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1477 A meeting of the Board of Governors of the Federal Reserve SYsterli was held in Washington on Saturday, October 30, 1937, at 11:00 PRESENT: Mr. Eccles, Chairman Mr. McKee Mr. Davis Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter ferred to and the action stated with respect thereto was taken by the Telegram to Mr. Powell, Secretary of the Federal Reserve Bank or kit IleaPolis, stating that the Board approves the establishment withollt eh ange by the bank today of the rates of discount and purchase in itB Sting schedule. Approved unanimously. /111110randum dated October 28, 1937, from Mr. Morrill recommendthe reasons stated in the memorandum, that Messrs. George R. e• rld Thomas B. Handley, elevator operators, be appointed guards t• hEtt their salaries be fixed at the rate of $1,500 per annum each, etive November 1, 1937; and that Kr. Douglas P. Weaver be appointed 411 elevator operator, with salary at the rate of $1,200 per annum, "rective uPon the date upon which he enters upon the performance of Cil• lttee after having passed satisfactorily the usual physical exThe memorandum stated that the Personnel Committee had 1478 1°/30/37 4PProved, for a trial period at least, the closing at all times of the 46t Court gate in order to avoid the employment of an additional guard to Patrol that area. Approved unanimously. Memorandum dated October 28, 1937, from Mr. Carpenter, Assistant SecrstarY, submitting the resignation of Miss Patricia M. Collier as a telv,0 r4rY file clerk in the Office of the Secretary, to be effective as ()r th 6 Close of business on November 30, 1937, and recommending that the row -'ignation be accepted. Approved unanimously. M emorandum dated July 26, 1937, prepared in accordance with the 1111cierstilding at the meeting of the Board on June 4, 1937, that the 8elli°1' staff would make a further study of the definition of "savings 413°81tst? as contained in the Board's Regulation Q, Payment of Interest tePc)site) and would submit a recommendation as to any change which '°4k5 II felt should be made in the definition. The memorandum stated that "ter a discussion by the senior staff of all aspects of the matter the followino conclusions were reached: be On principle, the definition of savings deposits should th Alrther restricted at an appropriate time by amendment to the statute or the regulation, or both, but, under all of e existing circumstances, it was recommended: 1. 2, That no amendment be made to the definition of savings deposits at this time. That the interpretation of the present definition Of savings deposits be liberalized along the lines recommended in Mr. Ransom's memorandum of December 15, 1936. 1479 1W30/37 3. -3That a ruling regarding the types of organizations which may maintain savings deposits in member banks be published in the Federal Reserve Bulletin in substantially the form attached to the memorandum. Approved unanimously. The pertinent part of Mr. Ransom's memorandum of December 15, 1936, read as follows: banie "Changes in regulations are disturbing and confusing to t ---ers, who find it difficult at best to keep themselves inas to all the requirements of the various administra44." authorities and if, as the Federal Advisory Council seemed ' cl31 feel, the situation can be met satisfactorily without a clange in the Board's definition of savings deposits, it is 11,!arlY desirable to do so. I believe that the present defi' 11a:di-0n could be given a somewhat more liberal meaning than ths been indicated by previous rulings and I am prepared, thefef°re, to recommend that the Board take the position d21. organizations of the following kinds may have savings °Posits under the Board's regulation: Bar associations, medical associations, dentists' associations and similar professional organizations Labor unions of the prevalent type United States Chamber of Commerce National Lime Association Bicycle Manufacturers' Association National Fertilizer Association, Inc. Rotary Clubs, Kiwanis Clubs and similar business groups Luncheon and dinner groups which are carried on primarily for social purposes meth "Without going into the details of the purposes and to °c18 of operation of each of these organizations, it seems st Me that their general character is sufficiently well underilla°°d to provide a guide for determining whether the list meY be extended to include other organizations. It seems to 411that the distinctive characteristic which runs through exid these forms of organization is that they are organized out c°nducted for the mutual benefit of their members, withthe necessity in order to effectuate