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4- t.0-3,4) Minutes of actions taken by the Board of Governors of the Feder , Reserve System on Tuesday, September 12, 1950. The Board met ih the Board Room at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Eccles Szymczak Evans Vardaman Norton Powell Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser to the Board Thurston, Assistant to the Board Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Vest, General Counsel Townsend, Solicitor Young, Director, Division of Research and Statistics Mr. Youngdahl, Chief, Government Finance Section, Division of Research and Statistics Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Thomas reported on recent developments in the open market following which there was a discussion of expansion in bank credit the past few weeks and actions that might be taken to restrain exPansi on. Nring a that the discussion of Mr. Thomas' report, Mr. Szymczak stated Board should be giving thought to when it would go to Congr8s vi-th a request for additional powers to use in dealing with the irtflationary situation, that it was important that a program be worked out so that there could be agreement among the members of the 8°ard as to What additional powers, if any, should be sought, and A or)c)(.1 t 9/12/50 -2that in the meantime the Board should have in mind the statement in the ann ouncement made jointly by the Board and the Federal Open karket Co mmittee on August 18, 1950, that "...the Board of Governors or the Federal Reserve System and the Federal Open Market Committee are prepared to use all the means at their command to restrain turther ex pansion of bank credit consistent with the policy of mainta.ining orderly conditions in the Government securities market. l'he Board is also prepared to request the Congress for additional authority should that prove necessary..." There was a general discussion of the part that changes in Nerlre requirements might of Play in future credit policy and the form that any request for additional authority to increase rese rve re quirements might take. There was agreement that the Board 811°111d continue to studY the problem of an increase in reserve regilireinents so that it would be prepared to act whenever conditions Mig4 call for action and that to that end the staff should reap- Praise tent the or current situation so that the Board could have a restate- the al considerations involved before the meeting of the Fed°Pen joirier, Market Committee on September 27, 1950. Fauver, Administrative Assistant to:ri he Chairman, the 1:fleeting during the foregoing discussion at its close, withdrew. Mrs Evans stated that yesterday afternoon he and Mr. Powell 19 9/12/50 —3— accompanied by Mr. Young, Director of the Division of Research and hatistics, and Mr . Solomon Assistant General Counsel, called 11Pori Mr. Stuart A. Rice, Assistant Director of the Bureau of the Budget in charge of the Division of Statistical Standards, with l'eePect to a question that had been raised concerning submission to the Bureau of the Budget of those portions of Regulation W, Con311111er Credit, pertaining to record-keeping and reports. During the discussion, he said, representatives of the Bureau indicated that the Board should have submitted for their consideration prior to adoption the portions of the regulation calling for record-keeping kid reports. The basis for this request was the provision in the 4deraaReports Act which that forms and "plans" relating requires t° the the t, "collection of information" be cleared through the Bureau of zudget before dopton any Gover agency. Mr. Evans went by to ainment eaY that f ollowing the discussion he asked the Secretary to 8erld several copies of Regulation to Mr. Rice for his information 1)14 th at, on the basis of discussion with the Legal Division, he did 11°t reel that the type of records required to be kept under the reg1144°113 which were for the purpose of determining whether a regisLt 434 ecnaPlied with the regulation, made it necessaryto submit 13°I'ti°11 of the Regulation to the Bureau in advance of adoption. 