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1355 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Thursday, September 16, 1943, at 11:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinreferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Peds_ "al Reserve System held on September 15, 1943, were approved unani114)tielY. Bond in the amount of $10,000, executed under date of Septembel, 1, 1943, by LeRoy Larsen as Federal Reserve Agent's Representative at the Salt Lake City Branch of the Federal Reserve Bank of San Fran- Approved unanimously. Memorandum of this date from Mr. Nelson, Assistant Secretary, Nc) '4111erlding that the temporary appointment of Ulys H. Craig as a 4ret,• erla helper in the Secretary's Office be extended on a temporary b4gis for an indefinite period, effective at the expiration of his Nae tit appointment at the close of business on September 17, 1943, 1356 9/14/43 -2- lth an increase in his basic salary from $1,080 to ,11,200 per annum, etrective September 16, 1943. Approved unanimously. Letter to Mr. Koppang, First Vice President of the Federal Reae)nre Bank of Kansas City, reading as follows: "The Board of Governors approves the changes in the Personnel classification plan of the Federal Reserve Bank of Kansas City and its Branches as submitted with Your letter of September 2, 1943. In addition, page 95 covering the position of Superintendent, Building Department, has been cancelled in accordance with your telePhone request and a new page has been prepared indicating that Page 95 has been withdrawn. This page will be placed 3/1 the Board's copy of your personnel classification plan 2 and a duplicate copy is enclosed for your use." Approved unanimously. Telegram to Mr. Gilbert, President of the Federal Reserve Bank Nllas, reading as follows: t. "Re letter September 10. In accordance with regulapl°118 of the Board of Governors regarding branches of eral Reserve Banks, the Board hereby approves discon;'Inuance of the offices of Manager at the Houston and ;an Antonio Branches and the designation of a Vice PresiQent of the Bank to serve as managing officer at each °f the two branches. "In accordance with action of your directors, Board ann ri'rrcwes continuation of payment of salaries for the ':eriod ending May 31, 1944 to Mr. Austin and Mr. Pondrom their new capacities as Vice Presidents at the rates 4.? previously approved for them as Managers of the respec'aye branches." Approved unanimously. Telegram to be dated September 17, 1943, to Mr. Leedy, President or thn r - ,ederal Reserve Bank of Kansas City, reading as follows: 1357 9/16/43 -3- . "Retel September 14. Pursuant to provisions of Secion 19 of Federal Reserve Act Board grants permission to l'estport Avenue Bank, Kansas City, Missouri, to maintain _!arlle reserves against deposits as are required to be maine.lned by banks located outside of central reserve and reerve cities, effective as of the date of its admission ! to membership. Please advise bank of this action and of Permission being subject to revocation at any time by Beard.” Approved unanimously. Letter prepared for the signature of Chairman Eccles to Mr. , klla„ -- W. National Rice, National Service Director, Disabled American Veterans, Service Department, reading as follows: ."This refers to your letter of August 20, 1943, regardIng the practice of some national banks in making ch arges against disabled veterans and dependents of deeased veterans for the cashing of compensation and penchecks. You ask whether it is not possible for Board to issue a directive to the effect that no le3lach charges shall be made by any bank which is a memer of the Federal Reserve System. "Your attention is directed to the following paragraph of section 16 which is a part 'of the original Federal Reserve Act: 'Every Federal reserve bank shall receive on deposit at par from member banks or from Federal reserve banks checks and drafts drawn upon any of its depositors, and when remitted by a Federal reserve bank, checks and drafts drawn by any depositor in any other Federal reserve bank or member bank upon funds to the credit of said depositor in said reserve bank or member bank. Nothing herein contained shall be construed as prohibiting a member bank from charging its actual expense incurred in collecting and remitting funds, or for exchange sold to its patrons. The Board of Governors of the Federal Reserve System shall, by rule, fix the charges to be collected by the member banks 1358 9116/43 -4- "from its patrons whose checks are cleared through the Federal reserve bank and the charge Which may be imposed for the service of clearing or collection rendered by the Federal reserve bank.' "You will observe from this paragraph that no member 1, uautc may be prohibited from charging its actual exPense incurred in collecting and remitting funds. At Tcst, the Board could fix the charge in an amount not Lo exceed the actual expense incurred and this charge would be applicable only to such checks as might be -eared through a Federal Reserve Bank. Since the ac411a1 expenses incurred by various banks in various situalcns must necessarily differ, it would be impossible for : Board to fix a rule of general application if, indeed, 't would not be impossible for a bank itself to ascertain such costs with respect to specific items. Answering your :Pecific question, therefore, it is not possible for the 4)0ard to issue a directive to the effect that no such ellarges shall be made by any bank which is a member of the Federal Reserve System. "In this connection it may be pointed out that of the aPproximately 14,000 commercial banks some 7,500 are rt members of the System and would not be subject to any ;:„rective of the Board if such a directive were possible. s ne Board is not informed as to the percentage of banks ' lich make charges for cashing Government checks. It b°111d be surprised, however, if there are many member 4 anks which make charges against regular customers havg accounts with them. It wonders if the cases which re come to your attention are not cases where the payees 'Jd not maintain accounts with the banks and where ques1,1°ns of identification and resulting risk might not also :Aave been involved. Also, it may be pointed out that even it were possible for the Board to prohibit member banks 4 11°J11 making charges for the cashing of Government checks, . l'.ncluding checks of the kind described in your letter, such °134. Prohibition might be followed by the refusal of some anks to cash such checks at all. "I do not imagine that you have found many member . Federal Reserve System unwilling to view sym; eat1-31 tr the problem raised in the first paragraph c.,rpur letter. However, this reply is directed specifiLLY to answering your question as to what the Board of cvernors can do in the way of issuing a directive." V I V e Approved unanimously. Thereupon the meeting adjourned.
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