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M I N U T E S O F M E E T I N G O F T H E F E D E R A L A D V IS O R Y C O U N C IL September 17, 1945 At 2:15 P. M ., the Federal Advisory Council reconvened in the Board Room of the Federal Reserve Building, Washington, D. C., the President, Mr. Brown, in the chair. Present: Mr. Edward E. Brown, President; Mr. Charles E. Spencer, Jr., Vice Presi dent; Messrs. John C. Traphagen, John H. McCoy, Robert V. Fleming, Keehn W. Berry, Julian B. Baird, A. E. Bradshaw, Ed H. Winton, George M. Wallace, Walter Lichten stein, Secretary, and Herbert V. Prochnow, Acting Secretary. Absent: Mr. William Fulton Kurtz Mr. Ralph C. Gifford Mr. Woodlief Thomas, Director, Division of Research and Statistics of the Federal Reserve System, discussed general economic conditions. The meeting adjourned at 3:20 P. M. HERBERT V. PROCHNOW, . Acting Secretary. 5 MINUTES OF MEETING OF THE EXECUTIVE COMMITTEE OF THE FEDERAL ADVISORY COUNCIL October 3, 1945 At 11:05 A. M., the Executive Committee of the Federal Advisory Council convened in the Board Room of the Federal Reserve Building, Washington, D. C., the President, Mr. Brown, in the chair. Present: Mr. Edward E. Brown, President; Mr. Charles E. Spencer, Jr., Vice Presi dent; Messrs. John C. Traphagen, William Fulton Kurtz, Robert V. Fleming, Ralph C. Gifford, and Herbert V. Prochnow, Acting Secretary. There was a discussion regarding the Bill to Reorganize Government Agencies (H. R. 4129) and its relationship to the banking agencies. Brief discussions took place regarding the Bill to Amend the Clayton Act (H. R. 2357), the proposed loan to Great Britain and plans for future government financing. The meeting adjourned at 12:00 Noon. H E R B E R T V. P R O C H N O W , Acting Secretary. 6 M IN U T E S O F JO IN T C O N F E R E N C E O F T H E E X E C U T IV E C O M M IT T E E OF T H E F E D E R A L A D V IS O R Y C O U N C IL A N D T H E B O A R D O F G O V E R N O R S O F TH E FED ERA L R ESER V E SY STEM October 3, 1945 At 12:10 P. M., a joint conference of the Executive Committee of the Federal Advisory Council and the Board of Governors of the Federal Reserve System was held in the Board Room of the Federal Reserve Building, Washington, D. C. Present: Members of the Board of Governors of the Federal Reserve System: Chairman Marriner S. Eccles; Governors M. S. Szymczak, Ernest G. Draper and R. M. Evans; also, S. R. Carpenter, Secretary of the Board of Governors; J. J. Connell, General Assistant, Office of the Secretary; Walter Wyatt, General Counsel; George B. Vest, General Attorney; Woodlief Thomas, Director, Division of Research and Statistics; Edward L. Smead, Director, Division of Bank Operations; Carl E. Parry, Director, Division of Security Loans, and Liston P. Bethea, Director, Division of Administrative Services. Present: Members of the Executive Committee of the Federal Advisory Council: Mr. Edward E. Brown, President; Mr. Charles E. Spencer, Jr., Vice President; Messrs. John C. Traphagen, William Fulton Kurtz, Robert V. Fleming, Ralph C. Gifford, and Herbert V. Prochnow, Acting Secretary. There was a lengthy discussion regarding the Bill to Reorganize Government Agencies (H. R. 4129). In connection with the Bill to Amend the Clayton Act (H. R. 2357), the Chairman of the Board of Governors stated the Board favors the bill. The Chairman of the Board of Governors spoke briefly regarding the proposed loan to Great Britain and future government financing. The meeting adjourned at 1:21 P. M. HERBERT V. PROCHNOW, Acting Secretary. 