14r* of Szymczak stated that last Friday afternoon he received a report prepared in the office of Gordon Gray/ Special 16 1235 9/12/50 -4ASSistant to the President, with respect to foreign economic Micies of the United States with a request that comments of the /3(3arcl be s ubmitted by Wednesday afternoon, September 13. He stated that the staff of the Division of International Finance was reOle report and that it was expected that a memorandum or letter e(pntaining comments would be prepared for consideration toDlorrow. Chairman McCabe suggested that, because of the shortness of e matter be referred to Mr. Szymczak with the understanding rep y state a l he would express his own views and the views of the nd that if in his judgment it would be desirable to take up t0fl with the Board he would do so before comments on the report Were submitted to Mr. Gray. that Chairman McCabets suggestion was approved unanimously. call on Mr. lin A -r'anlan stated that yesterday afternoon he received a the telephone from Paul E. Reinhold, a Class C director of the Pede al : -: h: e erve Bank of Atlanta, with respect to the bids reby Jackson -ank for construction of a new building for the 0 111 : ' branch, Mr. Reinhold expressing the feeling that be- the Present unsatisfactory space condition of the branch esPe tNich aesli—Y in view of anticipated increases in demands upon the , efenee activities in the area increased, it was impar thf, Bank be authorized to proceed with construction of a 4.4) -511" building on the basis of the low bid received. Chairman McCabe said that he received a telephone call Yeate from Mr. Neely who was in New York about the same matter andt:::7Mr. Neely expressed full appreciation of the desirability ting construction to emergency situations along the lines cilsellesed at the meetings of the Board on August 3 and 10, 1950, btlt said that in view of the extremely cramped and inadequate clillrters at the Jacksonville branch, the prospective action in coin axicl LIcY o perations growing out of the large number of Army e4111PS in the Ja cksonville territory, and the fact that firm bids liklbeen received at prices which in the judgment of the Atlanta 13ah.k ect°r8 were satisfactory, he would urge that they be authorized to accept the bids and proceed with construction. The Ch‘ltricilall also read a telegram dated September 11 from President )ktari 4 c't the Atlanta Bank giving information with respect to the bids Stating that at a meeting last Friday the directors of the Bark 4rged that the ths di Board authorize acceptance of the low bid, that d not reel the letting of the contract would result in any 11114vo, 4:able publicity, that the bids were firm bids and there did 1101t. b— '43ea.r to be any Ilhat question in the mind of the low bidder but the iate would be readily available, an that in their vq the 8Yetem the would come in for more unfavorable publicity if e°11tract wa8 not let since it was generally known the building 1 sp! 9/12/5o -6441 0 , -g been under consideration and was desperately needed. Mr. Vardaman stated that he felt the same as he had always felt connection with the Jacksonville branch, and that he would ctr°11glY advocate that the Atlanta Bank be authorized to proceed with construction on the grounds that a new building was badly needed. To offset any possible unfavorable publicity that might resIllt from co nstruction under present conditions, he suggested thatconaideration be given to issuing a statement which would say that the h -uilding was being authorized because of a critical need t(11. it and which would also make clear the extent to which building Pre4°1118 Of Federal Reserve Banks and branches had been curtailed 8ince the o utbreak of war in Korea in June. Mr. Leonard stated that the total bid as reported in Mr. 1. (c41,4 4.n 8 telegram Was Wks tor $21193673 of which approximately $1,400,000 to relit the building. He also said that, while it would be necessary c4 the material which Mr. McLarin's telegram stated was being 411t to the " - I'd) it appeared that the bid was reasonable and that it was tade 1:11-1-3r moderately higher than preliminary estimates of cost stsPring, which he felt were too low at the time. bliring the ensuing discussion it was stated that the Bill 44 Itt 78 ktlai4,95 —ich would have authorized an increase from $10 to $20 lie3erve t funds that might be expended on construction of Federal branch buildings had been tabled in the House and that, 1238 9450 —7— i:ttlie Jacksonville branch were authorized, the amount remaining fl%all the original 10.0 million authorized would be approximately 42114alion. Reference