such facilities are not being adequately supplied by private or by other public agencies. The Committee believes, therefore, that .?ongress should give consideration to the establishment of adequate facilities to provide industrial technological research or to make available the results of industrial research to business generally and particularly to small business. The method of accomplishin this end could be g either through existing agencies, such as the Bureau of Standards in the Department of Commerce and the Bureau of Agricultural and Industrial Chemistry in the Department of Agriculture; or, if necessary, through establishing new ones; through extending grants-in-aid to private or Public organizations; or through some combination of these different approaches. In particular, provision should be made in the appropriate department or agency of the Government for the continuance on a permanent basis of activities, such as the advisory referral service, which are now being provided by temporary wartime agencies. "The Board believes that, as a matter of System polPproval of the Atlanta Bank proposal would raise many questions and would establish a precedent that might cause 1626 10/25/44 -10- "serious difficulties in the future. It is therefore in agreement with the Committee's views and recommendations. ."I attach a copy of a report prepared by Mr. E. J. nc/Pk3 .-ns, of the Research Department of your Bank, which outlines the various industrial technological research facilities now being provided by the Federal Government." Approved unanimously. Thereupon the meeting adjourned. APProve . Vice Chairman.
@FedFRASER