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186 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Saturday, September 12, 1942, at 11:00 PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Draper Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary 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 System held on September 11, 1942, were approved unan54101181y. Memorandum dated September 9, 1942, from Mr. Bethea, recommending (1) that Miss Helen A. Haltigan be appointed as a junior file clerk in the Secretary's Office on a permanent basis, with no change in her p resent salary at the rate of $1,440 per annum, effective as of the e3goiration of her temporary appointment at the close of business on September 15, 1942, and (2) that the temporary appointment of Miss te rnardine M. McNeany, as a junior file clerk in the Secretary's Office, be e)ctended for an additional period of not to exceed three months from september 23, 1942, with no change in her present salary at the rate of 1,260 per annum, and that the leave of absence without pay granted Miss Mcea —11Y on August 13, 1942, be extended for such period beyond its 1787 9/12/42 -2- expiration on September 22 as may be necessary to enable her to recover from a recent operation. Approved unanimously. Memorandum dated September 9, 1942, from Mr. Leonard, Director of the Division of Personnel Administration, submitting memoranda from the respective division heads involved in which it was recommended that increases in salaries of employees of the Board be approved, effective as of September 16, 1942, as shown below: Name Miss Mrs. ItiSs Miss Margaret Metcalf Anna G. Beers Alice Lutz Ruth L. Dehn Jean Crosby Designation Clerk-stenographer, Division of Research and Statistics Clerk-stenographer, Division of Research and Statistics Stenographer, Division of Security Loans Stenographer, Division of Security Loans Stenographer, Legal Division Salary Increase To From $1,560 $1,680 1,620 1,740 1,680 1,800 1,620 1,620 1,800 1,800 Approved unanimously. Memorandum dated September 10, 1942, from Mr. Paulger, Chief °f the Division of Examinations, recommending that the salary of Mrs. lislens K. Walters, who has been assigned as secretary to Mr. Pollard, Assistant Chief of that Division, be increased from $1,900 to $2,000 per annum, effective September 16, 1942. Approved unanimously. Letter to Mr. Lawrence W. Cramer, Executive Secretary of the Pr ' ssident's Committee on Fair Employment Practice, War Manpower Commis/31°n' reading as follows: 1788 9/12/42 -3- "Enclosed is a report in the form requested in your letter of August 22 showing the number of colored employees and the total number of employees on the Board's staff as of July 31, 1942. In accordance with your request, similar reports Will be submitted as of December 1, 1942 and every four months thereafter. "The enclosed report shows a total staff of 460, of whom 32 are colored employees. As compared with the April report, the figures reflect a reduction of 7 in the total number of employees and an increase of 1 in the number of colored employees. "As you know, the Board's employees are not under the Classified Civil Service and accordingly in the enclosed report all employees are shown as unclassified. I might state that, on the basis of Civil Service classifications, the positions of 7 or 8 of the colored employees would probably be Classified in the CAF series rather than in the custodial series. "The Board's outstanding instructions are to select for each position the best qualified person known to be available. Under this policy colored employees are employed and promoted on their merits. Incidentally, since July 31, date of the report, one colored messenger has been promoted to a clerical Position on the basis of his demonstrated ability to do the work." Approved unanimously. Letter to Mr. Williams, President of the Federal Reserve Bank fPhiladelphia, reading as follows: "As requested in your letter of September 5, 1942, the Board of Governors approves the 2ayment of salary at the rate of $5,500 per annum to Mr. Philip F. Coleman, Assistant Vice President, effective September 1, 1942, for the period ending April 30, 1943." Approved unanimously. Letter to Mr. Stewart, Secretary of the Federal Reserve Bank c)* St. Louis, reading as follows: "Referring to your letter of September 3, 1942, the Board does not contemplate making any changes in the classification of member banks in your district for electoral 1789 9/12/42 -4- purposes, and accordingly the classification which has been in effect since September 1941 will apply for the forthcoming regular election of Class A and Class B directors of your Bank. It is noted that you have reviewed the present classification of member banks for electoral purposes and have no changes to suggest." Approved unanimously. Letter to the board of directors of the "State Bank of St. Chariest!, St. Charles, Illinois, stating that, subject to conditions of me mbership numbered 1 to 3 contained in the Board's Regulation H, the Board approves the bank's application for membership in the Federal Reserve System and for the appropriate amount of stock in the Federal Reserve Bank of Chicago. Approved unanimously, for transmission through the Federal Reserve Bank of Chicago. Letter to Mr. Mulroney, Vice President of the Federal Reserve Bank of Chicago, reading as follows: "The report of examination of The Romeo Savings Bank, Romeo, Michigan, as of May 13, 1942, stated that Melvin F. Lanphar & Co. and The Lanphar Agency, Inc. were affiliates of the bank because Mr. Melvin F. Lanphar, who owned 'stock control' of such companies, owned 232.35 shares of stock of the bank, which constituted more than 50 per cent of the number of shares voted for the election of directors of the bank at the preceding election. "The report of examination listed loans by the bank to Melvin F. Lanphar & Co. violating the restrictions of section 23A of the Federal Reserve Act with respect to amount and security. "Also, the bank's report of condition as of June 30, 1942, was not accompanied by Schedule 0 listing the two affiliates and the bank did not submit and publish a report of Melvin F. Lanphar & Co. on Form F.R. 220, as was required if the affiliate relationship still existed and its indebtedness to the bank had not been materially reduced. Likewise, the 1790 9/1?