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1473 Minutes of actions taken by the Board of Governors of the ede — al Reserve System on Thursday, September 8, 1949. The Board " 14 in the Board Room at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Vardaman Mr. Mr. Mr. Mr. Carpenter, Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Before this meeting there had been sent to each member of the 400ard a draft of statement and order on the exception, appeal reqUest filed by Transamerica Corporation under date of August 29, 9+9, to which had been added Mr. Vardaman's dissent from the te tient and order and his reasons therefor. The draft was discussed and its issuance in the following form was approved unanimously: "Respondent has filed with the Board an exception, 4PPea1 and request, dated August 29, 1949, entitled 'Exlelition and Appeal from Ruling of Hearing Officer Denying , 1 e8Dondent's Motion to Dismiss for Failure of Proof, and ' t;equest for Adjournment of Hearing Date Prescribed in °aid Ruling.' "Neither due process of law, nor any statute applic!ble to this proceeding, requires the Board to entertain !71" determine interlocutory appeals from the rulings of Its hearing officers. And no such appeals are contemplated or authorized by the Board's Rules of Practice. ? 1,11 the contrary, the effect of Rules VII and VIII of the :ct5.°ard's Rules is to preclude interlocutory appeals, and 4° require that exceptions to a hearing officer's rulIllgs be filed after the filing of the hearing officer's 1474 9/8/49 -2- "report containing his recommended decision, and 'be argued °ay at the final hearing, if any, on the merits before the Board or one or more members thereof.' The ruling of the Rearing Officer upon respondent's motion to dismiss for failure of proof was not an initial decision of the case Within the meaning of the Administrative Procedure Act; it was not a recommended decision within the meaning of the Act or of the Board's Rules, and no report in connecRespondent's tion with the ruling was filed or required. exception to and appeal from such ruling is therefore dismissed as premature, but without prejudice to respondent's I'lght to renew the same in accordance with the provisions (141 the Board's above mentioned Rules VII and VIII. "Insofar as respondent's exception and appeal chFillenges the Hearing Officer's action in fixing September 191 1949, as the date on which hearings are to be resumed, we may add that while such action is not subject to interlocutory aPPeal -- and nothing in Rule IV of the Board's Rules of Practice provides otherwise -- the Board has treated resPondent's request for an adjournment of the hearing date as a motion for an adjournment or continuance of the hearand has carefully considered respondent's brief and he affidavit of respondent's counsel in support of resPondent's request. However, for the reasons stated by the 1".ring Officer in his Notice denying respondent's motion 60 dismiss for failure of proof, the Board is of the °Pinion that the date prescribed by the Hearing Officer ror the resumption of hearings is not unreasonable. Re, 8413c)11dent's request that the hearings be adjourned until a 41tte at least five months after the Board's determination ' °I" respondents exception and appeal is therefore denied. ORDER "For the reasons set forth in the foregoing statement, it is ORDERED that: 1. Respondent's exception to and appeal from the HearOfficer's ruling denying respondent's motion to dismiss ' j Or failure of proof be, and it hereby is, dismissed, but thout prejudice to respondent's right to renew the same ; 111 the manner and at the time prescribed by Rules VII and III of the Board's Rules of Practice. hen 42. Respondent's request for an adjournment of the date prescribed by the Hearing Officer in his Notice 1-sellYing respondent's motion to dismiss for failure of proof ue, and it hereby is, denied. 1 1475 9/8/49 -3- "This 8th day of September, 1949. "By the Board. (signed) S. R. Carpenter S. R. Carpenter (SEAL) Secretary. "Governor Vardaman dissents. In his opinion, respondent's exception and appeal should be allowed, and the Board itself should hear and determine respondent's motion to dismiss for failure of proof. Governor Vardaman is also of the opinion that, respondent's exception and appeal having been dismissed, respondent's request for an adjournment of the hearings should be granted to the extent of adjourning or continuing the hearings to a date not earlier than sixty days subsequent to September 19, 1949, the date fixed by the Hearing Officer for the resumption of the h earings. "Governors Eccles and Clayton took no part in the consideration or decision of the exception, appeal and request referred to in the foregoing statement and order." Shortly after this action was taken Mr. Draper, who had been detained by another appointment, joined the meeting and upon being informed of the action stated that he wished to be recorded as voting in favor of it. At this point Messrs. Eccles and Clayton joined the meeting. Chairman McCabe stated that yesterday he met with Messrs. Dr01.11 4. and Williams, Presidents