7 NOTEt Thic» +■ S e c r e t a r y * 8 n o t e ^ i ^ ° f the A ctin g a s c o m p le t e or neep««,n ° ? , be r e earded T^ e t r a n s c r ip t . i s »+ * y accui*ate. use of th e m e t e r s o f t\U V A d v i s o r y C o u n c i l .' ° r th * s o l « f e d e r a l H. V. P. Beeting^of n° tes on the the Federal advl*60’1* 1™ Coramittee of 1945, at 1 H 0 5 AS° 7 R? ™ ^ X °n October 3, of the Federal memoers of the Executive CoJSttee £ ent M-err llO o V 5 A■J-"* • M• * M*> f '^ S° ry Counc11 w»^e presJoinlnS meeting at Mr. Fleming at 11:17 BILL TC REORGANIZE GOVERNMENT AGENCIES (H. R. A129 states the most important matter for discussion is the b ill for reorganizing agencies of the Government, par ticularly as it relates to agencies dealing with banking. He believes Eccles has the idea that the Board of Governors should take over the primary functions of the Comptroller's office and of the FDIC. Eccles also has the idea that you cannot have effective credit control unless you have control over bank exam inations, He would undoubtedly favor rigid examinations in time of boom and less strict examinations in time of depression. Eccles proposed such ideas in the past, but they met with the opposition of both Morgenthau, and Crowley and his ideas did not get very far. Morgenthau offered a counter-proposal which was that the Federal Reserve Board should be made a part oi the Treasury inasmuch as the Treasury has the r e s p o n s i b i l i t y for financing the Government*s needs. Browi has discussed t. matte” 4 t h both Delano and Crowley. He sibility ^ o u l d be for t h e Co-jnci o us bill. the FDIC and t h e C o m p t r o l l e r ' & ^ (Kurtz entered at 11.12 A. a .) ^ MeBpt in the bill. If uav be d iffic u lt to the b ill gets to the floor of e • " * i ble to have amend j however, in trie -ena e ^ Raises the question o' disamendments considered. * •.can Bankers* Association, the cussing the matter w ith ^ e and other interested groups. Reserve City Bankers * Association, ing s p e c i f i c a l l y that the ^ . (Fleming entered at 11*17 Spencer u n the President is allowe agencies, unless President*s plan f ° r d e j r that if the V*e3ent bil1 ?RS®eF» s o r abolish Government b *eCtB within 60 da/s reorganization. o -2- The id e a back th is re o rg a n iza tio n b i l l r e p e a t e d l y o v e r s e v e r a l y e a r s , and he h as d is c u s s e d h a s come u p th e m a t t e r w i t h ■ entio ns that th e t io n o f a num ber o f o f f i c i a l s that he general the o f th e G o v e r n m e n t , He saw a n a r t i c l e i n t h e A m e ric a n B a n k e r s t a t i n g i d e a o f t h e b i l l a s i t r e l a t e s to t h e r e o r g a n i z a ag e n c ie s d e a lin g w ith th e b a n k i n g system w o u l d b e to h a v e t h e C o m p t r o l l e r ^ o f f i c e becom e th e e x a m i n i n g b o d y , t h e F D IC t h e i n s u r i n g b o d y a n d t h e B o a rd o f G o v e r n o r s th e p o l i c y m ak ing b o d y , result fr o m F le m in g b e l i e v e s such a d i v i s i o n zation a lo n g o ffic e re g ard in g to G overnors. handled The d elays by o n e and It of illo g ical the control o f raises. is p a id F lem in g total assets out that of th e e x a m i n a t i o n s sho uld Brorn o f t h e A m e r ic a n B a n k e r s A s s o c i a to th e p ro b le m s viiich the expense th is o f n a t io n a l bank by the b a n k s . states of all su ch a d i v i s i o n to h a v e th e e x a m i n i n g f u n c t i o n c o n sid era tio n He p o in t s o ffic e the Board o f th e B o ard o f G o v e r n o r s . t h e N a t i o n a l B ank D i v i s i o n g iv e ex p o lic y - m a k in g b y a n o t h e r . C row ley b e l i e v e s the for c o n f l i c t s w h ic h ’-ould r e s u l t w o u l d is agency and t i o n m ig h t w e l l e x a m in a tio n s e x a m in e r, th e C o m p