The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1969 A meeting of the Board of Governors of the Federal Reserve Systetlw ae held in Washington on Thursday, October 8, 1942, at 2:00 p.m. PRESENT: Mr. Eccles, Chairman Mr. Ransom, Vice Chairman Mr. Szymczak Mr. McKee Mr. Draper Mr. Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the ?eder al'Reserve System held on October 7, 1942, were approved unanimously. The minutes of the meeting of the Board of Governors of the € 1 Reserve System with the executive committee of the Federal Ad' 1180 rYCouncil'held on October 7, 1942, were approved unanimously. Letter to Mr. Rounds, First Vice President of the Federal Reserve (31* New York, reading as follows: "As requested in your letter of September 29, 1942, the Board of Governors approves for a further period of six months, !he temporary employment of Messrs. Raynor D. Howell, Moyland dt Macdonell, and Frederick W. Ingalls, as Field Representaives, each at an annual salary of $3,000, for duties in con-. tlection with the issuance of United States Tar Savings Bonds." Approved unanimously. Letter to Mr. Rounds, First Vice President of the Federal Reserve 44k Of New 'York, reading as follows: "As requested in your letter of September 29, 1942, Board approves the payment of an amount equal to one Year's salary, $1,800, to the Retirement System for the the 1970 1,/8/42 -2- .Purpose of supplementing the retirement allowance to which Ill's Isidore Streck, Jr., an employee of your Bank, will be entitled on his retirement October 1, 1942.,, Approved unanimously. Letter to Mr. McLarin, President of the Federal Reserve Bank Or Atlanta, reading as follows: "In accordance with the request contained in your lette1 'of October 2, 1942, the Board approves the appointment, effective November 1, 1942, of Thomas Victor Varnedoe as " 4 assistant examiner for the Federal Reserve Bank of Atlanta.lt Approved unanimously. Letter to Mr. Nardin, Chairman and Federal Reserve Agent at the Pederal Reserve Bank of St. Louis, reading as follows: "In accordance with the recommendation contained in My. -n * -corker's letter of October 2, 1942, the Board of Gover°1's approves the payment of a salary to MT. Alfred C. 4!arechner, Alternate Assistant Federal Reserve Agent, at Head Office, at the rate of $1,800 per annum, effective vetober 1, 1942." Approved unanimously. Lett,,:./. to Mr. Grady, Federal Reserve Agent at the Federal Ree Bank of San Francisco, reading as follows: "In accordance with the request contained in your letof September 18, 1942, the Board of Governors approves ulle appointment of Mr. Philip M. Stone as Alternate Assistalat Federal Reserve Agent at your Bank at his present salary "i4 200 per month, with the understanding that he will be 1)1-i'loed upon the Agent's payroll and will be solely respon!lble to you, or, during a vacancy in the office of Agent, r o the Assistant Federal Reserve Agent, and to the Board of *°Vernors, for the proper performance of his duties. When , r1°t engaged in the performance of his duties as Alternate 4t8sistant Federal Reserve Agent he may, with the approval 1971 14/8/42 -3- "Of the Federal Reserve Agent, or during a vacancy in the office of the Federal Reserve Agent, of the Assistant Federal .1Ieserve Agent, and the President, perform such work for the Bank as will not be inconsistent with his duties as Alternate Assistant Federal Reserve Agent. "This approval is given with the understanding that Mr. G A Snow will resign as of the date Mr. Stone's appointment Comes effective, and Mr. Stone should not enter upon the Performance of his duties as Alternate Assistant Federal Re! ei've Agent until his bond has been examined by your counsel uo determine whether its execution complies fully with the l'ulee printed on the reverse side thereof. "Please advise the effective date of Mr. Stone's appoint! ant and as to the action, if any, we should take with respect u0 releasing the bonding company from liability for any acts ! oMmitted by Mr. Snow subsequent to the termination of his ullties as Alternate Assistant Federal Reserve Agent, together with the actual date of termination of such duties. "It is noted that the usual forms of oath of office, bond, flcl signature card will be forwarded to the Board." Approved unanimously. Letter to Mr. C. H. Pope, President of The Munsey Trust Company, D. C., reading as follows: "This refers to your letter of August 28, 1942, to the Ped 0 eral Reserve Bank of Richmond relating to the status of Ws H. Corporation, New York, New York, as a holding comIIIT affiliate of your bank; mid to information subsequently '611Inlished to the Reserve Bank concerning bank stock held by •WH. Corporation. "The Board understands that C. W. H. Corporation owns controls 10,001 of the 20,000 outstanding shares of stock Of The Munsey Trust Company but does not own or control any °c11. of, or manage or control, any other banking instituci°11. In view of these facts, the Board has determined that W. H. Corporation is not engaged, directly or indirectly, 8 a business in holding the stock of, or managing or controling, banks, banking associations, savings banks, or trust .0 t1°111Panies, within the meaning of section 2(c) of the Banking t of 1933, as amended, and, accordingly, C. W. H. CorporaIs