19410217_230p_Minutes.pdf

193

A meeting of the Board of Governors of the Federal Reserve

8Yst em Was held in Washington on Monday, February 17, 1941, at 2:30

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

Mr. Morrill, SecretaryMr. Bethea, Assistant SecretaryMr. Carpenter, Assistant SecretaryMr. Clayton, Assistant to the Chairman

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

er't'er referred to was taken by the Board:

The minutes of the meetinE of the Board of Governors of the

?ecieral Resprve System held on February 15, 1941, were approved

1419'nitousiy.

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

adelphia, reading as follows:

80 "Referring to your letter of February 11, 1941, thejsard of Governors approves the reappointment of Messrs.,Ebert Butterworth, John T. McDade, B. F. Mechling, and

1111-Lth Powlison as members of the Industrial Advisory Corn-tee for the Third Federal Reserve District to serve for

erms of one year each beginning March 1, 1941."It is noted that in view of the present situation

with respect to defense financing, your Board believes it

rvisable to defer appointment of a successor to Mr. JohnChipman ,,

or p

Approved unanimously.

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Letter to the board of directors of the "Bremen State Bank",

TbileY Park, Illinois, stating that, subject to conditions of member-

numbered 1 to 3, inclusive, contained in the Board's Regulation

4, the Board approves the bank's application for membership in the

Peder,'1 Reserve System and for the appropriate amount of stock in the

-al Reserve Bank of Chicago.

Approved unanimously, togetherwith a letter to Mr. Schaller, Presi-dent of the Federal Reserve Bank ofChicago, reading as follows:

?, "The Board of Governors of the Federal Reserve System

Proves the application of the 'Bremen State Bank', Tinleyeark, Illinois, for membership in the Federal Reserve System,will1Nect to the conditions prescribed in the enclosed letter

ofleh You are requested to forward to the Board of Directorse the institution. Two copies of such letter are also en-l

y °sed, one of which is for your files and the other of whichc°11 are requested to forward to the Auditor of Public Ac-

lints for the State of Illinois for his information."Since the amount of estimated losses shown in the re-of examination of examination for membership is relatively small, the

isua1 condition of membership regarding the elimination of4sses has not been prescribed. It is assumed, however, that

1) °Per provision for losses will be made as a matter of soundanklne practice."

Letter to Mr. Gidney, Vice President of the Federal Reserve

41n npNew York, reading as follows:

"Reference is made to your letter of February 6, 1941,';.,th enclosures, relative to the Clayton Act status of Mr.thed Herrigel, Jr., and in this connection presenting foran! consideration of the Board the question whether Newarkme' North Arlington, New Jersey, are 'adjacent' within the

ailing of the Clayton Act and the Board's Regulation L.

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"Enclosed with your letter were the following:(1) Memorandum dated December 31, 1940, prepared

by Mr. J. V. D. Stryker of your bank;(2) Aerial photographs of the Fairchild Aerial

Surveys, Inc., numbered 57120 and 63989,respectively;

(3) 1940 edition of Hagstrom's map of EssexCounty, New Jersey; and

(4) Copies of letters dated November 12, 1938,and June 19, 1940, respectively, from Mr.Fred Herrigel, Jr., to the Federal ReserveBank of New York.

lett"On the basis of the information submitted with yourer the Board sees no reason to differ from your conclu-stont that Newark and North Arlington, New Jersey, are not

Aajliacent' within the meaning of section 8 of the Claytonand the Board's Regulation L."

Approved unanimously.

Letter to the Presidents of all Federal Reserve Banks, reading

follows:

"The Board of Governors concurs in the action taken

Wash. te Conference of Presidents at the meeting held in

oiington on February 7, 1941, with respect to the Report194 h.?, Standing Committee on Collections dated January 23,

Approved unanimously.

Letter to Mr. Emil Hurja, Pathfinder Building, Washington, D. C.,teaca

rig as follows:

contIn your January 25 issue of the Pathfinder appears aeSt question with answers as follows:

WHO OWNS THE FEDERAL RESERVE BANK?1. Its ownership is divided equally among the

4P States.2. The United States Government.3. The people of the United States as a whole.4. The Treasury Department of the U.S. Government.5. Private corporations.6. The Bank of England.

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t, "The foregoing question and answers are substantiallythe same as those appearing in a similar contest in SocialVaaLLat maga7ine last 1_,.4.ay.

"Since publication of the question in the Pathfinder,°ur attention has been called to it by repeated telephonecalls and letters from contestants asking which of the sixanswers is correct. From our point of view all six areOng, and the question itself errs by implying that there

ls only one Federal Reserve Bank instead of twelve.

ha "Had the question been worded differently, there might

ve been no difficulty in saying that the correct answer

w14°. 5, but the unqualified statement that the FederalReservejs Banks are owned by private corporations would implyat such so-called 'ownership' is the same as ownership of

the stock of corporations privately managed and operated forIjofit. It fails to convey the essential facts, which arethat the twelve Federal Reserve Banks are quasi-governmental

Zstitutions organized and operated to implement certainb netarY powers of Congress; that their stock is required to.He., owned by the member banks of the Federal reserve System;that such stock can not be sold, transferred, or hypothecated;,T.la does not convey control over their operations; that thedividend payable upon it are limited to six per cent perBIZri a cumulative; and that the surplus of the Federal Reserve

1.1 s, in the event of their liquidation, belongs to theUnitede States. In the light of these facts, it is obviousthat the word 'ownership' in its customary sense is notapplicable to the ownership of the stock of the Federal Re-serve Banks.

"It is a matter of some concern to us to find that the

restion and answers have given the contestants quite errone-t1(4)8 impressions, which we have been to considerable trouble

correct. A specimen letter to inquirers is enclosed.In view of the high standards maintained by the

Pathfinder in the presentation of its material in general,:faee tho ucht you might not be unwilling to present to your

aders a statement as to the ownership of the Federal Re-serve

Banks which would be full enough to include the factsWe have indicated and to correct misapprehensions that the

coestion and answers may have left in their minds. In thislinection we refer you to the description of the twelve

Federal Reserve Banks presented on pages 15 to 18 of thenp el°sed booklet, entitled 'The Federal Reserve System--Its

Poses and Functions's"

Approved unanimously.

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Thereupon the meeting adjourned.

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