Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, September 4, 1943, Volume 30, Part 3

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1279

A meeting of the Board of Governors of the Federal Reserve
SYstern

aot.

waS held in
Washington on Saturday, SepteMber 4, 1943, at 11:00

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 herein-

refer
red to was taken by the Board:
The minutes of the meeting of the Board of Governors of the FedeN, Res
ell
"System held on September 3, 1943, were approved unanimously.
the terucrandum dated September 1, 1943, from Mr. Paulger, Chief of
a
lasion of
Examinations, recommending that Miss Audrey L. Moye be
13Pc)illted
as a stenographer
in that Division on a temporary basis for a
P(*iod
Of not to
exceed three months, with basic salary at the rate of
AO Per
the perf annum, effective as of the date upon which she enters upon

41

°Pnlance of her duties after having passed satisfactorily the
tiet,ocaPthY.8ical

examination, with the understanding (1) that if anything

should

kt:'-etory

develop in the investigation of her references her serv-

tpin.ted immediately and (2) that if her services prove

4 verria,,

during her temporary appointment she will be recommended for

- ent a
'
ppointment.




Approved unanimously.

1280
9/443
-2Memorandum dated August 31, 1943, from Mr. Goldenweiser, DiOtor

of the Division of Research and Statistics, recommending, (1)

on the
adViee

of her physician, that Mrs. Nancy B. Kelly, secretary to

lire Stark, Assistant Director of the Division, be granted leave of abce
without pay for such time as may be necessary, not to exceed three
korths
from September
1, 1943/ to clear up an asthmatic condition, and
that the
Board continue to make its contributions to the retirement
te
on U18. Kelly's behalf during her absence provided she continues
°Wn cont
ributions for the same period.

The memorandum stated that

ICellY had been away
from the office since July 30 on sick leave,
arklsUggested that the period July 30 to August 10 be charged to accu4118.tecl and
credit),

accrued sick leave (leaving one day of sick leave to her

that August 11 to
August 31 be charged to accumulated and ac-

beal leave, and that leave for the period beginning September 1
charted to
leave without pay.
Approved unanimously.
/Tern°randum of this date from Mr. Carpenter, submitting the res181°11 of Miss Mary Elizabeth Kielkopf as a junior file clerk in the
Seel'etalts orrice,
become effective as of the close of business on
4Pteraber 13,
1943, t
and recommending that the resignation be accepted

()r that date.

The resignation was accepted.
1144k

or Letter

to Mr. Fletcher, Vice President of the Federal Reserve

Cleveland, reading as follows:
'In accordance with the request contained in your




1281
9/4/43

-3letter of
1943, the Board approves the deslazations August 31,
of the following as special assistant examiners
for the
Federal Reserve Bank of Cleveland:
W. L. Edelen
Charles Curro
Walter Kuhl
George Frede
J. B. Walsh
Ralph Hein
"The names of
Richard Oettinger
Howard Marsh
Walter Swedersky
Arnold Motz
(Smerdeski)
have been
special assistant
of
removed
the
roster
from
exa
miners."
Approved unanimously.
eNL

Letter to Mr. Laming, Vice President and Cashier of the FedIlese,"
've Bank of Cleveland, reading as follows:

Inc, "This refers
to your letter of August 18, 1943, stat'
or thrt, consideration is being given to the discontinuance
hanrca3r1rient of supplemental compensation to employees of your
eouiiand inquiring whether, in view of the provisions of Exnier14
'
ve Order No. 9250, your Bank may discontinue the pay`' °I* such supplemental compensation.
sta,k. So far as the law and regulations relating to salary
pa37;llization are concerned, your Bank may discontinue the
the 7,11.t,' Of supplemental compensation within the limits of
lati
°wing provisions of the Salary Stabilization Regu(34 of October 27, 1942:
th
i Sec. 4001.7 Decreases in salaries of less
15_222. -- In the case of a salary rate exlsting as of the close of October 3, 1942, under
ich an employee is paid a salary of less than
00 per annum for any particular work, no de21:ease shall be made by the employer below the
ulghest salary rate paid for such work between
j
„,anuarY 1, 1942, and September 15, 1942, unless
to correct gross inequities or to aid in the eflective prosecution of the war. Any decrease in
silch salary rate after October 3, 1942, shall be
c°nsidered in contravention of the Act and the
'
l egulations, rulings, or orders promulgated thereIlnaer if such decrease is made prior to the apProval of the Board or the Commissioner, as the
case may be.
'Sec. 4001.8. Decreases in salaries of over
„
-- In the case of a salary rate existing
the close of October 3, 1942, under which