t r o l l e r ^ and th e C o m p t r o l l e r 's a n d c l e a r l y w o u l d n o t make Brovn. b ill A bank a problem w i t h an e x a m i n a t i o n , d e sira b le. be k e p t o u t th in k s to t a k e u p tak e up a q u e s t io n o f p o lic y w ith be u n f o r t u n a t e a u th o rity t h a t th e c o n f l i c t s w h ic h *-ould a u t h o r i t y w o u l d make a n y r e o r g a n i these l in e s un w o rkable. a m p l e , m ig h t h a v e w o u ld h a v e of th a t as o f June banks w ere d istrib u te d 30, as he r e c a l l s , fo llo w s: £ 35 b i l l i o n in the n a t io n a l b a n k s ; $ 4 2 b i l l i o n in s t a t e member b a n k s ; a n d * 1 7 b i l l i o n i n th e nonmember b a n k s , m aking a t o t a l o f & 1 A 4 b i l l i o n fig u r e s in d ic a t e that n a t io n a l assets than e i t h e r on e o f t h e Brown. A p o ll of the ap p ro xim ately as th e in assets fo r a l l banks. These ba n ks h a v e s u b s t a n t i a l l y m ore in o t h e r two g r o u p s . t h e n a t i o n a l b a n k s w ould u n d o u b t e d l y sho,r t h a t t h e s e b a n k s a r e a g a i n s t the r e o r g a n i z a t i o n o f t h e s e a g e n c i e s a l o n g t h e l i n e s now a p p a r e n t l y b e i n g c o n s i d e r e d . He b e l i e v e s such a n a t i o n a l b a n k p o l l w o uld be m ost i n f l u e n t i a l when t h e S e n a t e c o n s i d e r s t h e m e a s u r e . D elan o w i l l p ro b a b ly n o t s t r o n g l y o p p o s e th e r e o r g a n i z a t i o n and p a r t i c u l a r l y n o t i f t h ^ y s h o u l d m ake the C o m p t r o l l e r o f th e C u r r e n c y , the S e c r e t a r y o f the T r e a s u r y a n d th e h e a d o f the F D IC members o f th e B o a rd o f Governors. K u r t z . I t m ig h t n o t be so b ad i f t h e b a n k in g system c o u ld be a s s u r e d t h a t t h e B o a r d o f G o v e rn o rs w ould a lw a y s be a stro ng a n d h i g h l y co m petent B o a r d . aspects o f F le m in g t h i n k s t h a t even so t h e r e w ould be u n d e s i r a b l e su c h a r e o r g a n i z a t i o n . -3- Ve h a v e a n u n u s u a l s i t u a t i o n i n th e l o n g a n d Brown. successful record th e C o m p t r o l l e r *3 o f f i c e of fo r 82 y e a r s , and t h i s i s to o v a l u a b l e a t r a d i t i o n to l o s e . By a n d l a r g e C o m p t r o l l e r * s o f f i c e h a s n e v e r o p e r a t e d on p o l i t i c a l l i n e s , the but h a s b u i l t u p a t r a d i t i o n o f h a n d l i n g i t s a f f a i r s on a b a s i s o f w hat was b e s t f o r t h e n a t i o n a l b a n k i n g s y s t e m . I t m ig h t b e p e r m i s s i b l e to g i v e t h e r i g h t t c open n e w b a n k s to th e B o a r d , and i t m ig h t a l s o regulatio n of be s a t i s f a c t o r y c e rta in F le m in g to t r a n s f e r to the B o a r d the in v e stm e n ts o f b a n k s . m e n tio n s that A ss o c ia tio n and the R e se rv e to p e t i t i o n for the a b o l i t i o n both th e A m e r ic a n B a n k e r s * C i t y Bankers* A sso ciatio n are o f the sp e c ia l (H . 2357) lic e n sin g g o in g o f banks by the T r e a s u r y , B IL L TO AMEND THF CLAYTON Brown, s y ste m s. The R. A n o t h e r m a t t e r to be d i s c u s s e d i s amend t h e C l a y t o n to M r . N e ed h am ACT Act, and to w h ic h those b ill ap p arently in terested F e d eral Trade in is the the b i l l state b an k in g C o m m is sio n h a s h a d c e r t a i n au th o rity to prevent- u n l a w f u l r e s t r a i n t s , m o n o p o l ie s a n d a c t i v i t i e s lessened to amend co m p e titio n . o n ly p r o v i d e s co ntrol over b ut the a c q u i s