The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1346 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Tuesday, October 31, 1939, at 11:00 a. in. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Snead, Chief of the Division of Bank Operations Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Dreibelbis, Assistant General Counsel Mr. Vest, Assistant General Counsel Mr. Szymczak referred to the agreeraent reached by the Board at its meeting on March 15, 1939, that the tentative standards established for maximura salaries for officers of Federal Reserve banks would be disclassed with the Chairmen of the Federal Reserve banks at their next conand inquired whether the members of the Board wished to wait Until the meeting to present the standards to the Chairmen or to send the standards to the Chairmen for their consideration prior to the meeting. He said it would be his recommendation that the first of the two Procedures be followed in order that the Board's reasons for the standIds might be fully explained to the Chairmen. " Mr. Szymczak's recommendation was approved unanimously. 1347 10/31/39 -2- Mr. Morrill reported that advice had been received from the Chairmen (or Deputy Chairmen) of eight Federal Reserve banks that they Will be able to attend a meeting of Chairmen on December 4, that the Deputy Chairman at Minneapolis will be able to attend on Tuesday, December 5, or the following Monday, Decenber 11, and that the Chairmen at the Federal Reserve Banks of Atlanta, St. Louis and San Francisco had not been heard from. In the ensuing discussion it was agreed that December 11 would not be a satisfactory date and that if possible the conference should be held during the week of December 4, 1939. Mr. Morrill was requested to communicate with the remaining Chairmen and to fix the date of the conference on December 4 and 5 or 5 and 6 depending upon which of these dates appear to be the more satisfactory. Reference was then made to the program of topics to be considered at the forthcoming meeting of the Chairmen of the Federal ReServe banks and Mr. Davis stated that a tentative program had been drafted for that meeting. It was agreed that a copy of the tentative program would be sent to each member of the Board with the understanding that any suggestions that he might have to make as to topics for the program would be sent to Mr. Davis not later than Thursday, November 2, and that the program prepared by Messrs. Davis and Szymczak, after receipt of suggestions from the other members of the Board, would be sent promptly by the Secretary to the Chairmen of all Federal Reserve banks with the request that they advise of any additional topics that they wish to have discussed at the meeting. 13,18 10/31/39 -3Chairmen Eccles presented a letter which was received by him yesterday from the Secretary of the Treasury requesting, for the reasons stated in the letter, that the Board authorize the temporary assignment of Andrew M. Kamarck, a junior economist in the Board's Division of Research and Statistics, to the Treasury Department for 4 period of six months beginning November 1, 1939, for work on a study in connection with the Exchange Stabilization Fund, it being understood that the Treasury Department would reimburse the Board for Mr. Kamarck's salary during the period of the assignment. Mr. Goldenweiser stated that, while there would be some inconvenience in making the assignment, he felt the experience which Mr. Kamarck would gain would be beneficial to him in his further service to the Board and that it would be possible to obtain the services of a substitute for Mr. Kamarck during his absence. Upon motion by Mr. Ransom, the following letter to the Secretary of the Treasury, which had been prepared for the signature of the Chairman, was approved unanimously: "Your letter of October 30, 1939, with respect to the temporary assignment of Mr. Andrew M. Kamarck, an economist in the Board's Division of Research and Statistics, to the Treasury Department for work in connection With the operation of the Exchange Stabilization Fund, reached my office yesterday and was presented at a meeting of the Board of Governors this morning. "The Board is pleased to authorize the assignment Of Mr. Kamarck to the Treasury for a six-months period camnencing November 1, 1939, with the understanding referred to in your letter that the Treasury Department 1_349 10/31/39 -4- "will reimburse the Board for his salary at the rate of i2,500.00 per annum and the payments at the rate of 4132.00 per annum which will be made by the Board on his