was also made to a visit by Messrs. Creighton ahdErickson, Chairman and President, respectively, of the Boston Nleral Reserve Bank, last Friday at which time they discussed aarm for an addition to the Boston Bank building and renovation Of the existing structure and indicated that a substantial curtallment in the contemplated program would be made owing to devel°Pments since June. Following the discussion, upon motion by Mr. Vardaman, it WAS agreed unanimously that the Federal Reserve Bank of Atlanta should be informed that the Board would expect to give favorable consideration to the request for letting of contracts for the Jacksonville branch building after it had had an opportunity to examine the material referred to in Mx. McLarinis telegram. At this Point all of the members of the staff with the ex- e ption 01 Mr. Mr. "ignme tha tie Carpenter withdrew. Eccles stated that he had no objection to the proposed SUbjeCtS to the members of the Board as discussed at whieh3etllig8 °f the Board on September kik)a Pur'ailant ead 1950, or that 5 and 8, in accordance with to his request, he mould have no assignments. He since Mr. Vardaman in a memorandum dated September 6, whim, ' -I he sent to each member of the Board, noted the absence one 14eMber from the list of assignments and expressed the view 9/12/50 -8that such an arrangement was not good unless for some special reason the member involved requested on the record that no assigntaents be given to him, he (Mr. Eccles) wanted to state for the record the reasons for his position. For that purpose he made substantially the following statement: tin, The members of the Board have known for some re mehad ho_, _ intention to resign and leave Washington -LJ U o carry out a program which would enable t° leave ' e.'arls at an sometime in September. I outlined my informal meeting of the Board some weeks 135°. Because of the long period during which I have ) ' ' irlen a member of the Board, I felt I would like to .e 1,,Thia,_Position during the last months of my service in „2(1 I could be relieved of routine assignments andhich Z4-°-ciPate onlY in important questions of policy, th t i id make it Possible for me to take care of certain z was that I would like to complete before leaving Inattl g°11. It was understood, when I discussed the that--; -Lnformally with the other members of the Board, 'R.14°1-11d be free to carry out such a program. developed 1_1 that time the Korean situation has 1" which-1: Board to whiuds Presented a number of problems for the that Ich have given consideration, with the result leave i have not been able to carry out my plans to enteen SePtember. February first will mark the sevice ari;" an niversary of my entry into Government servess something intervenes I now plan toth ,40t later than that date or perhaps around e might halr;%°I the year. Leaving on an anniversary date hatifcy)me a dvantage in pointing up my long service and Itailing.nlY leaving even under the conditions now prelike to have the same understanding with ,4:adkri assignments and routine matters as I have the recent period which would leave me • to rPorta lle into Aloe -v matters the meetings of the Board whenever of policy were being discussed. I Pl e ant,rb --ed to be away from Washington for a coniarran PQvlod between now and February first and this 4:::nt would enable me to carry out that plan. reasons, I would appreciate it if, for the 9/12/50 -9- t airae ssigbnniella.t least, I were not given any specific No objection was raised by the members of the Board to the arrallg'ement In that outlined by Mr. Eccles. connection with the above matter, Chairman McCabe stated in view of the important questions coming before the Board of s'vverri°118 in the immediate future the Board would be much more effective if the members would see to it that any public statements or %talents which they made were such that it ilitherswere working as a team rather than N.e suggestion WAS discussed in the light respect to Public statements by members of would be clear that the speaking as individuals. of existing policy with the Board. At the conclusion of the discussion the following list of assignments of members of the Board was approved unanimously to be effective Im mediately. A.Ssi ninerits of Sub'ects for Initial Consideration by IndiMembers of the Board of Governors and Certain vtdiw 'ilzlIl 