/42 -5- "bank failed to submit Schedule 0 and a report of Melvin F. Lanphar & Co. as of April 4, 1942, the previous call date. "From the bank's letters of July 27 and August 4, 1942, to the Reserve Bank, copies of which have been forwarded to the Board, it appears that the bank believes that Melvin F. Lanphar & Co. no longer is an affiliate because Mr. Lanphar has disposed of 100 shares of his bank stock to Mrs. Corinne 0. Lanphar who is reported to have no holdings in that company; and, while The Lanphar Agency, Inc. was not mentioned, it appears probable that the bank believes the same transaction terminated that affiliate relationship. "However, the information submitted does not satisfy the Board that the affiliate relationships have been terminated. A transfer of the stock to the name of another person without transfer of both ownership and control, of course, would not accomplish this result. While definite information is lacking, it appears probable that Mrs. Lanphar is the wife of Melvin F. Lanphar and that the transfer of the stock to her name was for the express purpose of technically terminating the affiliate relationships; it is the Board's view that, in such circumstances, it may be assumed, in the absence of strong evidence to the contrary, that there in fact has been no change in the ownership of the stock or, at least, in its control. Incidentally, in another case in Which similar transfers were made, inquiries by the Bureau of Internal Revenue revealed that, for the purposes of Federal taxation, the persons involved successfully contended that there had been no change in the ownership of the stock. "Unless you have additional information indicating that the affiliate relationships in fact have been terminated, it is suggested that you take this matter up with the bank with the view of obtaining such further action as may be necessary to correct the violation of section 23A and assuring the submission of required reports as of future call dates. Submission and publication at this time of the affiliate reports as of past call dates apparently would serve no useful purPose and the Board will not insist upon it." Approved unanimously. Letter to the Presidents of all the Federal Reserve Banks, reading as follows: "The Board has received from the War Department a memorandum dated September 7, 1942, signed by Lieutenant Colonel Paul Cleveland, regarding certain provisions contained in a 1791 9/12/42 -6- "number of loan agreements executed in connection with guaranteed loans which prohibit the borrower from undertaking additional war contracts, from consenting to the modification of war contracts, and from accepting advance payments. A copy of this memorandum is enclosed herewith for your information and guidance." Approved unanimously. Letter to Mr. Longmire, Director of the War Production Loan Agency, Federal Reserve Bank of St. Louis, reading as follows: "This will acknowledge receipt of your letter of September 1, 1942, with which you enclosed reports of total of daily balances outstanding on loans guaranteed by the War Department pursuant to Executive Order No. 9112. "Colonel Mechem asked first that we get him a report Showing for each loan advances, repayments, and balance outstanding. He felt that such information was necessary in order that his records might be complete. In the interest, however, of keeping the reports down to a minimum, We pointed out to Colonel Mechem that balances outstanding are already reported on Form F. R. 579 and that if he had a report showing the total advanced on each loan during a given month he could, by adding this amount to the balance outstanding at the end of the previous month and subtracting the balance outstanding at the end of the current month, arrive at the amount of repayments during the month. This seemed to satisfy Colonel Mechem, and, accordingly, we asked that we be furnished reports showing only the actual advances made during the report month on each loan guaranteed by the War Department. "Recently Lieutenant Biays of Colonel Mechem's office advised us that the reports furnished by other Federal Reserve Banks in accordance with the Board's letter S-534 of July 16 give the Department just the information they wish, and he has asked us to obtain reports from you which show like information. Inasmuch as similar reports are furnished the Navy Department and Maritime Commission, we should like to obtain from you revised reports for each of the three departments showing for the period March 26 to June 30 and for the month of July the data desired as outlined above." Approved unanimously. Telegram to Mr. Gilmore, Assistant Cashier of the Federal Re8"Ire Bank of St. Louis, reading as follows: 9/12/42 -7- . "Replying your telegram September 10 concerning section 8(m) of Regulation IN, your understanding of 5-546 (that credit extended in connection with the purchase of a stoker by a person who is changing from hand firing soft coal lump to soft coal screenings is exempt since soft coal screenings cannot be fired without a stoker) is correct." Approved unanimously. Thereupon the meeting adjourned. Assistant Secretary. APProved:
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