of the Federal Reserve Banks of New l'ork axicl Philadelphia, who had been appointed members of a special Q0141,, -Ittee of the Presidents' Conference to direct a study which /04.14, aid the Presidents in preparing their replies to the questioh— received by them from the Douglas Subcommittee of the oitt 0°iittee on the Economic Report and to discuss with the 1476 V8/49 -4- C1144111811 of the Board of Governors such questions as might arise ilcollnection with the questionnaires sent to him and the Presidents. At Chairman McCabe's request, MX. Carpenter read a memoranc114a , &resented during the meeting of the special committee which 8tated (a) that it appeared that the subcommittee was looking for ate and individual answers to the questionnaires received by 8el the President and the Chairman of the Board of Governors rather that( oombin,,d System response, (b) that nevertheless there should he st., -Me oPportunity far coordinated effort in preparing answers to the clUestionnaires, both among the Presidents and as between the lidents and the Chairman of the Board of Governors, which would still Permit of differences between the answers of the Presidents aziti chEtirinzzi and differences in the answers of the individual l'181clent6, (c) that the special committee had appointed a committee tr'Clii the economists of the Federal Reserve Banks to work on the (1114ti°11flaires sent to the Presidents which would meet in New York art 111111'sclaY and Friday of this week to begin blocking out its job 8;r4Ithatever cooperation with the staff of the Board of Governors 1..ove to be feasible and desirable, (d) that the ques- ti°11s °I1 which the staff committee and the Board's staff might work t(ether were the questions which were largely historical or which rel. to international finance, gold, and silver, and relations Ilith other banking and credit agencies, and that the questions on 1477 9/8/49 -5- ilich individual answers might be prepared were questions which 484d for expressions of individual opinion on future policy and °14Aa1ization, and (c) that if this general program recommended it"If it was suggested that it might be advantageous if Mr. Thomas, Dire etor of the Board's Division of Research and Statistics, attended the 04 rst day's meeting of the staff committee to work out with it a. kethod Of allocating the work to be done jointly by the staff comblittee and the Board's staff. Chairman McCabe stated that in accordance with the suggestion 14" l'eferred to, Mr. Thomas was in New York today attending the 441i4g of the staff committee. He also said that it was the tho ht "he special committee of the Presidents' Conference that there 411(k be Prepared a broad, general statement which would form the tere.1 basis for the answers to the questionnaires sent to the and that so far as practicable answers to individual cille"141as would be by reference to the general statement. 418° the It was thought, he said, that there would be a free exchange of 'rts °f answers between the individual Presidents and between the l'Nicl°11ts and the Chairman of the Board and that in submitting the 4114?el's to the subcommittee of the Joint Committee on the Economic N'c ' rt there would be a frank statement to the effect that there 1111bsexi consultation in the preparation of the answers to the ques- tl°411aires, that uniform answers had been prepared to some questions 1478 9/8/49 -6- 1111114 the answers to other questions had been left to the discretion or individuals to whom the questionnaires had been addressed. Mr. Eccles inquired whether the questionnnaire sent to Chair- 4"ceabe was sent to him as an individual or to the Board, and Mr. Rierier stated that Mr. Lester V. Chandler, Economist to the Subcomlitittee) had addressed the questionnaires to individuals so that it could be left to their discretion to determine whether they should be 4111rel'ed by them as individuals or by the respective institutions with Ithleh they were connected. Mr. Eccles then suggested that because of the short time alor the preparation of the replies and the probable difficulty r eetti -ng agreement on certain of the answers, it would be preferable if the answers to the questionnaire sent to Chairman McCabe could be mitted as the Chairman's views rather than the views of the Board. Chairman McCabe stated that, even if that were done, he would %4tAt to submit the drafts of answers to the members of the Board in or- t° have the benefit of any suggestions that they might wish to make. Mr. Szymczak suggested that drafts of answers be prepared by 11 etaff and sent to the individual members of the Board with the tlX/lIght that if there could be agreement on the answers to be made, there PlY could be sent as coming from the Board. or In the ensuing discussion, Mr. Eccles suggested that the draft €tllswers be sent to the members of the Board and that they be afromed 3.11 opportunity to discuss the drafts so that Chairman McCabe 1_479 9/8/49 -7- niiglt have the benefit of the views of the individual members and o that when the answers were sent to the Senate subcommittee the t4teraent could be made that they