19500224_Minutes.pdf

237

Minutes of actions taken by the Board. of Governors of the

?deal Reserve System on Friday, February

Inet in the Board Room at 10:40 a.m.

PRESENT: Mr. McCabe, ChairmanMr. EcclesMr. SzymczakMr. Draper

Mr.Mr.Mr.Mr.Mr.

Mr.Mr.

f

idir.

Mr.

24., 1950. The Board

Carpenter, SecretarySherman, Assistant SecretaryKenyon, .1,ssistant SecretaryMorrill, Special AdviserThurston, Assistant to the BoardRiefler, Assistant to the ChairmanVest, General CounselMillard, Director, Division ofExaminationsYoung, Director, Division ofResearch and StatisticsBaumann, Assistant General Counsel

Chairman McCabe stted that Senator Robertson invited him to

on 1.:ednesdaY,

NIversation informedholdizle

to

h0m bill,

Eve Chairman

vritnPs es

l'CillWing Val ell

4t./'1y :viarch.

Pe-r.sonsth% hee.rings, the t

441c of Chic

February 22, 1950, and that in the course of their

him that he would start hearings on the bank

S. 2318, on 'v:ednesday, March 1, that he would

McCabe as the first witness, and that he planned

at the rate of three C day on March 1, 2, and 3,

there would be a recess and hearings would be resumed

Chairman McCabe stated that he sent a telegram to

on Thursday morning, February 23, informing them of

leg ram going to Harold V. Amberg, First National

Chicago, Illinois, Edward F. Brown, First National

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

238

2/24/50-2-

of Chicago, Chicago, Illinois, Ben DuBois, Secretary of the

illdlePendent Bankers Association, Sauk Centre, Minnesota, Harry

Ilax'dil?g, President of the

Neral Reserve District,

Independent Bankers Association of Twelfth

First National Bank, Pleasanton, California,

14altr1" C. Sparling, President of the National Association of Super-

of State Banks,

President of the AmericanTrIaPti.

Copy Paterson, New Jersey,

th

San Francisco, California, F. Raymond. Peterson,

Bankers Association, First National Bank &

and J. C. Thomson, President of

N'arthwest Bancorporation, Minneapolis, Minnesota-

Chairman McCabehe

diecUssed With Mr.13ecte of the

deStrable if

Iiith the

President's

Ch41-rits.n. McCabe then

1413.t to be made by hiinItrulci be f

urnished to the

he br cnaght up

1.11ere he cuestion of

3.11g by $15 million the?efi,ter

telik

proposed

went on to say that late yesterday afternoon

Staats of the Bureau of the Budget various as-

legislation, stating that he felt it would be

Mr. Staats could ascertain whether it was in accordance

legislative program before the hearings commenced.

said that Mr. Vest had prepared a draft of state-

before the committee on March 1 and that copies

Board for comment as soon as possible.

Chairman McCabe added that in talking with Senator Robertson

proposed legislation with respect to

authority provided in section 10 of the

elRe8erve Act for construction of buildings of Federal Reserve

br"ches, that Senator Robertson said he would introduce a bill


239

2/4/5o

ediately

111.44ea

-3-

sent to him, and that this was done

04Thursday, February 23, the bill being identified

CheIrrReal McCabe added that he expressed the view to Senator Robertson

t116:t there was no need for hearings on this legislation and that theSellator

agreed with this view.

Chairman McCabe commented further that he also discussed with

81411at°1' Robertson the status of legislation with respect to capital

tegllirezents of banks for admission to membership

xiclaIR' 5749) and that Senator Robertson said he would hold hearingsOn

the Zeasure as soon as possible and would talk with Senator Maybankto 0.1./Ici out when they could be started in the light of the scheduled

hee.ring on the bank holding company legislation.

There were presented telegrams toOf

°St°11, New York Cleveland, Richmond,

if a draft could be

P°1i3, Kansas City, Dallas, and SantoaN a

t PPrc)ves the establishment withoutof

yor

atecta :: Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis,

iktlat ltY, and Dallas on February 23, 1950, and by the Federal ReserveOf

ng schedules.

as S. 3105.

in the System (S.

the Federal Reserve Banks

2494

Atlanta, Chicago, St. Louis,

Francisco stating that the

change by the Federal Reserve

Sari Francisco on February 21, by the Federal Reserve Banks of

Bos ton today of the rates of discount and purchase in their

Approved unanimously.


240

2/24/5o—4—

There was then presented a draft of telegram to Mr. Slade,

Vice Pres ident of the Federal Reserve Bank of San Francisco, with

l'eterence to an application by American Trust Company, San Francisco,

4141°Illia for permission to establish and operate a branch inWood-

144) California, it being understood that the bank would purchase

the a t

sse.sand assume the deposit and trust liabilities of Bank of

ic)t)(1113'11c1 National Association and Yolo County Savings Bank. Mr.

