19390420_Minutes.pdf

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

8Yetem was held in Washington on Thursday, April 20, 1939, at 12:30

P. m.

PRESENT: Mr. Eccles, Chairman

Mr. Ransom, Vice Chairman

Mr. McKeeMr. DavisMr. Draper

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-

after referred to was taken by the Board:

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

Federal Reserve System held on April 19, 1939, were approved unani-

mously.

Letter to Mr. Parker, President of the Federal Reserve Bank

of Atlanta, reading as follows:

"Referring to your letter of April 14, 1939, the

Board of Governors approves the payment of a salary at

the rate of '0,000 per annum, for the period from May

1, 1939, to December 31, 1939, to Ur. J. P. Turman as

Counsel of your bank."

Approved unanimously.

Letter to the board of directors of "The Gary State Bank",

Gary, Indiana, stating that, subject to conditions of membership num-

bered 1 to 4 and 6 contained in the Board's Regulation E and the fol-

10%ing additional conditions, the Board approves the bank's application

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for membership in the Federal Reserve System and for the appropriate

amount of stock in the Federal Reserve Bank of Chicago:

"5. Such bank, except as permitted in the case of na-

tional banks exercising fiduciary powers, shall

not invest collectively funds held by the bank as

fiduciary and Shall keep the securities and in-

vestments of each trust separate from those of

all other trusts and separate also from. the Proper-

ties of the bank itself.

"7. Such bank shall made adequate provision for depre-

ciation in its blanking houses and furniture andfixtures.

"8. After admission of such bank to membership, un-realized profits on real estate sold, which un-realized profits amounted to 47,223.99 on March22, 1939, as shown in the report of examinationas of that date, shall be treated as valuationreserves in reports of condition and publishedreports.

”9. Prior to admission to membership, such bank, ifit has not already done so, shall charge off orotherwise eliminate estimated losses of 5,836.80,as shown in the report of examination of such bankas of March 22, 1939, made by an examiner for theFederal Reserve Bank of Chicago."

Approved unanimously, together witha letter to Mr. Schaller, President ofthe Federal Reserve Bank of Chicago, read-ing as follows:

"The Board of Governors of the Federal Reserve Sys-tem approves the application of 'The Gary State Bank',Gary, Indiana, for membership in the Federal Reserve Sys-tem, subject to the conditions prescribed in the enclosedletter 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 andthe other of which you are requested to forward to the

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"Director, Department of Financial Institutions for the

State of Indiana for his information."Since it is understood that in the State of Indiana,

trust funds deposited in the banking department of a bankare preferred claims in event of liquidation of the bank,you are, of course, authorized to waive compliance withcondition of membership numbered 6 until further noticein accordance with the general authorization previouslygranted by the Board with which you are familiar.

"According to the information contained in the Fed-eral Deposit Insurance Corporation report of examinationas of December 22, 1938, Chairman Crowley, in Tune of lastyear, consented to the retirement by the bank of the re-maining 0.00,000 debentures outstanding to the Reconstruc-tion Finance Corporation on the condition that no cashdividends on common stock be paid until such time as anadditional 0.00,000 of earnings had been accumulated andtransferred to surplus or used to increase common capital.The directors of the bank, by resolution dated Tune 28,1938, agreed to comply with the requirement. In that re-port the examiner indicated that the management would liketo pay a dividend although the necessary additional earn-ings had not been accumulated, and to avoid any possiblemisunderstanding on the matter after the bank becomes amember, it is requested that you advise the managementthat the bank's application for membership has been ap-proved on the understanding that the resolution passedby the Board of Directors last Tune will remain in fullforce and effect."

Letter to "The First National Bank of Lake Linden", Lake Linden,

Michigan, reading as follows:

"This refers to the resolution adopted on April 22,1938, by the board of directors of your bank, signifyingthe bank's desire to surrender its right to exercisefiduciary powers heretofore granted to it.

"The Board understands that your bank has been dis-charged or otherwise Properly relieved in accordance withthe law of all of its duties as fiduciary. The Board,therefore, has issued a formal certificate to your bankcertifying that it is no longer authorized to exercise

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"any of the fiduciary powers covered by the provisions

of section 11(k) of the Federal Reserve Act, as amended.

This certificate is inclosed herewith.

"In this connection, your attention is called to thefact that, under the provisions of section 11(k) of the

Federal Reserve Act, as amended, when such a certificate

has been issued by the Board of Governors of the Federal

Reserve System to a national bank, such bank (1) shall

no longer be subject to the provisions of section 11(k)

of the Federal Reserve Act or the regulations of theBoard of Governors of the Federal Reserve System made

pursuant thereto, (2) shall be entitled to have returned

to it any securities which it may have deposited with

the State or similar authorities for the protection of

private or court trusts, and (3) shall not exercise anyof the powers conferred by section 11(k) of the Federal

Reserve Act except with the permission of the Board of

Governors of the Federal Reserve System."

Approved unanimously.

Mr. Bethea suggested that the Board authorize the payment of

the cost of luncheon in the amount of 13.00 served to Messrs. Lloyd,

Spencer, Hartman, Roberts, Lacey, Page, Cochel, Stinchfield, Gregory,

Drips, Akers and Sanders, members of the American Agricultural Editors

Association, in the Board's Dining room today.

Approved unanimously.

Assi st ant Secretary.

Chairman.

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