i t i o n ac q u isitio n ? b i l l th e Board re la tio n of assets tc ether company i n t e r e s t s . m a in t a in of the must a p p r o v e ce rta in the o f f i c e Those a c a s e w h e re h i s sam e t h i s m ig h t be con la r g e bank h o l d i n g b ulk or a l l but i f of you t r y to th e C o m p t r o l l e r of th e p u r c h a s e d in te r e ste d to th e dual b an k b o u g h t the the C o m p tro lle r*s p e rm is in re q u ir e state a a ls o F e d e r a l p e rm issio n in a bank. Mr . N eedh am f e e l s m ight b r e a k do w n these T r a d e C o m m is sio n h a s you b u y t h e but o b ta in e d m e a s u r e m ay do i s p e r m is s io n a n d ac q u isitio n o f if that Under t h is e s s e n t i a l l y the purchased as a b ra n c h , m e n tio n s bank Brown, w hat t h i s p ro v id e s branch, Spencer to m a i n t a i n it they o c c u r . y o u n e e d no a p p r o v a l , in stitu tio n the stock o f c o m p a n ie s, In d ire c tly , sto p p in g At present and w h ic h Clay ton A ct n o t of the F e d e r a l bu sin e sse s. a bank, assets o f a n o th e r s io n b e fo re that s id e r e d a s a n o t h e r m eans o f the a s s e t s as w e ll, or" G o v e r n o r s w o u l d h a v e to b a n k s the the a c q u is it io n s h a l l be ap p ro v e d power i n in r e la t io n The b i l l to o f some c o n c e r n bank. b a n k in g b e l i e v e state ban k to get c o n n e c t i o n w it h t h a t in a s e n s e that state the th is b a n k in g system , BRITISH FINANCING F le m in g from the B o a r d t h e posed l o r n or b e l i e v e s i t w o u ld be d e s i r a b l e to a s c e r t a i n p r e s e n t s t a t u s o f th e d i s c u s s i o n on t h e p r o g r a n t to G r e a t B r ita in , -4- FUTURE GOVERNMENT FINANCING Trauhagon s u g g e s t s t h a t i t m ight be a d v is a b le to ask the B o a r d w h e t h e r a n y p l a n s a r e b e in g made fo r fu tu re Govern ment f i n a n c i n g . F l e m in g u n d e r s t a n d s the s a l e o f sa v in g s bonds w i l l be c o n tin u e d . F a t h j e h a s a p p o in t e d F le m in g h e a d o f a committee to d i s c u s s t h e m a t t e r o f Governm ent f i n a n c i n g . Brown, Spencer and o t h e r s a r e on t h e c o m m it t e e . F le m in g expects to t a l k with V in so n . B ro v n s a y s V in s o n ';;ants ta x e s t a ^ e n o f f that hamper b u s in e ss* H e h a s s w i ^ s s t e d tc V i n s o a th at the exce ss p r o f i t tax be e lim in a ted . V i n s o n u n d e r s t a n d s t a x a t i o n th oro ug h ly * K urtz a s k s w h e t h e r V i n s o n 's tax id e a s w i l l p r e v a i l . irown t h i n k s th e r e p e a l o f the e x ce ss p r o f i t ta x i s p ro b ab le. Some c o m p a n ie s n o t p a y i n g an excess p r o f i t tax b e l ie v e i t s h o u ld be r e t a i n e d . G l i ’f o r d . H a s B ro w n a s u c c e s s o r to Crow ley been suggested? d o e s n o t know o f a n y su cce sso r 7/ho has been sug gested. T h e m e e t i n g a d j o u r n e d a t 1 2 Neon -5- On O c t o b e r 3 , 194-5, a t 1 2 i l 0 P . M* a j o i n t m e e t i n g o f th e E x e c u t i v e Com m ittee o f th e Federal A d v i s o r y C o u n c i l and the B o a r d o f G o v e r n o r s o f th e F e d e r a l R e s e r v e System w as h e l d Reserve A ll in t h e B o a r d Room o f th e F e d e r a l B u ild in g , W ash in g to n , m em bers o f t h e E x e c u t i v e D. C. Com m ittee w e r e p r e s e n t , a n d t h e f o l l o w i n g w e re p r e s e n t fro m th e B o a rd o f G o v e r n o r s j C h a ir m a n E c c l e s , G o v e rn o rs S zy m czak, D rap er and E v a n s ; a l s o , M essrs. Carpenter, W yatt, V est, P a r r y , B e th e a , and C o n n e ll. T h o m a s , Sm ead , BILL TO REORGANIZE GOVERNMENT A G EN C IES ( H . R . 