CarPeriter stated that the matter WLS before the Board because of the101/

caPital ratio of American Trust Company and because of the possi-

ble relationship which the granting of permission to establish the

rnight have to the Clayton Act croceeding against Transamericae(*Poration,

especially in the light of the Board's decision not to

'1'111e aPPlications made in 1948 by Bank of America N.T. & S.A. for

13141nlissi°n to establish three branches in Germany because of its low413ital retio.

ring the discussion that followed, Mr. Millard strted thatthe

1°0 largest banks in the United States the lowest ratio of

t° risk assets Was that of Valley National Bank of Phoenix,

4:41z°11e.) the next lowest that of American Trust Company of San Fran-

and the third lowest that of Bank of America. National Trust

Association It was also stated that the Bank of Woodland

the age of tic:, ownersC::::

Savings Bank, were being sold because

four San Francisco banks had been in-


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00z,ttliti

tiZent to increase its capital

-5-ited to bid for the banks, and that the American Trust Companythe

high bidder.

Mr. Millard stated that when Mr. Maurice C. Sparling, super-

tendent of Banks of California,

elltdoned this applicationhe

Igas aware of the lowtalet the

Woodland banks

i%1Trust Company for permission

PN'Ied by the State

st c°mPanY to

844ces such asto Trarisamerica

Banking

increase

to him

was

and

in his office last week he

that Mr. Sparling

capital ratio of American Trust

were up for sale and the

was

responded that

Company but

application of Amer-

to establish a branch had been ap-

Deoartment

its

in

capital and

view

in

of

the

the

light

plan of American

of other circum-

the alternatives which might involve sale of the banks

owned institutions.Nst company had

e4"tal stock which

-°11 dUring this

indicated tilt4t

Mr. Millard added that American

it contemplated the sale of additional

would increase its capital by approximately

year.

Mr. Eccles stated that he did not feel that the Board should

ilipr‘t)Ire th e proposed branch unless American Trust Company made a firm

within the next six months.

Mr. Vest stated that although there1401- 114:

14g such a provision

of the branch,

would be no objection to

in a telegram or letter approving the estab-

such a condition would not be legally enforce-

(1 therefore was of questionable value.


2/24/50-6-

This suggestion and variousalternatives were discussed andit was agreed that ITessrs. Vest andCarpenter would revise the telegramto Jr.T Slade along the lines of thediscussion and submit it for the furtherconsideration of the Board.

242

Mr. Bauma nn withdrew from the meeting at this point.

There was then presented a draft of proposed letter to SenatorNrbalik' L'flairman of the Senate Banking and Currency Committee, reading

4 f°11ows:

"This is in response to the request of your Committee

forcentained in Mr. McMUrray's letter of February 6, 1950,'-'11 expression of the Board's views as to the merits03- the bill S. 2943.

ecUt•"Under this bill, there would be created in the Ex-

Busilve Office of the President, the office of a Smallde :less Coordinator who would be appointed by the Presi-0t 6 and be assisted by a staff of deputies, experts andsi :r employees. The Coordinator would be directed to as-

President in coordinating the activities of allo'iel;leies of the Government in furtherance of the intereststo 'ndePendent small business concerns and for that purposethee°11sult with various interested groups and to utilize

Bervices of Federal, State and other agencies. Amongel:;er things, he would be authorized to develop a statutorypri!enon vs to what constitutes a 'small business enter-age'e.; to supervise the awarding of bids by Governmentfai cies in order that such enterprises may receive theirpro', nare of such awards; and to study and recommend ap-lib'er'ate legislation, including steps to provide more

ral terms through the Reconstruction Finance Corpora-the-' to adapt section 13b or the Federal Reserve Act torezn reait needs of such enterprises, to adjust the lawst3ja eting securities to the problems of such enterprises,erico -c) revEmP the Federal income tax structure so as to

naa'e 'Lae growth of small business.objec,The Board of Governors is In sympathy with the general

'jive of furthering the interests and development of


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T4lall businesses and it recognizes the desirability ofgiving careful study to the various problems affectingsmall business concerns.

"Of special interest to the Board are those problemswhich relate to the financing of small business enterprises

rd it is noted that this bill would require the Coordinatorf° studY and recommend legislation to provide additional

ellities for this purpose. The Bord has some doubtwtsther it is necessary to set up a new and permanent agency.ri

the Government to consider what changes in the law are

eeessarY at this time in order to meet the credit and capi-tall reouirements of small business enterprises. It is be-1-leved that the study of soecific proposals having this end

vlew, as well as proposals dealing with other problemsOf small business, may effectively be undertaken by the ap-

;'ne°Prlate committees of Congress with such assistance asIn! be needed from existing agencies of the Government.Wttere are, as you know, a number of agencies which are con-

engaged in considering the various problems ofsx.1 business within their resDective fields, such as, for

:i?le, the Department of Commerce with respect to theIshing of technological and other assistance to busi-,esse

-7-

the -LI Congress should decide that there is a need for. establishment of a Small Business Coordinator and shouldtuirct legislation along the lines of S. 2943, we wish tosy8eure Your Committee that the Board would be glad to lendtricirY assistcnce to the Coordinator that might be desired

t° cooperate with him to the fullest extent possible.this The Board is submitting this report on S. 2943 atbill time because it is understood that hearings on thisis iwill be held at an early date. In addition, the Board'rlatig.71-11g study to other legislative proposals for the fi-t of small business enterprises with respect to which

elIa'as received requests for reports from your Committeepro it expects to submit its views with respect to these

Posals as soon as possible."