behalf during that period to the Retirement System of the Federal Reserve Banks. "In accordance with this arrangement Mr. Kamarck will report for duty at the Treasury on November 1, 1939." Before this meeting there had been circulated among the bel'S DIM— of the Board a memorandum dated October 12, 1939, from Mr. Ransom with respect to the question whether the absorption of exchange charges by a member bark is a payment of interest within the meaning of the Illoard's Regulation Q, Payment of Interest on Deposits. The memorandum referred to the consideration which had been given to this matter since It had been discussed at the meeting of the Board on December 6, 1938, Nul also presented for consideration several courses of action which sPPeared to be available to the Board. After a lengthy discussion of Positions that might be taken by the Board and the possible results, it was agreed unanimously that no decision should be reached at this and that the matter should be held for further consideration at a later date. During the discussion of the above matter Mr. Thurston, Special Assistant to the Chairman, joined the meeting. At the conclusion of the discussion Messrs. Wyatt, ead, G°1denweiser, Dreibelbis, Vest and Thurston left the meeting and the aetion stated with respect to each of the matters hereinafter referred to was taken by the Board: 1350 -5- 10/31/39 The minutes of the meeting of the Board of Governors of the Federal Reserve System held on October 27, 1939, were approved unanimously. Memorandum dated October 25, 1939, from Mr. amead, Chief of the Division of Bank Operations, recommending that, for the reasons stated in the memorandum, the temporary appointment of Mrs. Helen C. Roome as comptometer operator in the Division be extended for a period of not to exceed three months beginning November 1, 1939, with no change in her present salary at the rate of 4150.00 per month. Approved unanimously. Letter to Mr. Evans, Vice President of the Federal Reserve Bank of Dallas, reading as follows: "This refers to your recent letter, dated October 21 but received at the Board's offices on October 16, requesting an opinion as to whether the Citizens State Bank, Houston, Texas, should be requested to report as 'Other Real Estate' instead of as 'Loans and Discounts' in its condition reports the amount representing certain real estate sold under contract. You state that in your opinion the contracts represent 'Other Real Estate' and should be carried in that account. It is assumed that you believe that they should be reported against item 8, 'Real estate owned other than bank premises', rather than against item 9, 'Investments and other assets indirectly representing bank premises or other real estate'. "According to the information submitted, some years ago the subject bank foreclosed a mortgage on a large tract of unimproved land and, after carrying it a few Years in 'Other Real Estate', charged it down to 41, and subsequently it had the property subdivided into small ferns and began selling them under contracts which called for snail down payments and snail monthly payments by the buyers. It is understood that under the contracts 1351 10/31/39 -6- "the bank retains title to each tract until the entire purchase money is paid in full, at which time it conveys title to the buyer, and that the balance of 4j6,041.84 referred to in your letter represents balances due on these contracts. "A definite answer to your question cannot be given on the basis of the information submitted. As a matter of fact, it is felt that the question should not be considered either by the member bank or by you on the basis of the total of the contracts, but that in determining how the assets should be reported each sales contract should be analyzed separately. This procedure would be consistent with the instructions for the preparation of reports of condition, form F.R. 105a, which provide in part that assets representing properties sold should be reported as indirectly owned real estate against item 9 of form 1.R. 105 'where the terms of the transaction or other conditions do not afford reasonable assurance that the properties will not have to be taken over by the bank'. Contrariwise, if a real estate contract represents a bona fide sale and the terms and conditions of the sale and the status of the contract are such as to afford reasonable assurance that the property will not have to be taken over by the bank, no objection should be raised to the bank's reporting the contract as a loan." Approved unanimously. Letter dated October 28, 1939, to