4 1 2 9 ) Rrc'-vn s t a t e s t h a t th e C o u n c il u n d e r s t a n d s a b i l l p ro v i d i n g f o r r e o r g a n i z i n g a g e n c i e s o f th e G o v e rn m e n t i s now u n d e r c o n s i d e r a t i o n o l d a s k s w h a t t h e a t t i t u d e o f th e B o ard i s r e g a r d in g th is b ill. E ccles. Th e F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n th e B o 3rd o f G o v e r n o r s w e r e a g e n c ie s h a d trie d t h a t the B o a r d o rig in a lly to b e e x e m p t , be n o t e x e m p t* sis t e n t ly ask t h a t the Board but Eccles He be stated th a t h e n a d d is c u s s e d out in c r itic ize d th e f i e l d the the F D IC , u rg in g that sp e c ific a lly asked e xclu ded in in it co uld n o t con v i e w o f th e f a c t its 1938 report. su b je c t w it h a lle g in g and Some G o v e rn m e n t stated that he the Board h a d f a v o r e d a r e o r g a n i z a t i o n Sn y de r h a d exem pt. Snyder and that that He that t h e F D IC w a s be exem pt fro m the r e o r g a n iz a tio n . F le m in g asks what Eccles* Eccles o v e rla p p in g of that the re p o rt p o in t e d out the general the a g e n c ie s* Brov/n gram r e g a r d i n g states 1 9 3 8 r e p o r t c o n tain ed * asks w hether the Eccles t h e B o a rd h a s c o n so lid a tio n ~ ep lie s that put fo rth any p r o o f th e a g e n c i e s * t h e B o a rd h a s n o t set fo r th any p rogram . F le m in g B ank er some m e n tio n s com m ents to th e C o m p t r o l l e r * s o f f i c e D e p o s it In s u r a n c e o f Governors the E ccles the t h a t he had re a d effect beco m e C o rp o r a tio n p o l ic y - m a k in g that it in th e A m e r ic a n w as p l a n n e d th e e x a m i n i n g b o d y , the in su rin g body, to h a v e th e F e d e r a l and the Board body. doub ts w h e th e r an y th in g lik e that w i l l happen. He h a s d i s c u s s e d th e m a t t e r i n t h e p a s t w i t h m any G o v e rn m e n t o f f i c i a l s a n d h a s t a l k e d p a r t i c u l a r l y w i t h H a r o l d Sm ith a n d h i s o c ia tes. They are w e ll Digitized a fors s FRASER in fo rm e d r e g a r d i n g the problem . -6- He i s su r e t h a t a n y r e o r g a n i z a t i o n o f t h e s e a g e n c i e s w i l l by men who u n d e r s t a n d th e p r o b le m t h o r o u g h l y . be do n e SZYM CZAK. The b a n k s a p p a r e n t l y f a v o r a n y m easure t h a t c o n so lid ates a g e n c ie s and re d u c es exp en se s, e x c e p t w here i t relates to th e b an kin g a g e n c ie s . ECCLES a g r e e s . the t h r e e a g e n c i e s He th in k s the b a n k s w i l l w ant to k e e p s e p a r a t e -- a d i v i d e an d c o n q u e r p o l i c y — p it t i n g one a g e n c y a g a i n s t th e o t h e r . H e s t a t e s t h a t he h a s s e e n the ba n x s f o l l o w e x a c t l y t h i s p o l i c y i n d e a l i n g w it h th e G o v e r n ment a g e n c i e s . F L E M IN G la rg e st p o rtio n E ccles reads a the n a t i o n * s letter B o ard i n a s k i n g reads f ig u r e s comments t h a t of from H a r o l d t o be i n c l u d e d as the n a t i o n a l b a n k s c o n t r o l b a n k in g a s s e t s . Sm ith h i g h l y in o f D ec em b e r 3 0 , (A t t h i s com m ending t h e the r e o r g a n i z a t i o n . 