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A meeting of the Board of Governors of the Federal Reserve

SY'etemwas held in Washington on Friday, June 14, 1940, at 11:00 a.m.

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. SzymczakMr. McKeeMr. DavisMr. Draper

Mr. Morrill, Secretary

There were presented telegrams to Mr. Sanford, Assistant

Seel'etarY of the Federal Reserve Bank of New York, Mr. Leach, Presi—

dent of the Federal Reserve Bank of Richmond, Mr. McLarin, First Vice

lil'eeident of the Federal Reserve Bank of Atlanta, Mr. Olson, Assistant

Seel'etarY of the Federal Reserve Bank of Chicago, Mr. Stewart, Secre-

41'1 of the Federal Reserve Bank of St. Louis, Mr. Ziemer, Vice

?No,4"-lent of the Federal Reserve Bank of Minneapolis, Mr. Leedy, Sec—

r""417 of the Federal Reserve Bank of Kansas City, Mr. Gilbert, Pres—

ident of the Federal Reserve Bank of Dallas, and Mr. Hale, Secretary

°r the ,-ederal Reserve Bank of San Francisco, stating that the Board

IIPPro-ves the establishment without change by the Federal Reserve Banks

--Lehraond and San Francisco on June 11, and by the Federal Reserve

11411k8 of New York, Richmond, Atlanta, Chicago, St. Louis, Minneapolis,

418" City, and Dallas on June 13, 1940, of the rates of discount

4/1t1 PUrchase in their existing schedules.

Approved unanimously.

Mr. McKee submitted a draft of letter to the Presidents of

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413-Federal Reserve Banks reading as follows and recommended that it

be approved for the reason stated therein:

"It has been the general practice of the Board forseveral years to prescribe a condition of membership re -Taring the bank to make adequate provision for deprecia-°:011 in banking house and furniture and fixtures. Atfirst the condition specified the minimum rates to betaken annually, but some time ago the more general foranow in use was adopted.

"The Board still feels that, as a matter of soundbanking practice, all banks should make adequate provi-sion for depreciation in their banking houses and furni-ture and fixtures, but has decided to leave it to theFederal Reserve Banks to see to it, in the regular course°I' supervision, that proper provision is made for suchdePreciation. Accordingly, the general practice of pre -ecrlbing a condition of membership with respect to depre-ciation in banking house and furniture and fixtures willno longer be followed.

"Since the elimination of classified losses is fol-1°wed by the Reserve Banks as an administrative matter,

condition is not essential for the accomplishment ofthe end sought and discontinuance of the practice of pre -:cribing the condition does not represent any departure'rola' the position that banks should make adequate provi-sion for depreciation in their fixed assets."

Approved unanimously.

There was presented for consideration the question of the

to be adopted by the Board when its employees are offered posi-titti.

bY the Advisory Commission to the Council of National Defense.

14% Mor

4et tirohad inquired whether there mould be any objection on the

NItt 0

tha- he advised Mr. Lynch that there would be no objection if the

rill stated that Robert F. Lynch, one of the assistants to Mr.

f the Board to his negotiating with two of the Board's employees,

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1°Yees desired to accept employment with the Commission. He also

8144 that subsequently it was learned that negotiations with the two

eraPlayees were in process and that one of the employees had raised

the question whether the Board would be willing to grant a temporary

-kve of absence so that the employee could return to the service of

the Board later without suffering any loss of benefits in the Retire -

sys,_ueln during the period of the leave of absence.

...Is

It was agreed unanimously that, asa matter of general policy, no objectionshould be interposed by the Board to theemployment by the Defense Commission ofany of the present employees of the Boardwho may desire to accept such employment,and that if any employee desired a leaveof absence during his service to the Com-mission, for a period not later than Jan-uary 1, 1941, the application would begranted with the understanding that shouldthe employee wish to retain his statusin the Retirement System he should con-tinue his own contributions and also paythe Board's contributions during theperiod.

In taking this action the questionwhether the leave of absence in any casemight be extended beyond January 1, 1941,was left for determination at a laterdate.