not a holding company affiliate for any purposes 'fler than those of section 23A of the Federal Reserve Act. j i j 1972 10/8/42 "If, however, C. W. H. Corporation should at any time or control a substantial portion of the stock of, or taanage or control, more than one banking institution, this zatter should again be submitted to the Board for its det ,ermination. The Board reserves the right to make a further aetermination at any time on the basis of the then existing facts.,, Approved unanimously, for transmission through the Federal Reserve Bank of Richmond. Letter to Mr. Hitt, First Vice President of the Federal Reserve Ilelilt 0 f St. Louis, reading as follows: "Reference is made to your letter of October 1, 1942, elid enclosures, with respect to the absorption of The TeleaPhers National Bank of St. Louis, St. Louis, Missouri, V the United Bank and Trust Company, St. Louis, Missouri, "of August 31, 1942. "On the basis of the information submitted, the Board concurs in the opinion of the Reserve Bank that the transfer , , c31* assets and deposits to the State member bank by the national "Ilk has not resulted in any change in the general character "the assets of the United Bank and Trust Company or the seope of its powers within the meaning of condition of member,8 1,111P numbered 3 to which the State member bank is subject. , he Board, therefore, will interpose no objection to the bransaction under the condition of membership." a Approved unanimously. Letter to Mr. Hitt, First Vice President of the Federal Reserve 411k Of St. Louis, reading as follows: "Reference is made to your letter of September 8, 1942, regard to the recent assumption of fiduciary activities 'The Lake State Bank', Richland, Indiana, revealed by hS examination of the bank made as of Tilly 20, 1942. "It appears that the bank, which was not exercising its rust powers at the time of its admission to membership in 40 and is not subject to the Board's standard trust condi°fle, has qualified as executor of the estate of a former ' 1y-rector and is now acting in that capacity without first 4;!ving obtained the permission of the Board as required by "Q.el terms of its condition of membership numbered 1. 1973 10/8/42 -5- "In view of the circumstances as stated in your letter he Board will not object to the bank's continuing to adMinister the one executorship it now holds, with the under8tilding that it will not acquire any other fiduciary business Without first obtaining the permission of the Board. Please advise the bank accordingly." Approved unanimously. Letter to the Presidents of all the Federal Reserve Banks, readfollows: "In connection with the execution of guarantee agreements pursuant to Executive Order No. 9112, a question /lecently arose at one of the Federal Reserve Banks as to hether mortgages may be taken as security for guaranteed ( ; 4(3ans where there is a possibility of conflict between the ' °vernment's rights under section 14 of the standard supply .ejntract and the rights of the financing institution under race mortgage. The question was referred to the War Depart„ent by the Board of Governors, and the Board has now reeived a memorandum from the War Department dated October 5, e42, containing the following statement of the War Departnt's views with respect to this question: "'2. It is not contrary to the policy of the , :jar Department for mortgages to be taken on materials purchased with the proceeds of a guaranteed loan provided that assignment of the contract is also taken as security. Payments under Article 14 would thus flow to the Bank in full or Partial satisfaction of the mortgage. If such payments did not constitute full satisfaction nevertheless the mortgagee should have the right to foreclose. If the Government desires to protect Itself from the so-called "spreader” clause to be inserted in new guarantee agreements it would have to exercise its right of taking over the loan under Section 7 of the guarantee agreement. "'3. In the normal case, it is believed that any conflict that may exist can be ironed out by negotiations. "4. Nothing in the above is intended to indicate that mortgages should be taken as a general practice. In cases other than that of weak contractors the War Department in general prefers Open lines of credit secured only by assignments of contracts and the usual covenants in loan l 2 1974 1°/8/42 —6— "'agreements or by covenants to assign at the demand of the guarantor in the case of larger credits to sound concerns where because of the number of contracts and purchase orders involved assignment is administratively cumbersome.'" Approved unanimously. Letter to Mr. Stroud, First Vice President and General Counsel the Federal Peserve Bank of Dallas, reading as follows: .. "This refers to your letter of September 24, 1942, l'alsing certain questions regarding the interpretation 2f.General Order No. 54 Revised, which was issued by the nited States Maritime Commission, under date of August 5, 1942, and transmitted to you with the Board's letter Of September 19, 1942 (S-553). "With respect to your first question, it is our 1.4.1nderstanding, based upon informal advice received from uhe ldaritime Commission, that the words 'with respect to arentees not in excess of One Hundred Thousand Dollars 100,000) for any one loan', contained in paragraph 1 c)f the General Order in question, have reference to the ount of the guarantee rather than to the amount of the t°8k11. In other words, the Director and Assistant DirecOrs of Finance are authorized te make delegations of . 