19410221_Minutes.pdf

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A meeting of the Board of Governors of the Federal Reserve

SYstem was held in Washington on Friday, February 21, 1941, at 3:00

P.m.

after

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. DraperMr. Szymczak

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-

referred to was taken by the Board:

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

ra1 Reserve System held on February 20, 1941, were approved unani-tiolisiy.

Telegrams to Mr. Young, President of the Federal Reserve Bank

tat*

Vi-ce'resident of the Federal Reserve Bank of Atlanta, Mr. Dillard,

4eret ar7 of the Federal Reserve Bank of Chicago, Mr. Caldwell, Chair-

of Bos t°n, Messrs. Sanford and Post, Secretaries of the Federal Reserve

8 of New York and Philadelphia, respectively, Mr. McLarin, First

of the Federal Reserve Bank of Kansas City, and Mr. West, VicePres.

Ident of the Federal Reserve Bank of San Francisco, stating thatthe t

°ard approves the establishment without change by the Federal Re-

te Bank of San Francisco on February 18, by the Federal Reserve Banksor me

/7 York, Atlanta, Chicago, Kansas City, and San Francisco on Feb-Nar,

-'' 20, 1941, and by the Federal Reserve Banks of Boston and Phila-

cielPh*la today, of the rates of discount and purchase in their existing

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schedules.

Approved unanimously.

Letter to the "Illinois State Bank of Quincy", Quincy, Illinois,

reading as follows:

Wise

"The Board of Governors of the Federal Reserve Sys-tern has considered the application for permission to exer-cise fiduciary powers made by you on behalf of the 'IllinoisNational Bank of Quincy', Quincy, Illinois, the nationalbank into which the Illinois State Bank of Quincy, Quincy,Illinois, is to be converted, and grants such national bankauthority, effective if and when it is authorized by theCom-ptroller of the Currency to commence business, to act,When not in contravention of State or local law, as trustee,executor, administrator, registrar of stocks and bonds,pardian of estates, assignee, receiver, committee of es-tates of lunatics, or in any other fiduciary capacity inWhich State banks, trust companies or other corporationsWhich come into competition with national banks are per-flitted to act under the laws of the State of Illinois, 'the exercise of all such rights to be subject to the pro-visions of the Federal Reserve Act and the regulations ofthe Board of Governors of the Federal Reserve System.,.t... "After the conversion of the Illinois State Bank of;lincy into the Illinois National Bank of Quincy becomeseffective and the Comptroller of the Currency authorizesthe national bank to commence business, you are requestedto have the board of directors of the national bank adopta resolution ratifying your application for permission toexercise trust powers, and a certified copy of the resolu-tion so adopted should be forwarded to the Federal ReserveBank of St. Louis for transmission to the Board for itsrecords. When a copy of such resolution has been received,I?Lr the Board, a formal certificate covering the nationalpank's authority to exercise trust powers will be for-

warded."

Approved unanimously.

Letter to "The First National Bank of Wisconsin Rapids",

°Ilsin Rapids, Wisconsin, reading as follows:

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"This refers to the resolution adopted on December3.-9, 1940, by the board of directors of your bank, signify-ing the bank's desire to surrender its right to exercisefiduciary powers heretofore granted to it.

"The Board, understanding that your bank has neveractually accepted or undertaken the exercise of any trust,has issued a formal certificate to your bank certifyingtl:lat it is no longer authorized to exercise any of thefiduciary powers covered by the provisions of section

Yk) of the Federal Reserve Act, as amended. This cer-tificate is enclosed herewith.

"In this connection, your attention is called to thefact that, under the provisions of section 11(k) of theFederal Reserve Act, as amended, when such a certificatehas been issued by the Board of Governors of the FederalReserve System to a national bank, such bank (1) shall nolonger be subject to the provisions of section 11(k) ofthe Federal Reserve Act or the regulations of the Boardof Governors of the Federal Reserve System made pursuantthereto, (2) shall be entitled to have returned to it any8?curities which it may have deposited with the State or!inalar authorities for the protection of private or court

and (3) shall not exercise any of the powers con-I?rred by section 11(k) of the Federal Reserve Act exceptwith the permission of the Board of Governors of the Fed-eral Reserve System."