4° divir?. acecrdance with the Board's established policy, beib...'elorl or tiZ . attached portion of the staff is to be regarded as to, or under the jurisdiction of, a. armeinear Board , member by reason of any of these assatr : all bers: .11-1have -, uhe members of the staff are to serve all m Board, and while a member of the Board mayizeb°2cson to call on a certain division or certain not attaa,48 of the staff more than others, they are Th! or ciaicies,sc,...._ subject to the control of, such member. _ uPe of each report fl assignments Board member's 8tuctie the Pr eparation by the staff of such s, reaearat.) and other incidental material, ini.e., NIllat " memoranda, and st atistical material, legal opinions, °nal memoranda, etc., as may be considered ap- A 9/12/50 -10Propriate within the limits of the staff organization and budget. If a Board member desires to initiate a discusOf a subject that is among the assignments of another Board member, he should first take the matter uP with the Board member who has the assignment. These assignmets will be reviewed in February of ! IrerY utembershiother year or whenever there is a change in the p of the Board. Chairman mark 1. Economic and monetary policy matters (open int ' e °Aerations, discount rates, reserve requirements, ie o%)Goovernment finance, international moneta;;TieT tion 2. Policies involved in the initiation and adopl SYsteomf egislation and executive orders affecting the mitt-(The Chairman is chairman of the Open Market Com.a40'e and of its executive committee. The Chairman is on I,,12Y statute a member of the National Advisory Council inent"6ernational Monetary and Financial Problems and a Chaj °f the Advisory Board to the Export-Import Bank. --an ex officio of Personnel Committee.) Mr. Szymczak (Alternate, Mr. Vardaman) 1. barikerRelations of Reserve Banks with foreign banks, : 11 1 . 11:Fments; staff missions and travel o 4 embers of Reserve Banks and Board to 2.3. stitut.; Inte rnational financial institutions and intions ;.$318 engaged in foreign banking subject to sectranc3he;(111 domesticd25( ofb2a L. Feder l Reserve Act; foreign . foreip., Relations with foreign central banks and s trlEeasIzries. deal., -rf—ension and maintenance of credit by brokers, "ellritlesarlice, and others for purchasing or carrying 4 edral Reserve Retirement System. B laY cardaral Reserve Retirement System trustee, elected raittee s its representative; member Personnel Cornon N . until March 1, 1951; alternate for Chairman McCabe Mr. Evans (Alternate, Mr. Norton) grlcultural conditions, including prices, pro- 4L. 9/12/50 -11duction, and markets. and relations concerning these stiub,)ect s with strationthe Department of Agriculture, Farm Credit , Food and Agriculture Organization of the it. United Nations, and other agencies; lending activles of Government agencies in the agricultural field. Regulation of consumer instalment credit. coin -3. Relations under existing law with bank holding aja eS and affiliates; examinations of such companies at.filiates; issuance and revocation of voting permits. Rese1147° lo hformal liaison between Board and Chairmen of ,124nks; preparation of topics for agenda of Federal ee Corlfei180tY Council, Chairmen's Conference, Presidents and similar groups. OPeration and maintenance of Board's building. Commit ember executive committee of Federal Open Market tee until March 1, 1951.) Mr. Vardaman (Alternate, Mr. Powell) agerltls-si A ctivities of Federal Reserve Banks as fiscal Act -611 guaranteeing loans under Defense Production °f 1950. 2. AA,„,ul. (31* Membe ,uSSlOnS to, conditions of, and termination batjs. 'Ship of State banks; trust powers for member br3n Establishment, regulation, and discontinuance of di-7.c11 ,es and agencies of Reserve Banks; determination 13 ;:l t i14:1d4ranch territorial limits. tors ) Outside matters; interdistrict settlement fund. business and other relations of direclookin°fricers, and employees of Reserve Banks; interof pistil !relations of directors, officers, and employees 4er banks of serving other banks and security dealers; directr executive officers of member banks; removal nasmber V, officers, and employees of Reserve Banks and elach ps anks; disposition of criminal charges against rsons. Of Mr. Norton 1 (Alternate, Mr. Evans) Re 2: i:egul:ation of real estate credit. ' G n es dlng and loan guarantee and