r




1282
914/43
—4—
"'an employee is paid a salary of $5,000 or more
Per annum, no decrease in such rate made by the
employer shall be considered in contravention of
the Act and the regulations promulgated there—
under (see section 5(b) of the Act); provided,
however, that if by virtue of such decrease the
11,e17 salary paid to the employee is less than
if6,000 per annum, then the validity of such de—
crease below $5,000 shall be determined under
the provisions of section 4001.7 of these regu—
lations.'
"Section 5(b) of the Act reads as follows:
'Nothing in this Act shall be construed to
Prevent the reduction by any private employer of
the salary
of any of his employees which is at
the rate of
$5,000 or more per annum.'
of
Since, es indicated in the nee to officers and employees
tha.°Jur Bank dated June 1, 1943, enclosed with your letter,
month-7ertime Payments are computed on basic salary plus the
Y amount of supplemental compensation, it is assumed that
celiP-Lemental compensation is a part of the rate of salary re—
actl
!
ir cl bY employees of your Bank. In the circumstances, any
discontinuine the payment of supplemental compensation
the B the limits
stated above would require prior approval of
Joizit°ard of Governors and would have to be certified to the
Orde,;
-(31nmittee on Salaries and Wages as provided in General
'
01,,;°• 19 of the National War Labor Board.
"This
and ,
reply relate:, solely to the legal question involved
poisi'°es not undertake to raise or discuss any questions of
of j?" which might be involved in a discontinuance of payments
`q3Plemental compensation."
Approved unanimously.
Letter

to Mr. Woolley, Vice President and Cashier of the Federal

e 8ank of Kansas City, reading as follows:
paw. "R
eference is made to your letter of August 25 to Mr.
regarding the proposed reemployment of Winfrey B.
Aker
h
Who
recently received his discharge from the Army.
Per
Of Mr. Y°ur request, the Board approves the reappointment
that vs Aker as
an assistant examiner, provided, however,
rollo"e is reemployed
by the Reserve Bank within 30 days
woring the date
of
this
approval letter.
and il:lease
advise us whether or not Mr. Aker is reemployed
s°, the effective date of his appointment as an as—
q116
eXaltiner."




Approved unanimously.

28:1
9/4/43

-5Letter to the board of directors of the "State Bank of Howards

4°17e", Howards
Grove (P. O. — R. #11 Sheboygan, Wisconsin), stating
that, 8ubject to
conditions of membership numbered 1 to 3 contained in
t413(3ardis Regulation H, the Board approves the bank's application for
441belishiP in the Federal Reserve System and for the appropriate amount
°.r atock 4-1-u the Federal Reserve Bank of Chicago.
Approved unanimously, for transmission
through the Federal Reserve Bank of Chicago.
illemcrandum dated September 1, 19433 from Mr. Smead, Chief of
the lavision
of Bank Operations, referring to the Board's letter of
'1114 3, 1943,
to the Presidents of all the Federal Reserve Banks in
11 they were
requested to review the cla sification of member banks
t°r electoral
Purposes and to advise the Board of any changes they would
recommend.
The
that changes in memorandwn recommended, for the reasons stated therein,
the classifications of member banks in the Cleveland and
diStriCtS
be approved as set forth ih letters to the respective
Slloted below,
and that no changes be made in the classifications
()t nienlbe/'
banks in the remaining districts.
Letter to Mr. Fleming, President of the
Federal Reserve Bank of Cleveland:
of 0 "Referrine to your letter of August 5, 1943, the Board
tor
has changed the classification of member banks
of °IrernOrs
the
Purpose of electing Class A and Class B directors
wilP11/' Bank as suggested in your letter, so that Group 1
exc;C?nsist of banks with a combined capital and surplus
nng $999,9991 Group 2 of banks with combined capital
with--Plus of
$200,001 to $999,999, and Group 3 of banks
combined capital and surplus of less than $200,001."
Letter to Mr. McLarin, President of the
Federal Reserve Bank of Atlanta:




