19500811_Minutes.pdf

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Minutes of actions taken by the Board of Governors of the

Federal Reserve System on Friday, August 11, 1950.

PRESENT: Mr. Evans, Chairman pro tem.

Mr. Sherman, Assistant SecretaryMr. Kenyon, Assistant Secretary

Telegrams to the Federal Reserve Banks of Boston, Cleveland,

Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas,

and San Francisco stating that the Board approves the establishment

without change by the Federal Reserve Bank of San Francisco on August

8) by the Federal Reserve Bank of St. Louis on august 9, by the

Federal Reserve Banks of Cleveland, Richmond, Atlanta, Chicago,

14inneapolis, Kansas City, and Dallas on August 101 1950, and by the

Federal Reserve Bank of Boston today, of the rates of discount and

Purchase in their existing schedules.

Approved unanimously.

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

Bi,Lnk of New York, reading as follows:

"In view of the circumstances described in yourletter of August 9, 1950, the Board of Governorsapproves the payment of salary to Mr. Charles Diringerat the rate of $8,825 per annum, which is 727 inexcess of the maximum established for the positionof Chief of the Coin and Bullion Division, CashDepartment, the position he now occupies. It isassumed that Mr. Diringer will be placed in aPosition commensurate with his salary as early asPossible."

Approved unanimously.

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

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Bank Of of San Francisco, reading as follows:

"In accordance With the request contained inyour letter of August 7, 1950, the Board approvesthe reappointment of John W. Godfrey, formerly anassistant examiner, as an assistant examiner forthe Federal Reserve Bank of San Francisco.

"Please advise us of the date upon which theappointment becomes effective."

Approved unanimously.

Letter to The First National Bank of Falls City, Falls

City, Nebraska, reading as follows:

"This refers to the resolution adopted onFebruary 7, 1950, by the board of directors ofyour bank, signifying the bank's desire to .surrenderits right to exercise fiduciary powers heretoforegranted to it.

"The Board, understanding that your bank hasbeen discharged or otherwise properly relieved inaccordance with the law of all of its duties asfiduciary, has issued a formal certificate to yourbank certifying that it is no longer authorized toexercise any of the fiduciary powers covered bythe provisions of section 11(k) of the Federal Re-serve Act, as amended. This certificate isenclosed herewith.

"In this connection, your attention is calledto the fact that, under the provisions of section11(k) of the Federal Reserve Act, as amended, whensuch a certificate has been issued by the Board ofGovernors of the Federal Reserve System to anational bank, such bank (1) shall no longer besubject to the provisions of section 11(k) or theregulations of the Board of Governors of the FederalReserve System made pursuant thereto, (2) shall beentitled to have returned to it any securities whichit may have deposited with the State authorities forthe protection of private or court trusts, and (3)shall not exercise thereafter any of the powersgranted by section 11(k) without first applying forand obtaining a new permit to exercise such powersPursuant to the provisions of section 11(k).

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"A certified copy of the Board's certificate isenclosed herewith for filing with the State authoritiesin connection with the release of the securities whichYou have deposited with them."

Approved unanimously.

Letter to Dr. Edison H. Cramer, Chief, Division of Research

and Statistics, Federal Deposit Insurance Corporation, Washington

25/ D. C., reading as follows:

"This refers to your letter of July 28, 1950addressed to Mr. Goodman of the Board's Divisionof Examinations enclosing a chart showing thenumber of defalcations in insured non-member Statebanks for each of the years1946-1949 and stating thatChairman Han l would like to have the same informationfor State bank members of the Federal Reserve System.

"The files of the Board of Governors disclosethat reports of possible criminal violations of thistype in State member banks have been made to theAttorney General of the United States during thePeriod indicated as follows:

Year Number of Cases I-§"Z 30 (includes 3 mysterious disappearances)1947 52 (includes 1 mysterious disappearance)1948 56 (includes 6 mysterious disappearances)1949 67 (includes 2 mysterious disappearances)"

Approved unanimously.

Letter to Mr. A. 14. Hall, Director, Bureau of Engraving and

Printing, Washington, D. C., reading as follows:

"Reference is made to your letter of August 7,1950, addressed to Mr. Leonard, Director of the Board'sDivision of Bank Operations, in which you outlined aProposed change in the method of printing and processingFederal Reserve notes under which the signatures ofthe Secretary of the Treasury and the Treasurer ofthe United States, as well as the information whichidentifies a particular Federal Reserve Bank, will

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"be printed typographically at the same time theserial numbers and the seal are imprinted.

"In view of the fact that the proposed methodwill result in a greater degree of flexibility inthe production of Federal Reserve notes and yourOpinion that the proposed change does not in anysense affect the security of the designs or lessenthe difficulty of reproduction of such notes byunauthorized persons, the Board of Governors andthe Federal Reserve Banks are agreeable to theuse of the new process in the printing of alldenominations of Federal Reserve notes.

"It is noted that the proposed change hasbeen cleared by the Fiscal Assistant Secretaryof the Treasury, the Commissioner of the PublicDebt, the Chief of the United States Secret Service,and the Deputy and Acting Treasurer of the UnitedStates."

Approved unanimously.

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

Bank or .New York, reading as follows:

"This refers to your letter of July 27, 1950,in which you recommend that the Board amend itsRegulation F to raise the limit on participationof an individual trust in a common trust fund from$70,000 to $100,000. In support of this recommenda-tion, you forwarded a memorandum on this generalquestion prepared by your Trust Examiner.

"The proposal submitted involves an importantchange in the Regulation and in the scope of commontrust fund administration. It will require seriousstudy of the many aspects of the matter and, presumably,Will necessitate obtaining the views and recommenda-tions of various individuals, trust institutions andsupervisory agencies concerned with common trust fundadministration. However, your recommendation willreceive the careful consideration of the Board atIts earliest opportunity."

Approved unanimously.

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Letter to Mr. Roger W. Jones, Assistant Director, Legislative

Reference, Bureau of the Budget, Washington 25, D. C., reading as

follows:

"This is in response to enrolled bill transmittalsheet received by the Board on August 10, 1950, enclos-ing a facsimile of enrolled bill H. R. 8597, an Act'To permit national banks to give security in the formrequired by State law for deposits of funds by localPublic agencies and officers'.

"As indicated by the title, the bill authorizesnatdonal banks to give security for certain publicdeposits. In our letter to you of April 28, 1950 westated that the Board believes that there is a funda-mental inconsistency in continuing the authority toPrefer one class of depositors over another bydiverting a part of the assets of the bank to securethe payment of the claims of the preferred class infull, and that this inconsistency would be accentuatedby liberalizing the provisions of law on this subject.We pointed out, however, that if after consideringthis fundamental question of policy it should be theview of Congress that the existing discriminationamong depositors should be maintained, it would beconsistent to enact the proposed bill."

Approved unanimously.

Letter to Mr. Roger W. Jones, Assistant Director, Legislative

Reference, Bureau of the Budget, Washington 25, D. C., reading as

follows:

"This is in response to enrolled bill transmittalsheet received by the Board on August 9, 1950, enclos-ing a facsimile of enrolled bill H. R. 1161, an Act'To provide for the conversion of national bankingassociations into and their merger or consolidationwith State banks, and for other purposes'.

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"The Board is sympathetic with the principle ofequality in the treatment of different classes of banksand favors the elimination of discrimination whereverpracticable. Therefore, the Board sees no objectionto the President's approving this bill."

Approved unanimously.

Assistant Secretary.

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