insurance activiuraa overnment agencies (other than in the agricul- t 3. s therefor. ervices of Reserve Banks and reimbursement 444 fUnel.exPenditures, including Reserve Bank budgets tao nal expense reports; examinations of Reserve 9/12/5o -12Banks; reserves for losses; chargeoffs and dividends; Reserven Bank stock; discounts and advances of Reserve operations under section 13b of the Federal !!!erve Act; Purchases by Reserve Banks of securities bills other than through System Open Market AcerfInt; questions of eligibility of paper for discount as security for advances. , 4. Coordination and development of relations of t rir Board and the Reserve Banks with member banks, str•linenlber banks, banking associations, educational inns, and the general public. (Member Personnel Committee until March 1, 1952.) Mr. Powell (Alternate, Mr. Szymczak) 1. barocs ,Supervision and examination of State member ,justra:,rmestic branches, mergers, consolidations, adof capitalstructure, maintenance of required e8 including revision of basis for computing reiql in b reel, erves, payment of interest on depositswith Fedee : r11 -,,nn-s; relations regarding these matters Pinan. " l'elpcsit Insurance Corporation, Reconstruction Barlicie Corporation, Comptroller of the Currency, State -? Departments, and Bankers Associations. *actin Loans and investments of member banks, inwith J, acceptances; relations regarding these matters EXcha -e Comptroller of the Currency, Securities and Commission, and other Government agencies. Research programs of Reserve Banks and Board l'ePort:rn° ,,rs; Publications of the Reserve System; call Illeivo °I condition and other periodical reports of banks. 4• Particlo Clearance and collection systems, including abili4"alaY studies of proposals to shorten availschedules at Federal Reserve Banks. ' Payroll plans for savings bonds. Personnel Committee Messrs. Szymczak and Norton 1. B card ts budgets and expenditures. 2. s eaprit d upervision of Board's staff; promotion of ecntact e ccrPs in the organization by providing for Zee-L:121 e between Board and staff, planning special 4leciale of staff, recreational and social activities, tive carit recognition, and developing more effec3—e?r sYstem. ell1P1oye .4PProvals of appointments of officers and -3 Of the Reserve Banks requiring action by the -13 Board; Reserve Bank salaries and salary classifica1°11plans; executive development plan. (When an apmPointment is in the research or examination depart, ent of a Reserve Bank, it is understood that the 0 4.r econ,-_ aullendation to the Board will be made in collabation , with Mr. Powell.) se 4. Appointments of Class "C" directors of Repor j7 !!allks and the directors of branches who are apFed-ye ' bY the Board; designations of Chairmen and merleral Reserve Agents and appointments of Deputy ChairReserve Banks; questions relating to election and of n'" t cuifications of Class A and Class B directors ,,rve Banks, including classification of member bankese ' s,Ior such Execu?. Travelelections. authorizations. nlmittee of the Federal Opn Market Committee (Until March 1, 19S1) Members Chair;z7-__ Alternates Mr. McCabe 1. Mr. Vardaman For Board illee Chairzan: Mr. 2. Mr. Szymczak Members Sproul M Mr. Eccles Mr. Evans L ::=7.7 Mr. Young For Presidents 1. Mr. Erickson 2. Mr. Davis 3. Mr. Peyton In accordance with the transfer of the assignment of the Federal Reserve Retirement System to Mr. Szymczak and his designation as the Board's representative on the Board of Trustees of the Retirement System, and the transfer of the assignment of operations Tld expenses of the Federal Reserve Joanks to Mr. Norton, unanimous approval was given to the following letters: Letter to ulr. Gilbert, Chairman of Board of Trustees of the ent s Ysuem, reading as follows: B blon 6 of the g' rules and regulations gOV— the steepro,Retirement System of the Federal Reserve v`Ldes that one member of the Board of ' of the Retirement System shall be desig- 9/12/50 -lanated by the Board of Governors of the Federal Reserve System to serve at its pleasure. "As you know Mr. Ernest G. Draper who has been servj as such member of the Board of Trustees, rased to be a member of the Board of Governors after t:t31, 1950. In accordance with the provision in mr ;*1`(-4es and regulations, the Board has designated • • Of 4.:" Ss Szymczak to succeed Mr. Draper as a member t '"e Board of Trustees to serve until a successor aPPointed by the Board." Letter to Mr. Young, Chairman of the Investment Committee °t the Rat' lrement System, reading as follows: A servintiS you know, Mr. Ernest G. Draper, who has been Reti,g as a member of the Board of Trustees of the to h''ment System of the Federal Reserve Banks,August ceased 31 .70 member of the Szymczak after Board of Governors to ' s.;;1°. The Board has designated Mr. M. S. Trtl i:esed Mr. Draper as a member of the appointed Board of the 4 7 18,at eo serve until a successor is by as 0 "In order to continue the existing arrangement , 6 1, 11ed in the telegram to Mr. Gilbert as Chairhe Investment Committee of the Retirement ldre sT2f the Federal Reserve Banks on May 26, 1949, tvmczak has also been designated to succeed 0raper tee as an associate of the Investment Commit Of th. the R etirement System and to attend meetings Board ;'°mmittee. Mr. Gerald M. Conkling of the Wj1 ce staff and a member of the Board of Trustees 8 oz:Inc nus to serve as technical assistant to Mr. Lett ?ecler OXjer to -r. u Coleman, Chairman of the Special Committee 41 Reserve Bank Budgets, reading as follows: 14.5k Ca lllir .ts letter to you on July 6, i;stated that Evans had been appoint tlarl se Board as the member to see serve on the three of the al Committee composed of a representative 'Lereh,-"airments Conference, the Presidents Conare and the Board of Governors, of which Y° ' an, to submit a report on the problems 4r"., t -15"involved in the effective budgetary control of exPenses of the Federal Reserve Banks. In rearrangent of work incident to the appointment of Messrs. and Lorton Norton has Powell as new members of the Board, Mr. been appointed a member of this Committee to succeed Mr. Evans. ,r,,,, H50 that he may have an opportunity to become C°7mmiittareew,ith the work thus far done by the Special am furnishing Mr. Norton with a copy telegram sent to the Chairmen and Presidents i;sall Federal Reserve Banks under date of July 12, 811,1' and livith a copy of the letter of July 26, 1950, the committees appointed by you with the riziTistanding that their first reports, as proposed telegram, would be submitted to the Special -ummatittee not later than October 1. serv The Presidents and Chairmen of the Federal Reapi,„ e, Banks are being informed today of Mr. Norton's ' ---LnEolent to this Committee." Minute of actions taken by the Board of Governors of the Perl ''eral Rese rve System on September 11, 1950, were approved unani%11sly, r Memorandum dated the Personnel September 7, 1950, from Corkttee, reduction in salary of Miss Elnyr D. 4%vcote, Serecommending a cretary to Mr. 825 to $4,325 per annum, Thomas, from $4, q'tective May 26, 1951Approved, Mr. Vardaman voting "no". tie 0 , 111—andum dated September 7, 1950, from the Personnel secrete:eccInmending that Miss Margaret E. Rauber, who served / 1 4 rid. tc) Mr. Draper, be transferred -to the Office of the a3 Secretary, effective immediately, with an adjustment fl*°111 $5,300 to $4,200 per annum, effective March 1, 1951. C' 11 01 4 C )el" -16Approved, Yr. Vardaman voting "no". Memorandum dated September 7, 1950, from the Personnel C°1"Ilittee, recommending that the Board adopt a policy that when a tember °I the staff is transferred from one position to another of 14rer+ tor hi -'"48, his salary shall be adjusted to the appropriate level 8 Position at the end of a six months' period. Approved, Mr. Vardaman voting "no". Mernorandum dated September 8, 1950, from Mr. Dembitz, Assistkilt Dili ector of the Division of International Finance, recommending irierease 8 in the basic annual salaries of the following employees 111 that D . slon, effective September 17, 1950: 4e41101. kli• athi" -;", Ballinger 's Hardy Title Clerk Messenger Salary Increase To From $2,650 $2,730 2,492 2,412 Approved unanimously. MeMorandum dated September 8, 1950, from Mr. Dembitz, 4asistarit Director of the Division of International Finance, rec(11411elicling that the temporary indefinite appointment of Paul Gekker 48 411 economist in that Division, be extended on a permanent basis, effective 4vIal)r at September 12, 1950, with no change in his present basic the rate of $3,950 Per annum. Approved unanimously. I248 9/12/5o -17Letter to Mr. Fletcher, First Vice President of the Federal Re serve Bank of Cleveland, reading as follows: t "Reference is made to your letter of Seprnein ,,b, e_r 7) 1950, requesting the Board's approval a. c'he payment of salary to Mr. Howard Evans, 1,,,.161°.rnier employee of the Pittsburgh Branch, who d November 1 wi age 65. 