1944 the p o in t Thom as s h o w in g t o t a l c o m m e r c ia l ban k d e p o s i t s o f & 1 2 8 b i l l i o n o f w h ic h £ 7 1 b i l l i o n i n d e p o s i t s w e re i n t h e n a t i o n a l b a n k s a n d $ 3 9 b i l l i o n w e r e i n d e p o s i t s i n th e s t a t e m em ber b a n k s . ) BBC731 b e l i e v e s 9 5 p e r c e n t o f t h e nu m ber o f N a t i o n a l b an k s a n d b a n k s r e p r e s e n t i n g 9 5 p e r c e n t o f t h e n a t i o n a l b a n k a s s e t s w ould v o t e re o rg a n iza tio n . to k e e p the He p o in ts C o m p t r o lle r m i g h t C o m p tro ller^ out o ffic e that ce rta in out o f th e fu n c tio n s o f the be t r a n s f e r r e d . SZYM CZAK. Some f u n c t i o n s m ig h t h a v e to go to t h e Treasury. ECCL ..S. of One the e x a m i n a t i o n tro ls in not and i t re d u c tio n th e n a t i o n a l it be n e c e s s a r y Eccles in so B o ard s h o u l d h a v e to exam in e a p p a r e n tly hopes the control to o k o v e r t h e to pay th e th e to u s e ex expenses. banks tw ic e a to e x a m in e e x a m in a tio n s as to a p p r o v e is the n e c e ss a ry con th e B o a r d even be n e c e s s a r y t h e num ber o f banks can h a v e If t h e b a n k s v^ould n o t h a v e m ig h t n o t o n ce a y e a r . the d e p res sio n s. banks, I t m ig h t a l s o year, of banks booms a n d a m in a t io n o f th in g the some b a n k s expense an d in d u c e m e n t s the to g e t id e a. F L E M IN G . An e x a m i n a t i o n h a s a g oo d ECCLES. So m e tim e s e f f e c t on t h e staff o f a bank. th e F e d e r a l D e p o s i t C om p troller’ s o f f i c e the 3 0 *s w as n o t an the In su ran ce still B o ard h a s C o rp o r a tio n p u r s u e d one p o l i c y , another p o lic y , another p o lic y . d u e to b a d bank loan s. and The d e p re s sio n Loans that are the of good on %S0 b i l l i o n a n n u a l n a t i o n a l in co m e b a s i s a r e s t i l l b e t t e r on a *140 b illio n no good on a n ou t t h a t b a n k s annual n a tio n al annual n a tio n a l are cent f o r p e r io d s m a k in g t^rm r u n n i n g fro m in com e b a s i s , in c o m e o f #40 but th e y may be b illio n . Ho l o a n s now f o r 2 a n d 2 - 1 /2 5 to 1 0 y e a r s . If p o in ts per the n a t i o n a l -7— income fe ll to flOO billion or less, these loans might not look so good until such a period as the national income might again rise. The result might be that examiners would criticize a loan when the national income fe ll and later approve the loan when the national income was higher. The whole question of loans and bond accounts is interwoven with the monetary and f i s cal policies and th« economic stability of the country. FLEMING asKs whether the Board w ill discuss with the Council its plans on reorganization when the plans are ready. ECCLES doubts whether the Board w ill discuss these plans with the Council. SZYMCZAK comments that the average banker believes in retaining the present agencies and is not in favor of consolida ting them. ECCLES doubts whether the Administration r i l l even ask the Board its opinion because there are too many special agencies to consult, each one having certain selfish interests. SZYMCZAK. In a reorganization, all the functions might even be placed in the Treasury. ECCLES. Any reorganization could not be worse than the present system. GIFFORD. I f the Federal Reserve System should ex amine a ll banks, then the non-members might advertise that they were examined by the Federal Reserve System. ECCLES replies that member banks do not seem to find any advantage in advertising that they are members of the System, but that a ll of them advertise that they are members of the FDIC. FLEMING states that banks are compelled by law to ad vertise that they are members of the FDIC. BILL TO AMEND THE CLAYTON ACT (H . R. 2357) BRQV/M asks whether the Board would care to express its attitude on