represented the personal views of the 4641111an of the Board but that in their preparation he had had the berlefit of the views of the other members. Mr. Eccles' suggestion was approved unanimously. In response to an inquiry from Chairman McCabe, the other member8 vl the Board present stated that they had no objection to the Procedure proposed by the special committee of the Presidents' Conteret ce for the preparation of the replies to questionnaires to the p residents of the Federal Reserve Banks. There was further informal discussion of certain organizational Pkble M8 in connection with which the Board had the benefit of recomkerld "°11s from the Personnel Committee. At the conclusion of the 1sct8810n, the recommendations of the Personnel Committee were acct as a general approach to the problems involved and Chairman 4ceab e Was authorized to discuss the matter further with the approe Parties with the understanding that after the discussions a re" sse'l Memorandum of recommendations would be presented to the Board 1'111441 action. 111*. Clayton referred to the discussion at various times in r'eerit months of the position which he had taken that for the time would not participate in the consideration of any of the 414tte s r- c°111ine before the Board in connection with the Clayton Act 14S() 9/8/49 -8- Ilroceed, lng against Transamerica Corporation and he said that in aC0rdance with the informal understanding that he had had with Mr. VardazIan he wished to present the following statement with respect toh is position: "From time to time Governor Vardaman has raised objections to the position I have taken with reference to Participation in matters relating to the Transamerica Proceeding. These objections have been voiced at meetings of the Board, as recorded at several Points in the card's minutes, and at other times to me. At the request of Governor Vardaman, a rather lengthy discussion liae had at a conference in my office about mid-July, attended by Governors Vardaman and Szymczak and Messrs. earPenter, Vest, and Smith. At this conference, I again reiterated my intention to follow the course that I MoPted at the meeting of the Board on December 6, 1948, en. I stated, as recorded in the Board's minutes, that t had come to the conclusion 'that it would be preferable i rofli the standpoint of the Board' that I refrain from !!rticipating in the proceeding, leaving the question of 'V voluntary disqualification on the one hand or my , 1, ?tive participation on the other hand to be decided when tL became necessary to make such a decision. Such a of the that not .reision, obviously, would be mine and action unanimous since the Board had already by rated the motion of Transamerica for my disqualificaon the ground, among others, that the Board had no aUthority to disqualify me. yc "Although no objection to this coursewas voiced by Vardaman at the time, he has made the statement on two or in three occasions since December 6, 1948, that ,1c *, his opinion the position taken by me in this matter is elllaging to Governor Clayton and to the Board.' At the conference above mentioned, Messrs. Vest and zLLiith stated their opinion that from the point of view of tr Board in connection with the Transamerica proceeding, Position I had taken was not only entirely correct but cae distinctly to the advantage of the Board. The various 2nsiderati0n5 that might enter into a later decision on Part to alter my present status were discussed at length. °vernor Vardaman thereupon stated that in view of the n 1481 9/8/49 -9- n oPinion of Messrs. Vest and Smith he withdrew any opPosition to my position in this matter but still felt , strongly that a further statement of my position should oe filed with the Board. There is no need for the considerations brought out in the conference to be discussed here. In general, however, it is my strong preference tot to participate in the action, but on the other hand I do not wish to forever foreclose my ability to participate, 8inee at some time my participation might be vital in order to assure an uninterrupted consideration of the case, Or for some other reason not now apparent." At this point Mr. Riefler withdrew, and the action stated Ilith respect to each of the matters hereinafter referred to was tEtkell by the Board: Minutes of actions taken by the Board of Governors of the Feder al Reserve System on September 7, 1949, were approved unanible11813r. Memorand dated August 22, 1949, from Mr. Thomas, Director °r th,„ - Division of Research and Statistics, recommending increases the 'asic annual salaries of the following employees in that 0.4.0 effective September 18, 1949: 1\113/_ Iie —‘1111, th A. McMahon Lee Glass Title Clerk-Stenographer Clerk Salary Increase To From $2,79.24 $2,72b:00 2,648.76 2,573.52 Approved unanimously. Memorandum dated September 7, 1949, from Mr. Bethea, Director 'r the Division of Administrative Services, recommending that the reallut ti011 of Miss Rachael Morley, a page in that Division, be 1482 9/8/49 -10- 13tecl to be effective, in accordance with her request, at the elcee of business on September 16, 1949. Approved