4,7ree 1949 because he had attained the :For the reasons outlined in your letter, ''''°ard of Governors approves the payment of ' forarlar to Mr. Evans at the rate of $3,120 per annum It temPorary period beginning September 11, 1950. tr:' understood that Mr. Evans will be used to ' .1-11 others in Regulation X work." Approved unanimously. Lett lieserve Ba "to Mr. Dearmont, Federal Reserve Agent of the Federal Ilk of St. Louis, reading as follows: your !„'In a ccordance with the request contained in -Letter of Govern° September 8, 1950, the Board of O. }cal re approves the appointment of Mr. Richard /Igen+ eY. as Alternate Assistant Federal Reserve at -ti.‘-') effective September 15, 1950, with salary "ett ra,te of $4,240 per annum0 that titrh-LvS approval is given with the understanding serve : r A Alley will 1/ res?)n2 be placed upon the Feder 8ible 4:''''erte Payroll and will be solely off the A r,,,b4°,."---. , or, during a vacancy in the ice Agent, of and tt,) -n`', to the Assistant Federal Reserve forman the Board of Governors, for the proper perPerform "of his duties. When not engaged in the % Ice of his duties as Alternate Assistantof the Ds."1- Iteserve Agent he may, with the approval the 4d?ra.j. Reserve Agent or, during a vacancy in AsaistfIce of the Federal Reserve Agent, of the Perfor„ arlt Federal Reserve Agent, and the President, corlsi4 euoh work for the Bank as will not be inFeders aielorit with his duties as Alternate Assistant tiii!Tserve Agent. ' -Ls noted from your letter that Mr. KaleY, 94.50 -181.-ore assuming his duties as Alternate Assistant er'a Reserve Agent, will execute the usual oath °trice which will be forwarded to the Board." T Approved unanimously. Letter to Mr. Diercks, Vice President of the Federal Rere Bank Of Chicago, reading as follows: S "The Board of Governors of the Federal Reserve tstem has considered the recommendation of the tive Committee of your Bank, contained in your or le""I' of August 31 and, pursuant to the provisions mi ;7°tion 19 of the Federal Reserve Act, grants per1.:Lon to Park National Bank of Chicago, Chicago, po , . -4.s 83 to maintain the same reserves against de- . 100 8 as are required to be maintained by banks or a e,,ed in reserve cities, effective as of the date -tTncement of business by the subject bank! in th,'4-ease advise the bank of the Board's action that 18 matter, calling its attention to the fact the Bauch Permission is subject to revocation by c)al'd of Governors of the Federal Reserve System." j toliows Approved unanimously. Letter to Bank of Alaska, Anchorage, Alaska, reading as SYst "The Board of Governors of the Federal Reserve to eeM has c onsidered the application for permission ot 'cise f iduciary by you on be ll age " Ratio L nal Bank powers made of Alaska in Anchorage, lchr i '3r iti a, the national bank into which the In Anchorage Alaska, is to be converted, it aZa'arits such natic;nal bank authority, effective the c,;-ik when it is authorized by the Comptroller of in eon; 1 11erlaY to commence business, to act, whenn elteeizi"ravention of State or local law, as trustee, d bonte °1'' administrator, registrar of stocks an corn_ Mitt4 gllardiar,-4°an of estates, assignee, receiverl(keta °r of lunatics, or in any other fi l'Sr c estates , -1' ty in which State banks, trust corn- Onfr-f1 V-4/0k, 9I12/50 -19- "n. -nles or other corporations which come into com' Petition with national banks are permitted to act under the laws of the Territory of Alaska, the exe!'cise of all such rights to be subject to the proof the Federal Reserve Act and the regulaj -ns of the Board of Governors of the Federal ReSee System. 