Mr. Hill, Vice President of the Federal Reserve Bank of Philadelphia, reading as follows: "Pursuant to the recommendation made in Mr. Fenner's letter of October 25 and in view of the circumstances described in the letter sent to you by the Integrity Trust Company, Philadelphia, Pennsylvania, under date of October 16, 1939, the Board extends to November 13, 1939, the time in which the Integrity Trust Company, Philadelphia, Pennsylvania, may publish its condition statement as of October 2, 1939." Approved unanimously. Letter to Mr. Guy T. Helvering, Commissioner of Internal Revenue, W"hington, D. C., reading as follows: 1_352 10/31/39 -7_ "This refers to your letter of October 13, 1939 (IT:P:T:3-PCD) relating to the credit provided for holding company affiliates by section 26(d) of the Revenue Acts of 1936 and 1938 and the Internal Revenue Code and to the issuance of certificates by the Board in connection therewith. "The 21 holding company affiliates, other than banks, which now hold general voting permits are as follows: New Hampshire Bankshares, Inc., Nashua, New Hampshire Old Colony Trust Associates, Boston, Massachusetts Shawmut Association, Boston, Massachusetts Marine Midland Corporation, Jersey City, New Jersey BancOhio Corporation, Columbus, Ohio Atlantic Trust Company, Jacksonville, Florida Barnett National Securities Corporation, Jacksonville, Florida Citizens and Southern Holding Company, Savannah, Georgia Trust Company of Georgia Associates, Atlanta, Georgia Wisconsin Bankshares Corporation, Milwaukee, Wisconsin Trustees under trust agreement with reference to stock of The First National Bank of Louisville, Ky. and other corporations, dated July 1, 1925 (commonly known as First National Bank Trustees or Trustees, First National Bank), Louisville, Kentucky Bank Shares Corporation, Minneapolis, Minnesota First Bank Stock Corporation, Minneapolis, Minnesota Northwest Bancorporation, Minneapolis, Minnesota Marine Bancorporation, Seattle, Washington Sebastopol National Securities Co., Sebastopol, California Union Bond & Mortgage Company, Port Angeles, Washington United States National Corporation, Portland, Oregon Florida National Group, Inc., Jacksonville, Florida First Security Corporation of Ogden, Ogden, Utah Transamerica Corporation, San Francisco, California 1353 10/31/39 -8- "All of these organizations held permits on Decedber 31, 1936, except the three last named which received permits in 1937. "The Board has been definitely advised that the following holding company affiliates have made claims for credit for one or more tax years: Atlantic Trust Company, Jacksonville, Florida Barnett National Securities Corporation, Jacksonville, Florida Citizens and Southern Holding Company, Savannah, Georgia Northwest Bancorporation, Minneapolis, Minnesota "The following holding company affiliates made inquiries concerning the credit but the circumstances are such as to Indicate that it is doubtful whether claims actually were made: Marine Midland Corporation, Jersey City, New Jersey First Security Corporation of Ogden, Ogden, Utah Sebastopol National Securities Co., Sebastopol, California "In order that your information may be complete, we are also listing the organizations, other than banks, which held general voting permits on December 31, 1936, or received permits subsequent thereto, but have since been dissolved or ceased to be holding company affiliates: First National of Elmira Corporation, Elmira, New York American Holding Corporation, Chicago, Illinois Bankers Bond& Share Company, Omaha, Nebraska Equitable Securities Company, Dallas, Texas American Investment Corporation, Ogden, Utah Rawlins Securities Company, Salt Lake City, Utah Almours Securities, Inc., Jacksonville, Florida Inter-America Corporation, San Francisco, California "All of these organizations held permits on December 31, 1936, except the two last named which received permits in 1937. We have received no inquiries or information indicating that any of these organizations was interested in the credit. "In explanation of our statement to which you refer in the last paragraph of your letter, it is our understanding that, as the result of the elimination of the so-called undistributed profits tax by the Revenue Act of 1939, the 1354 10/31/39 -9- "credit provided for holding company affiliates will be allowable for tax years commencing after December 31, 1939, only in determining the amount of income subject to surtax under sections 102 or 500 of the Internal Revenue Code." Approved unanimously. Thereupon the meeting adjourned. Chaiman.
@FedFRASER