I. 284
9/4/43
-6or

"Referring to your letter of August 16, 1943, the Board
Governors has changed the classification of member banks
°/ the Purpose of
:'
electing Class A and Class B directors of
Je°11r.Bank as suggested in your letter, so that Group 1 will
lst of banks with combined capital and surplus of
all,'
,°00 and over, Group 2 of banks with combined capital
14,surplus of $200,000 to $799,999, and Group 3 of banks
''n combined capital and surplus of less than $200,000."
p

X

Approved unanimously.
Letter to Mr. James A. Treanor, Jr., Director of the Trading
EcIallge Division, Securities and Exchange Commission, Philadelphia,
'elltsYlvatial reading as
follows:
31, "This refers
to Mr. Orrin C. Knudsents letter of August
regarding the application of Shawmut Association,
StIII, Massachusetts, to withdraw its listing on the Boston
xchange. The letter requests information concerning
po;tannual reports, interim statements of condition, and relevisicf examination of holding company affiliates under the
co
ation administered by the Board, together with blank
irls-es°II any forms which the affiliates must use or follow
conlinection with such reports or statements.
item,2
P r Your information, there are enclosed copies of the
?0; ulscussed
below:
- Annual Report of Holding Company Affiliate
The oard of Governors of the Federal Reserve System.
each13°ard reouests an annual report in this form from
V4iIn h°1ding company affiliate which holds a general
Permit issued by the Board pursuant to section
Fir of the Revised Statutes. The holding company afth Itte furnishes, as a part of its annual report to
cli:4
'
4)ard, a copy of the annual report prepared for or
co;.ributed to its shareholders for the fiscal year
Por:!eLby the annual report to the Board.
ren'
rit 220 FR 220a and FR 220b. These forms are,
hoil
ZtivelY, the forms for report of an affiliate or
or 7.1.-g company affiliate of a bank which is a member
4he
Federal Reserve System, the publisher's copy of
tilr
l report,
and the instructions for preparation of
wai reports.
Attention is directed to the terms of the
of
requirement
for reports of affiliates set
forth
of
°n Form FR 220b, in accordance with section 21
wailr"e Federal Reserve Act. It will be noted that the
pol4er of reports does not apply to the published re-‘.8 of 'Itlqlng company affiliates' as distinguished
BoST2-943,




9/4/43
—7—
"from 'affiliates,
. These forms are used by the Board
in

obtaining reports of affiliates and holding company
of State banks which are members of the Fedaf
fetses
erale
System, pursuant to section 9 of the Federal Reserve Act. Substantially the sane forms, and a
Ilaiver of reports
containing the same terms,are used by
tIle Comptroller of the Currency in obtaining reports of
4filiates and holding company affiliates of national
Danks, pursuant to the provisions of section 5211 of the
Revised Statutes and section 21 of the Federal Reserve
Act,