this primary purpose 1480 "/30/37 -4- being directly engaged in or carrying on any business en, erPrise. I would not, however, hold that such an organiza4ion could not have savings deposits if it should appear that incidentally, but not as its primary function, it owned ?I' controlled some business enterprise, as, for example, it is known that some church organizations and labor unions may ! Ire investments in banks, but that in such cases the operatru of the banks is not in any sense a primary purpose of °rganizstion or even essential to the effectuation of Such Purpose. "Perhaps some of the other organizations in the list of °116anizati0ns which the Board has held could not have sayings ; 1 ePosits are sufficiently similar to those which I now recam4 end be permitted to have savings deposits to justify their lusion in this recommendation, but I do not have before ? ell the facts necessary to enable me to reach a conclu:Vn- as to them, and, therefore, I suggest that the question ti ether they should be included be left open for considerat" lh in case any of them should feel that they are entitled 0 similar treatment." T The statement submitted for publication in the Federal Reserve Bulletin regarding the types of organizations which may maintain savings deposits in member banks, read as follows: " ,gassification of Deposits of Certain Oreanizations as Savings Deposits "The definition of savings deposits in Regulation Q, Which relates rel to payment of interest on deposits, and in Begion D, which relates to reserves of member banks, reads in Pert as follows: 'The term "savings deposit" means a deposit, evidenced by a pass book, consisting of funds (i) deposited to the credit of one or more individuals, of a corporation, association or other organiza4-rh operated primarily for religious, philen' uroPic, charitable, educational, fraternal or other fliller purposes and not operated for profit, or in which the entire beneficial interest is held 'Y one or more individuals or by such a corporation, association or other organization, * * belik "It will be noted that under this definition member 417, 11211Y classify deposits of one or more individuals as witi",hgs deposits if the deposits comply in other respects the regulation, but they may not classify deposits of 4 c°rPoration, association or other organization as savings 1481 1v30/37 -5-- "deposits unless (1) such organization is operated primarily for religious, philanthropic, cheritcble, educational, fraternal or other similar purposes; (2) such organization is not operated for profit; and (3) such deposits comply in °ther respects with the requirements of the regulation. "With respect to many organizations such as churches, charitY hospital associations, fraternal orders and endowed clucational institutions which are not operated for profit, 1° questions have arisen since such organizations are obalislY operated for religious, philanthropic, charitable, lf,;',1,licational, fraternal or other similar purposes. However, questions have arisen as to whether deposits of bert8in other types of organizations which are near the t°rder-line of the definition may be classified by member ! s .41(8 as savinEs deposits. The Board has given careful .„ 11dY to these questions and has reached the conclusion 4..11a.the types of organizations set forth below may be ) Insidered to be operated orimarily for religious, philan: 101 °P1 c, charitable, educational, fraternal or other similar tirPoses and, therefore, that deposits of such organizemaY be classified by member banks as savings deposits th 4he organizations are not operated for profit and if e dePoSitS otherwise comply with the requirements of the defi nition.- ZI Professional associations, such as bar, medical, and dentists' associations. . Trade associations, including manufacturers' associations, retailers' associations, end chambers Of commerce. ,. Business men's clubs, such as Rotary Clubs and luwanis Clubs. Recreational clubs, such as golf and tennis clubs, Social clubs, such as luncheon clubs and college fr aternities. Labor unions of the usual type. Volunteer fire companies and ladies' auxiliaries thereof. Cemetery associations. School districts. t. Police or firemen's pension or relief associa"(including a special fund held by a political 8,1,2. sion to provide pensions for police or firee American Automobile Association, Retired Officere Association, and other similar organizations. 