11tbority to other officers and employees of the Commis: ion with respect to guaranteed loans where the amount c)f the guarantee does not exceed 0.00,000, irrespective cq' the amount of the loan; except that, as hereafter -1 13_ted, the amount of the loan may not exceed 250,000. 4e limitation refers to the individual loan, and accordpermits the issuance of guarantees with respect 0 several loans to the same borrower where each loan is ' lernteed not more than ninety per cent, and where the Zmount of the guarantee in each instance is not more than a.'100,n00. "On the other hand, the language of the proviso rethe approval of the Maritime Colinission for guar-Iltees of loans in excess of $250,000 refers to the amount or the loan and not to the amount of the guarantee. This erviso makes it necessary to obtain the approval of the ramission in any case in which the amount of the loan to A e Cuaranteed is in excess of :'250,000. The Director or 'Issistant Directors of Finance may delegate to other oflloers of the Commission authority to approve guarantees F250,000 or less, where the amount °I' loans in amounts of : r r 1 E r j 1975 "/8/42 —7— Hof the guarantee does not exceed .r100,000, end such guarantees may be executed by the Federal Reserve Bank without submitting the matter to any officer or agent Of the Mariti,e Commission for prior approval, subject Of course to the requirements of the Commission's intructions of May 7, 1942, and provided the usual prodUction certificate is obtained. Where the amount of the euarantee exceeds 100,000, the guarantee must be !ubmitted to Washington for approval by the Director or assistant Directors of Finance or, if the amount of the 1°an exceeds n50,000, for the approval of the Commission. "Paragraph (c) of the proviso, rec.-miring the apP1'°val of the Maritime Commission for 'purchase orders all other contracts of whatsoever type providing for n advance payment by the Commission', is not intended r° raeuire that a guarantee must first be submitted to l eshington for the Maritime Commission's approval merely eause the borrower has received an advance payment from ! 4 ..le Commission. However, it is understood that the Mari'Ime Commission mu:It hereafter approve any new advance Yment made by the Commission to the borrower." Z j Approved unanimously, together with a letter to the Presidents of all the Federal Reserve Banks transmitting copies of the incoming letter, the above reply, and a letter received from the United States Maritime Commission affirming the correctness of the Board's reply. Letter to Mr. Caldwell, Chairman of the Federal Reserve Bank .118143 City, reading as follows: "At the completion of the examination of the Federal R °serve Bank of Kansas City made as of July 6, 1942, by It,he , upeard's examiners, a copy of the report of examination left for your information and that of the directors. c°PY was furnished President Leedy. "The Board will appreciate advice that the report has be en considered by the board of directors. Any comments 17. . °11 maY care to offer regarding discussions with respect the examination, or as to action taken or to be taken a result of the examination, will also be appreciated. "in this latter connection, comment is made on page 17 of bhe report of examination with respect to the embezzlement en employee of the Post Office station in the bank that 1976 1018/42 -8- "the operations of the Registered Mail Division, as well as the Post Office station, were under study by the bank with a view to providing adequate safeguards and a satisfactory se paration." Approved unanirously. Letter to Mr. E. W. Possiter, Chairman of the Committee on coDaPeti -ne Lending Agencies of the Nebraska Bankers Association, cgton, Nebraska, reading as follows: "Receipt is acknowledged of your letter of September enclosing a copy of the resolution of the Committee on nriPeting Lending Agencies of the Nebraska Bankers Associa1°n- We have read the letter and resolution with interest. "Youare doubtless aware that we had similar corre_ il) ondence on this subject last year with :Mr. William B. Iluehes, Secretary of your Association. We find ourselves at e loss for anything more constructive to say than what • Il e said to hin and have said to others who have written us (In the same subject; for it is not clear that the matter is °Ile upon which the Board can take a position. Congress has rl°t riven the Board any jurisdiction over the production "'edit system, nor is it apparent that the Board has any more l'eason to interfere in the supervision of production credit c'Tscciations than it would have to interfere with the superof numerous other institutions that compete with memver banks of the Federal Reserve System. The subject of ec)nflict and duplication in the field of bank supervision wes discussed in the Board's Annual Report for 1938, a rePrint of excerpts from which is enclosed." , 1 Approved unanimously. Thereupon the meeting adjourned. fortAra hi) 7 Secretary.
@FedFRASER