Prarle.

Approved unanimously.

Letter to Mr. Day, President of the Federal Reserve Bank of San

leco, reading as follows:

"This refers to Mr. Wheeler's letter of February 8,1941 and telegram of February 11, 1941, regarding theclassification of certain trust funds of the Bank of'111.'erioa National Trust and Savings Association, San Fran-!lsco, California. It appears from this correspondenceand from excerpts from the report of examination of thebank dated January 31, 1940, that funds of the Depart-rient of Water and Power of the City of Los Angeles which

lwere.4 received by the trust department of the bank werefansferred to the commercial department either as time'ePosits or as savings deposits.

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"Since it is indicated that the funds were withdrawnbY the trust department from the account in question onthe day following their transfer to the commercial depart-ment, it seems clear that such funds can not be regardedaS time deposits within the meaning either of RegulationQ or of Regulation D. Moreover, as indicated in theBoard's letter of April 3, 1937 (X-9861; Loose-Leaf Ser-vice, #6363) trust funds deposited in the savings depart-ment of a member bank may be classified as a savings de-Posit only if the entire beneficial interest therein isheld by an individual or organization of the kind de-scribed in subsection 1(e) of Regulation Q. The Depart-!Dent of Water and Power of the City of Los Angeles cannot;10e regarded as an organization operated primarily forreligious, philanthropic, charitable, educational, fra-ternal or other similar purposes' within the meaning oftLie Regulation and, accordingly, the funds in questionnlaY not properly be classified as savings deposits withinthe meaning either of Regulation Q or of Regulation D.

"The instruction for preparation of reports of con-

Vtion by national banks, and the like instructions re-tating to State member banks, provide that Item 1 ofochedule E - Deposits of individuals, partnerships ande„.orporations - should include demand deposits of trustIlunds to the credit of the trust department of the report-4-ng bank. Such deposits should be reported in like man-ner in weekly condition reports. In the circumstances!-t will be.appreciated if you will have this matter brought'4) the attention of the Bank of America National Trust

nd Savings Association, with the request that trust fundsv'ulch are deposited by the trust department in the com-mercial or savings department of the bank under circum-stances such as those described be hereafter classified

t? demand deposits opposite the item 'Deposits of indi-"J-duals, partnerships, and corporations'."

tz.1 a

Approved unanimously.

Letter to The Honorable, The Secretary of the Treasury, read-

8 f011OWS:

"The Board of Governors has recently received, throughthe Federal Reserve Bank of Kansas City, a copy of a let-ter addressed to that bank by a retail store in Lincoln,

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"Nebraska, regarding charges made by local banks forthe cashing of Government checks.

"It appears that the retail store in question iscalled upon to cash for accommodation purposes a largenumber of Government checks drawn on the Federal ReserveBank of Kansas City, including WPA, NYA, Agricultural,Veterans', and Postal employees' checks. The letterfraa the retail store describes the situation as fol-lows:

'Until the first of the year the localbanks were handling these items for us atpar. They are now charging us 2-1/4 oneach government item, which makes the costof this accommodation business prohibitive.In addition they are charging all non-de-positors 10 each for cashing a governmentcheck, which definitely throws all this busi-ness back on the retail stores and takes itout of the banks.

'Most of these people, especially W. P.A., receive small checks, and we are reluctantto force them to pay a tax for the privilegeof cashing their checks, as now seems inevi-table.

'We are writing you to see if some waycannot be found to handle these checks atpar.

'It is a very serious problem with usand we will appreciate your suggestions.'"From the information available, it does not ap-

pear that any violation of the provisions of the Fed-

Reserve Act is here involved. However, believingthat the situation will be of interest to your depart-,!nt, and in the light of the President's memorandum

(4 September 28, 1935, in which he urges all banks tocash at par Government checks issued under the emergency

1.'ller program, this matter is brought to your atten-10n for such consideration or action as you may deemgesirable.

"It will be appreciated if you will advise the Board°f any action which you may take in this connection."

Approved unanimously.

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Thereupon the meeting adjourned.

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