1482 1O/ /37 -6"The Board has also reached the conclusion that deposits of the organizati ons listed below may not be classified by 12141111)er banks as savings deposits either because the organize°n8 are not operated primarily for religious, philanthropic, fl, '"aritable, educational, fraternal or other similar purposes or 1, -acause'they are operated for profit. Building and loan associations. Mutual or cooperative fire or life insurance associations . Reciprocal or inter-insurance associations. Cooperative marketing associations, such as citrus growers or dairymen's cooperative marketing associations . Credit unions, Federal or State. States and municipalities and other political subdivisions thereof (except school districts) including departments, boards, and commissions of such political subdivisions. irtz "Although deposits of the types of organizations listed ediately above may not be classified by member banks as sr avilles deposits for the purpose of payment of interest or o tb ecYmPutation of reserves, attention is invited to the fact eflY of such organizations may maintain time deposits be'llm6omber banks. With respect to such deposits, which may tim either in the form of time certificates of deposit or forme tje open account, member banks may pay interest tw eccordance with the provisions of Regulation q and mainL' l'eserves in accordance with the provisions of Regulation elating to time deposits. mai "The above lists of organizations which may or may not be ir,tain savings deposits in member banks are not intended to etls'QmPlete but merely contain examples compiled from various iticle which have been submitted to the Board. Any necessary 1/e4. roi:14fy as to the proper classification of other organizations s 'Is Purpose should be submitted directly to the Federal theaell7e bank of the district in which the inquiry arises rather es 0 the Board. The Federal Reserve banks will, in so far trXssible, answer such questions in the light of the illus'ive cases stated above." Tloh -4st or L Letter to Mr. Henry Y. Offutt, Secretary, For the Trustees under cement with Reference to the Stock in the First National Bank (111417111e and Other Corporations, Louisville, Kentucky, reading as rollowe: 1483 'Oho/37 -7- "This refers to your letter of September 24, 1937, addressed to Mr. Wingfield and requesting a list of all bank 11(2,1ding companies that are required to obtain from the Board 01 Governors permits to vote the shares of bank stock owned d controlled. You also reauested advice as to the bank ,16ing companies which are operating under permanent voting ' ernlits issued by the Board and those which are operating uith temporary Voting permits. The Board has not attempted to compile a list of all held; the-nE campanies which would have to obtain permits from Board in order to vote bank stock owned or controlled iaind has not published a list of holding companies which tava applied for and now hold general voting permits issued vY the Board. The Board from time to time has issued limited Permits covering particular meetings of subsidiary /4--"Ls for particular purposes stated in the voting permit. 1;°revar, the effectiveness of these limited permits does -' continue beyond the specific purpose for which they are .anted. In view of all the circumstances, a list of holdthemPany affiliates now holding voting permits issued by B°ard is not inclosed herewith. It may be noted that yo letter does not state the purpose for which the infor• tt 1011 You requested is desired, but it is understood from 1,:avieus conversation you had with Mr. Wingfield that it itt :for the purpose of determining holding company affilthuas Which might be confronted with problems similar to cocLa of the holding company affiliate with which you are itlinected; and, if you desire to pursue the matter further, se 18 suggested that you get in touch with the Federal Res Bank of St. Louis." r r Approved unanimously, together with a letter to Mr. Martin, President of the Federal Reserve Bank of St. Louis, reading as follows: ,t18 "There are inclosed herewith a copy of a letter which Offutt, Secretary, For theteen received from Mr. Henry st TrUstees under Trust Agreement with Reference to the , e1: it the First National Bank of Louisville and Other 00 , Th;vesl'ations, and a copy of the Board's reply thereto. is also inclosed for your assistance in connection • orni, anY advice which you deem desirable to furnish Mr. .17.0i- tt if he pursues the matter further a list of ' nE permits outstanding October 1, 1937. You understand, genral01, c°11rse, that the Board has not published the inclosed 1484 113t, and if yau decide to furnish such list to Air. Offutt Should be on the basis that it is merely for his nforand is not to be used for publication." Thereupon the meeting adjourned.
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