There was then presented a telegram just received from Presi-4

garrison of the Federal Reserve Bank of New York stating that theboard

of directors of the Bank, at its meeting yesterday, voted to41401.4

4.ze the employment for a period of two months beginning July 1,

with compensation at the rate of :71,000 per month to cover salary

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885

and expenses, of Professor Laurence Seltzer, formerly of the Treasury

ancI ncw of Wayne University, to work with the Bank's Research staff

in Connection with the preparation of material on the Wagner question-

naire) and that the Board's approval of the compensation authorized by

the directors would be appreciated.

Mr. Morrill was requested to adviseMr. Harrison that the Board approved thecompensation proposed for Professor Seltzer.

Reference was made to a memorandum dated June 7, 1940, from

SzYmezak with which he submitted a memorandum prepared under date

24, 1940, by Mr. Van Fossen, Assistant Chief of the DivisionOf pk,,—^u4 Operations, which discussed the policies of the respective

Nteral Reserve Banks in connection with the maintenance of clearing

Itee°1211te for nonmember banks. The memorandum from Mr. Szymczak sug-

b4ted that there was nothing for the Board to do on the matter atthe

Present time but that it might wish to bring the subject to the

4tteh44of the Presidents of the Federal Reserve Banks at some

- conference.

There was unanimous agreement withMr. Szymczak's suggestion.

The action stated with respect to each of the matters herein-

referred to was then taken by the Board:

The minutes of the meeting of the Board of Governors of the

drAlReserve System held on June 13, 1940, were approved unani-

4511e1Y.

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Letter to the board of directors of "The Richwood Bankingco

Richwood, Ohio, stating that, subject to conditions of mem-

bershiP numbered 1 to 3 contained in the Board's Regulation HI the

814" approves the bank's application for membership in the Federal

erv"e System and for the appropriate amount of stock in the Federal

11141"va Bank of Cleveland.

Approved unanimously for transmis-sion through the Federal Reserve Bank ofCleveland.

Letter to the board of directors of the "Bank of Canton",

Oklahoma, stating that, subject to conditions of membershipNele

r'ed 1 to 3 contained in the Board's Regulation H and the fol-10win

g special conditions, the Board approves the bank's applicationtor in

embership in the Federal Reserve System and for the appropriate

of stock in the Federal Reserve Bank of Kansas City:

4.

115.

At the time of such bank's admission to member-ship, its paid-up unimpaired capital shall benot less than $25,000.

Such bank shall. increase the number of its direc-tors to not less than five, the minimum number re-quired in the case of all member banks under theProvisions of Section 31 of the Banking Act of1933, as amended."

Approved unanimously, together witha letter to Mr. Hamilton, President ofthe Federal Reserve Bank of Kansas City,reading as follows:

"The Board of Governors of the Federal Reserve System

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aPproves the application of the 'Bank of Canton', Canton,Oklahoma, for membership in the Federal Reserve System,subject to the conditions prescribed in the enclosed let-ter which you are requested to forward to the Board ofDirectors of the institution. Two copies of such letterare also enclosed, one of which is for your files and theOther of which you are requested to forward to the BankCommissioner for the State of Oklahoma for his informa-tion.

"If practicable, the increase in the number of direc-t°rs required by condition of membership numbered 5 shouldbe effected prior to admission of the bank to membership.However, the Board will not object to the admission ofthe bank with only three directors, with the understand-ing that, as agreed by the bank, steps will be taken im-mediately to increase the number to five.

"It is assumed that you will follow the matter of91e bank's obtaining proper conveyance of the title tolt8 banking premises, which your counsel suggested shouldbe done."

In connection with the above mat-ter, the following letter to the FederalDeposit Insurance Corporation was alsoapproved unanimously:

"The Board of Governors of the Federal Reserve Sys-tem today approved the application of the 'Bank of Canton'2!nton, Oklahoma, for membership in the Federal Reserve'AYstem, subject to compliance with certain conditions.

1,ecording to the Board's information, the deposits of thenk are not at this time insured by the Federal Deposit

'neurance Corporation."

Memorandum dated June 12, 1940, from Mr. Wingfield, Assistant

to thememorandum with respect to the following subjects:

°4-1- Counsel, recommending that there be published in the July is-

the Federal Reserve Bulletin statements in the form attached

Stock Deposited with Broker for Himto Lend

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Genera/ Rulings and General LicensesIssued by Secretary of the Treasury

Financial Transactions under NeutralityAct of 1939

Approved unanimously.

Thereupon the meting adjourned.

(21(11:i ii-Ye)OlitALLP Secretary.

Chairman.

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