unanimously. Letter to Mr. Diercks, Vice President of the Federal Reserve Be* 0f Chicago, reading as follows: "In accordance with the request contained in your letter of September 2, 1949, the Board approves the designation of John Walter Burhop as a special assistant examiner for the Federal Reserve Bank of Chicago." Approved unanimously. Letter to the Federal Deposit Insurance Corporation, Washington, reading as follows: "Pursuant to the provisions of section 12B of the Federal Reserve Act, as amended, the Board of Governors °! the Federal Reserve System hereby certifies that the 115.0irst State Bank of Richmond', Richmond, California, became a member of the Federal Reserve System on Septemcel" 1, 1949, and merged with the Central Valley Bank of alifornia, Escalon, California, on the same day. "The subject bank was organized to succeed the First 'llational Bank in Richmond, Richmond, California, and, teri exchange of its stock for that of the First Na,total Bank, to acquire the assets and assume the deposit 4-labilities of the First National Bank. Thereafter, it 1 the Bank of Hughson, Hughson, California, merged with 11:!a 1:. Central Valley Bank of California, Escalon, California, tlitch moved its head office to Richmond and was authorized c° operate branches at Escalon, Hughson, Oakley, and El 1,?I ' llto, California. It is understood that the branch at Cerrito is to be opened at a later date. The Central ielleY Bank of California also was admitted to membership the System on the same date and, under the merger plan, combined capital of the three constituent banks was 41creased $230,000. The Board of Governors of the Federal Reserve System U Z1 1483 9/8/49 -11- "further certifies that, in connection with the admission of the First State Bank of Richmond to membership "a part of the plan described above, consideration was V-ven to the following factors enumerated in subsection kg) of section 12B of the Federal Reserve Act: 1. The financial history and condition of the bank, 2. The adequacy of its capital structure, 3. Its future earnings prospects, 4. The general character of its management, 5. The convenience and needs of the community to be served by the bank, and 6. Whether or not its corporate powers are consistent with the purposes of section 12B of the Federal Reserve Act." Approved unanimously. Letter to Mr. George B. Luhman, President, First Wisconsin Company, Milwaukee, Wisconsin, reading as follows: "This refers to your letter of August 2, 1949, to Federal Reserve Bank of Chicago relating to the ,/;1,°1cling company affiliate status of First Wisconsin 411st Company, Milwaukee, Wisconsin. The Board understands that First Wisconsin Trust COtivr, aAY is engaged in the general trust business; that is a holding company affiliate of The First National „Illk of Rhinelander, Rhinelander, Wisconsin, by reason t i the fact that it holds in a fiduciary capacity more 84 JO percent of the outstanding shares of stock of ,ijle national bank; that it does not own or control, k rectly or indirectly, any other bank stock except held in fiduciary capacities in the normal course its trust business; and that it does not manage or CO directly or indirectly, any banking institu' 4-on other than The First National Bank of Rhinelander. that "n view of these facts, the Board has determined is 2irst Wisconsin Trust Company, Milwaukee, Wisconsin, rit, engaged, directly or indirectly, as a business, ' b holdingthe stock of, or managing or controlling, 138 '114, banking associations, savings banks, or trust cornWithin the meaning of section 2(c) of the BankAct of 1933, as amended; and, accordingly, First sc°11sin Trust Company is not a holding company affiliate the z J 1.484 9/8/49 -12- any purposes other than those of section 23A of the Federal Reserve Act. "If, however, the facts should at any time differ rrom those set out above to an extent which would indicate that First Wisconsin Trust Company might be deemed to be so engaged; this matter should again be submitted to the Board. The Board reserves the right to make a further determination at any time on the basis of the he existing facts." Approved unanimously. Memorandum dated August 19, 1949, from Mr. Baumann, Assistart n ' 2eneral Counsel, recommending for the purposes of a letter dated 44118t 1/ 1949, from the President and Executive Order No. 10072 481" 'Ally 29, 1949, regarding improvement in management of exeelltive departments and agencies, that the Personnel Committee be (lesigilated to be responsible for a program of improving the effecti e Ile8s and economy of the Board's operation, with the understandthe Committee would perform this function through the 1114et Procedure approved June 28, 1949. Approved unanimously. Memorandum dated September 1, 1949, from Mr. Chase, Assistant SOlic it°r, recommending for the purpose of continuing the reporting c/r the rn__ J-cansamerica proceeding, that $),000 be added to the non441 services item under the Miscellaneous Account of the 1949 Of the Solicitor's Office. 1485 918/49 -13Approved unanimously. 411PrOved: (41/ Chairman.
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