t

!
°f1118 P-1 throu h P-6. Form P-1 is the form for appli'
e ion of a
holding company affiliate for a voting perUnder authority of section 5144, Revised Statutes,
;
-r
1.,ld Forms P-2
through P-6 are the printed form for ex,41)its accompanying such application. Paragraph numuclered 1 of
the application for voting permit (Form P-1)
8":).!!'ainscLliutes,, as required by section 51/14 of the Revised
provision for examination of the holding comPan
h,1 affiliate by examiners duly authorized to examine
ZIKs with which
it is affiliated. As you probably
report of examination of a holding company
,_'lliate is not a form filled out by the holding com.1.;JnY but i
a report prepared by the examiner, showing
Zrrmation obtained from the records and books of the
fr ding companj affiliate and affiliated organizations,
°facers and employees of the holding company afaeaate, and
from other sources.
Liesp,
ati°11 P or the Board of Governors of the Federal
eS L2T. This is the Board's regulation on
IIZTPUI
ilho_lng company affiliates and voting permits, based
tijc) and issued pursuant to various provisions of see14 of the
Revised Statutes and of the Federal
e Act
Annu.,
pace;'L
orts of the Board for 1935 and 121(2. At
- 98 of the 1935 report, there is discussed
to bf-Lginal form of agreement required by the Board
it: ecuted by holding company affiliates as a con1110Z1:1 to the
granting of general voting permits. A
81 (
1
,ed form of such agreement is discussed at pages
of the 1936
report. Both the original and the
IrL_u.-rled form of
this agreement contain a general prosuhat
4-II-la
:ate 1, the management of the holding company afall be conducted under sound policies govatateg its
financial and other operations, including
Illents issued relating
thereto.
tn-rme The letter
requested advice also as to which of the
"liajr reports filed with the Board by holding company af-s are published, or made available to the public, and

°T
11.-l




i286
9/4/43
-8Inch are filed confidentially, and, with regard to the
"
,;.
'
-4.ery information as to the rule, regulation or section
the statute
which provides for confidential treatment.
°I'M 220a, the
report of an affiliate or holding company
of a State member bank, and the similar form used
atthe Comptroller of the Currency for reports of an affilre e or holding company affiliate of a national bank, are
„ Ports which are required by section 9 of the Federal Re'
t-?rlIe Act and section 5211 of the Revised Statutes, respec41
;ve1Y, to be published by the banks under the same condiloris as
govern their own published condition reports.
"The annual reports of holding company affiliates to
the
ab-8°ard on Form FR 437 are not published or made avail4-e to the
public by the Board. These reports are requested
by the
-,
Board
for the purpose of obtaining information for the
!
foe
l ' and the Federal Reserve banks which is deemed necessary
use bY the Federal Reserve System in the discharge of its
,
res
coZ34sibilities for regulation and supervision of holding
4v, affiliates of
banks.
'The reports of examination of holding company affil0 are not published or made available to the public
othe Board. As you are no doubt aware, reports of examinagenrel raade by examiners for bank supervisory authorities are
naturallY regarded as confidential, largely because of the
kohre and source of much of the information they contain.
are treports of examination are governmental documents and
amin Ile property of the government agency for which the exutor i°11 is conducted. Although there is no specific stat—
Provision declaring that reports of examination must
be
of atreated as
confidential, they are so regarded on the basis
whigninistrative interpretation of varir,us provisions of law
affairinTlY confidential treatment in the ordinary course of
Viqn 8*
In this regard, you may be interested in the protha:t -jr1 of section 9 of the Federal Reserve Act to the effect
coPies of reports of examination of State member banks
allth,i.
? the discretion
of the Board, be furnished to the State
direties having supervision of such banks, to officers,
er„ ors or receivers of such banks, and to any other _proper
eer;'
ens; also, the provision of section 21 of the Federal Reivi, Act emDowering the Comptroller of the Currency, after
nOtiee to the bank or affiliate, to publish the report
coiw athination of a national bank or affiliate which fails to
witrY
1:3 to his
satisfaction and within a specified period,
rlationis recommendations or suggestions based on such examin, and the provisions of section 22(h) of the Federal
'rve Ac+
Of b
.limiting the disclosure by examiners of the names
orr
illeuredozcsj:r the collateral for loans of a member bank or

j




9/4/43

—9—
Approved unanimously, together with
the following letter to Mr. McRae, Chief
Examiner at the Federal Reserve Bank of
Boston:

"For your information, there are enclosed copies of
exchange of correspondence between the Securities and
of,nge Commission and the Board regarding the application
°hawmut Association, Boston, Massachusetts, to withdraw
its
wistock
from listing on the Boston Stock Exchange, together
„e c0PY of a file memorandum regarding a telephone conver :
of fl-on between a member of the Board's staff and a member
6ne staff of the Securities and Exchange Commission.
se "It is our understanding that, for the purpose of obatt
'
i ving the proceedings, a representative of your bank will
be
the hearing on Shawmut Association's application, to
misheld
?ld at the
offices of the Securities and Exchange Cornin Boston on September 8, 1943."
8t.

Letter to Mr. Davis, President of the Federal Reserve Bank of
Louis
,
reading as follows:
"This refers to your letter of August 24, 1943, and its
cat ures, with reference to the cashing of time certifies"of deposit for customers who wish to buy war bonds.
matt There has been no change in the situation in this
190er since the Board's telegram to Mr. Hitt of April 15,
th4'4!'ePlYing to his wire of April 13,1943. However, at
the
we brought copies of the exchanged telegrams to
yoution of the Treasury, and we are sending copies of
,' -Letter of August 24 and its enclosures, together with a
co.
D,X °f this reply, to Under Secretary Bell for his infor--,-.Lon.ft
Approved unanimously.

Memorandum dated September 1, 1943, from Messrs. Smead, Wyatt,
'111c1 Vest, chi
-e- of the Division of Bank Operations, General Counsel, and
Ae4
,erve

Ge eral Attorney, respectively, stating that all of the Federal

anks and Federal Reserve Agents had approved the plan for securttip
eder
tiotl
al- ReFerve notes by pledges of participations in direct obliga°f the

.
United States in the System open market account which had

Y been approved by the Board and transmitted to them with the




128S
9406

-10letter of July 19/ 1943, and submitting a proposed letter to

the Pecieral Reserve Agents and the Presidents of all the Federal ReankS
which advised them that the plan would become effective on
Prida
SePteMber 172

1943, enclosed the text of messages to be used

8tA
-41Iting the plan, and advised of the adoption of certain code
Words f
or
use in the operation of the plan. Also attached to the memorandula
was a proposed telegram to the Federal Reserve Agents and the
1517S84,

of all the Federal Reserve Banks advising them that the let-

ter

being dispatched.
Approved unanimously.
Me morandum

the
toci

dated August 29, 1943, from Mr. Paulger, Chief of

lasion of Examinations, requesting that, because no other accome.t1
°113 were procurable at the time and in view of the time limit)
.he Boar
t4pe
or

aPProve the payment of additional expenditures by him during

brUct

JUlY 19 to August 9, 1943, covering the difference in price

cIrciom and of a compartment on an extra fare train from Chicago
%it) krzt
Partitie

Ow) California, and from Los Angeles to Chicago, and of a com-

4t fr°m Chicago to Washington. The memorandum was submitted to
the to
41
'
CI with a recommendation by Mr. Bethea that the voucher as subtted

MX'. Paulger
be approved for payment.
Approved unanimously.
Uemorandum dated September 1, 1943: from Mr. Paulger, Chief of

the

°I1 of Examinations, recommending that, because no other accom„
1

8 vere procurable at the time and it was necessary for them to be

°4 ?1
'
ancisc0 at the earliest possible date, the Board approve the




1289
9/4/43
—11—
Par4
"
t of an additional expenditure of $16.25 during the period July
17 to
211 1943' 1 by Messrs. Cagle and Andrew N. Thompson, Assistant
Chief of
the Division of Examinations and Federal Reserve Examiner,
e Pectivel
J covering the difference in price of the accommodations
to which they
would be entitled under the Board's travel regulations
or 4 compartment from Washington to Chicago and a drawing room from
Chi
°ago to San
Francisco.




Approved unanimously.

Thereupon the meeting adjourned.

Assistant Secretary.