the b i l l now being considered to amend the Clayton Act. ECCLES replies that the Board is for the b i l l . The Board does not wirih to leave the question of monopoly in banking to the Federal Trade Commission. (At this point Vest outlines two of the features of the b i l l as follows: (1) The Federal Trade Commission shall have control over the acquisition of assets as well as the stock of companies} (2) the consent of -8- the Federal Trade Commission shall be obtained before there can be any such a cq u isitio n ). The Board wishes to have the same power in banking which the Federal Trade Commission has in other f ie l d s , BRO^TN. Some persons who are interested in the state banking systems feel that under this b ill they will need not only the permission of state banking authorities in these matters, but also the permission of the Board, and that they would weaken the dual banking system, ECCLES. The b i l l gives the Federal authorities a chance to consider the situation fir s t rather than afterwards. BRQ?,H states that in Chicago there have been cases of banks in bad condition which were about to close and where it was possible to obtain prompt action by the local examiner with the Comptroller giving his approval to the action in the middle of the nigh t. wonders whether such prompt action vrould be possible i f it should prove necessary to go to the 3oard. ECCL5S. This b i l l is not concerned with a case such as BroT.TL mentions. Prompt action T-ould be taken in a matter of that kind. The b il l aims to prevent monopoly and the lessening of competition. FLEMING doesn’ t see where the b ill would seriously hurt banking. BRGfgN sees no real objection to it , but the American Bankers Association and some state groups are worried about it . ECCLES. The b il l simply provides that before a group can buy out a bank they must obtain the consent of the Federal authorities, just as they would have to obtain consent in get ting a new charter. BRITISH FINANCING I® there any further information on the dis cussions with the British since the Council met in September? ECCLES states that there is no additional information, situation is d iffic u lt and complicated. The country seems to be goin? to isolationism fa s t, and it would be difficult to put through a British loan. Consequently, Britain may be forced to strict controls and tho making of direct (bilateral) deals with various nations T-;-Ar’HAGrN asks whether that isn*t « change in Fccies* viewpoint since September. The -9- iICCLES. No; last month I spoke of the need for assist ance to the B ritish, but I was not hopeful. Britain may have to go to a Russian type of economy. Eccles believes an un balanced British budget and a shortage of goods w ill bring infla tion and later deflation. FUTURE GOVSP.NMKNT FINANCING BROr"N. Have t h e r e b e e n a n y d i s c u s s i o n s on f u t u r e plans? G o ve rn m e nt f i n a n c i n g ECCLES says there have been no new discussions and there w ill not be any, at least until after the meeting of the Open Market Committee in the near future. BROv"N understands that Snyder's and Vinson's views are that they wish no discussions until this drive is over. ECCLES says it looks like 2-1/2 per cent is too much for the Government to pay. He does not believe there will be any new financing u n til after next June. The meeting adjourned at 1 :2 1 P. M* NOTE: The Executive Committee met for ten minutes after the joint meeting of the Executive Committee and the Board and discussed informally possible courses of action which might be taken in connection with the b ill relating to the reorganization of Government agencies.
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