1,, "After the conversion of the Bank of Alaska, A, i6v, Alaska, into the National Bank of Alaska of -44en°rage becomes effective and the Comptroller the Currency authorizes the national bank to comof? meil business, you are requested to have the board rajill;:ctors of the national bank adopt a resolution c.1 1 :ng your application for permission to exerres ' Ilduoiary powers, and a certified copy of the Boa ution so adopted should be forwarded to the iteGovernors of the Federal Reserve System for roc f:e°rds. When a copy of such resolution has been ! thee : T cl bY the Board, a formal certificate covering poe"aonal t bank's authority to exercise trust rs will be forwarded." Approved unanimously. cO cii Letter to Mr. Prochnow, Secretary of the Federal Advisory 'reading as follows: and:Referring further to your letter of August 30 be rePlY of September 7, 1950, the Board would reo; ' ased if, in addition to such discussion of v-LoPments and the current economic situahave a; b 6he Federal Advisory Council might wish to age/IL"? following matters could be placed on the the ; ,Zmt 4ZiZtober meeting of the Council and of the Council and the Board: What further consideration has been given by the Council, or the Special 3Ttetee appointed by the Council Purpose, to the proposal to base reserve requirements of a member bank on the character of the bank's fPotilTiszher than on the location 2. In accordance with the discussions t r AC% 4_ pt,,,, -20between Chairman McCabe and President Brown, it is understood that the Council Will be prepared to discuss the reduction to two days of the maximum deferment for cash items." Approved unanimously. Letter for the signature of the Chairman to Honorable A. _ Robertson, United States Senate, Washington 25, D. C., readi 4 as follows: 1991 "This is in response to your letter of August re211 5pet asking for an expression of our views with the bag1 .1 uq-tte to of the protest of the Franchise Tax Board of s. California against the enactment of the ,47 r elating to State taxation of national banks. /3,3 "With ' co rd has reference to this bill generally, the advised the appropriate committees of the entEle s that it would interpose no objection to its and, for your information, there is enClosed addzs a.,c°PY of a letter to this effect which was Comm:--ueu by the Board to the Chairman of the Senate Ap Lee on Banking and Currency under date of Lt, 1950. Prarim"The ,4 oPPosition to the bill expressed by the frorti- e Tax Board of California apparently arises riatin' l he fact that the State of California, in taxing : inc al banks according to or measured by their net pariTe, measures the rate of the tax in part by corn corps " ith personal property taxes paid by genera kias°Dtions within the State. This would not be perUnder certain provisions of S. 2547 and, con or re enactment of have the effect would the bill 11g the income derived by the State of Califor11;'m its resiat-Lf the taxation of national banks. bill S. 2547 should become law, and f State bill lower tax rates for national banks than or b unct:,Irlks, the State of California would undoubtedly "rrestsc,Zessure to reduce the taxes of State banks 'lleti0.--'411glY, which would result in a further retaxat,11 in the income derived by the State from the 1°4 Of banks. T k -21"As you doubtless know, this bill is the re:,1.1.1t of extended negotiations between committees of the American Bankers Association and the National ia'1,LAssociation, and its purpose is to clarify ex;11g ,n,ates Provisions of section 5219 of the United aevised Statutes and to afford the States • greater latitude taxation the in section under that of national banks. wh. 'With respect to the particular provision T lch is the basis for the protest by the California Board, we at* understand the American Bankers Associe,1°11 has contended that measurement of the rate of t:',!lse tax by comparison with personal property aZes has resulted in uncertainty and discrimination, prohhat the Purpose of the provision of the bill the--biting such comparison is to make it clear that of tetatute authorizes the determination of the rate the IL emexcise tax only by comparison with taxes of othe---e r ncorgeneral nature imposed by the State upon porations. hearl, ,,In this connection, we understand that at 1950--gs held before your Subcommittee on July 20, made bwith respect to this bill, the statement was ,, Mr* Henry F. Long, President of the National Tax A.;Y the si' ' c ciation, that he had been in touch with all Of th ate taxing authorities and that the provisions the 441)111 had met with their approval. In view of °f Oal;':ction now raised by the Franchise Tax Board katio ; °rnia you may wish to obtain further infor4-1:rom Mr. Long. ..ALe or is -eturneA respondence enclosed with your letter cu herewith,, Approved unanimously. Secretary.
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