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907 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Friday, September 2, 1938, at 11:30 PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak Davis Draper Mr. Morrill, 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 Pederal Reserve System held on September 1, 1938, were approved unaniIllogsly. Telegrams to Mr. Paddock, First Vice President of the Federal Res" -uve Bank of Boston, Mr. Hays, Secretary of the Federal Reserve 8431k of Cleveland, Iva.. Thomas, Chairman of the Federal Reserve Bank Of Kansas City, and Mr. Sargent, Secretary of the Federal Reserve flIc of San Francisco, stating that the Board approves the establishwithout change by the Federal Reserve Banks of Cleveland, Kansas eitY and San Francisco on September 1, 1938, and by the Federal Reserve Bank of Boston today, of the rates of discount and purchase in their existing schedules. Approved unanimously. Letter to Mr. Swanson, Vice President of the Federal Reserve 908 9/2/38 -2- Of Minneapolis, reading as follows: "The report of examination of the Security Bank and Trust Company, Bozeman, Montana, made as of May 11, 1938, Shows that, since May 6, 1938, the benk has had only four directors, whereas its by-laws and articles of incorporation provide that it shall have a directorate consisting of five members. It appears that this vacancy was caused by a resignation, and the report of condition filed by the bank as of Tune 30, 1938, indicates that it may delay filling the vacancy until the next annual meeting of its stockholders which it is understood will be held in January, 1939, "As you know, section 31 of the Banking Act of 1933 requires a State member bank to have not less than five directors. In view of this fact, the fact that the vacancy in question has existed since May 6, 1938, and the further fact that the State law apparently requires the remaining directors to fill a vacancy on their board eS soon thereafter as is reasonably possible, it is asstaled that, if you have not already done so, you will request the bank to bring about a prompt correction of this matter." Approved unanimously. Telegram to Mr. McKinney, President of the Federal Reserve laank of Dallas, reading as follows: "Referring your August 29 and August 31 telegrams, Board is requesting opinion of Presidents Conference Committee on Free Services as to whether Federal Reserve banks should make a charge for services rendered in holding in safekeeping collateral deposited by (a) member batiks and (b) nonmember banks, as security for bankruptcy funds pursuant to Section 61 of the Bankruptcy Act. Will advise you further as soon as we hear from the Committee." Approved unanimously. Telegram to Mr. Martin, President of the Federal Reserve Bank °t St. Louis, reading as follows: 909 9/2/38 "Referring your August 26 letter, in Board's opinion Federal Reserve banks should, when requested, accept collateral from both member and nonmember banks to be held in safekeeping as security for deposits of bankruptcy funds, Pursuant to Section 61 of the Bankruptcy Act. Board is requesting opinion of Presidents Conference Committee on Free Services as to whether Federal Reserve banks should make a charge for services rendered in holding in safekeeping collateral deposited by (a) member banks and (b) nonmember banks, as security for bankruptcy funds pursuant to Section 61 of the Bankruptcy Act. Will advise you further as soon as we hear from the Committee." Approved unanimously. Telegram to Mr.. Fleming, Chairman of the Presidents' Conference Committee on Free Services, reading as follows: "Board has received wire from Mr. McKinney of Dallas stating that bank has been called upon to state conditions under which it will accept deposits of securities referred to in chapter 7 of amended Bankruptcy Act approved June 22, 1938. Mr. McKinney states that they feel that in view Of the volume and expensive character of this business banks should, in the outset, establish reasonable charges. Board is also in receipt of letter from Mr. Martin of St. Louis raising question as to whether Reserve banks should accept such securities from nonmember banks. Mr. Martin states that his bank would render service to member banks without charge but to render such service to nonmember banks would certainly do nothing to encourage membership in System. Board will appreciate it if your Committee Oil Free Services will review this question at your earliest convenience and advise it whether in the opinion of the Committee any charge should be made by Reserve banks for bolding in safekeeping collateral pledged by (a) member banks and (b) nonmember banks as security for deposits of bankruptcy funds and if so how the charge should be determined." Approved unanimously. Thereupon the meeting adjourned. %roved: Vice Chairman.
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