Approved unanimously fortransmission to the Bureau of theBudget, for advice as to the re-lationship of the proposed reportto the President's program.


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841latln-g and Currency Committee when he testified on S. 2246, a bill to

Pl'crids housing for the middle income group, on February 16, 1950, thathp- 841.,

unilt a supplementary statement showing the total amount of loans,

elLtit8' and continent liabilities which the Federal dovernment hadbee),' authorized

to commit itself to on account of housing and relatedProgratis

and that he state whether the Board approved the added author-t ons

funds under Titles I and II of the bill. He added that

-4'lleh as the bill was reported out by the Committee yesterday with

-8-

Mr. Thomas, Economic Adviser to the Board, joined the meet-

Bt this time.

Chairman McCabe suggested that, pending the appointment of

member of the Board, Messrs. Szymczak and Draper continue to

8ellre Es members of the Personnel Committee.

Chairman McCabe's suggestionwas approved unanimously.

Mr. Ramsey Wood, Economist, Division of Research and Statistics,

—41ated the meeting at this point.

Chairman McCabe referred to the request made by the Senate

st4=tiat2__

hotth; changes in the method for providing funds for cooperative

-"Ltig andth with material reductions in the amounts that would be au-

ue did not know whether the strtement was still desired butth?,t the

the IT had prepared one for consideration by the Board. At

C4.1rZarits reouest, Mr. Carpenter then read a draft of statement.


2/24/50—9—

The draft was discussed andseveral suggestions for change weremade, with the understanding thatwhen it was in a form satisfactoryto Chairman McCabe, he was author-ized to send it if the Committeestill desired it.

At this point all of the members of the staff with the ex-

ceition of Messrs. Carpenter, Sherman, and Kenyon withdrew, and theaction

stated with respect to each of the matters hereinafter referred

to taken by the Board:

Minutes of actions taken by the Board of Governors of the Fed-

Ft"erve System on February 23, 1950, were approved unanimously.

Memorandum dated February 20, 1950, from Mr. Young, Directorof th ni

6 --vision of Research and Statistics, recommending an increase14 the

--slc salary of Mrs. Ileen C. Shepherd, a clerk in that Division,

3)130 to $3,275 per annum, effective March 5, 1950.


trom 4

emorandum dated February 23, 195

(3ttheDion of Research and Statisticrliellt of

Miss Marian Elizabeth Gochenour,ozln- em PO

indefinite basis, with basic salary at the rate of $2,450a„..

effective as of the date upon which she enters upon the per-

of her duties after having

0, from Mr. Young, Director

s, recommending the appoint-

as a clerk in that Division,

passed the usual physical examination.


Memorandum dated February 23, 1950, from Mr. Young, Director


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klait of"e14 York, reading as follows:

at, "Your wire Febru-ry 23. Board approves the openingofu maintenance of an account on your books in the namete he Banco Central de Costa Rica subject to the usualctl e and conditions upon which your Bank maintains ac-114c'14ts for foreign central banks and governments. It isin .4e. stood that you will in due course offer participation

'uis account to the other Federal Reserve Banks."

-10-

"he Division of Research and Statistics, recommending that the

kard authorize Ramsay wood and Saul Klaman, economists in the Divi-

of Research and Statistics, to attend meetings of the Middle

11/e°111e Housing Conference to be held in Washington, D. C. on Feb-

<3 6nd 24 including banquet, and that reimbursement be made to

W°c'd and Mr. Klaman for payments of ,)2.00 for registration fee

44c1 7.00 for the banquet charge for each of them.


Telegram to Mr. Knoke, Vice President of the Federal Reserve


Lett er to The First National Bank of Clearwater, Clearwater,

ree,a-as follows:

ha "The Board of Governors of the Federal Reserve Systemput! given consideration to your application for fiduciarytra:ere, and grants you authority to act, when not in con-

-alLenti°r1 of State or local law, as trustee, executor,e5t—'1st1'at0r, re6istrar of stocks and bonds, guardian oftic:te8, assignee, receiver, committee of estates of luna-baril;! 01' in any other fiduciary capacity in which StateiriC), trust COT enies or other corporations which come1440 e(YraPetition'with national banks are permitted to act

er the laws of the State of Florida, the exercise of all


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such rights to be subject to the provisions of the Fed-al Reserve Act and the regulations of the Board of Gov-

ernors of the Federal Reserve System.f. "This letter will be your authority to exercise the

JdUciEry powers gmnted by the Board pending the prepera-j-?n of e formal certificate covering such authorization,waloh will be forwarded to you in due course."

4PProved:

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Approved unanimously fortransmission through FederalReserve Bank of Atlanta.

Chairman.


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19500224_Minutes.pdf