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A meeting of the Board of Governors of the Federal Reserve

System was held in Washington on Saturday, July 3, 1943, at 11:30 a.m.

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice Chairman

Mr. Szymczak1ft.. McKeeMr. DraperMr. Evans

Mr. Morrill, Secretary

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 July 2, 1943, were approved unanimously.

Memorandum of this date from Mr. Morrill, submitting the resig-

nation of Mrs. Alice Bardales as a charwoman in the Secretary's Office,

to become effective as of the close of business on July 2, 1943, and

recommending that the resignation be accepted as of that date.

The resignation was accepted.

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

Francisco, reading as follows:

"In the light of the circumstances reported in your let-

ter of May 28, the Board has been advised by its Legal Divi-

sion that the proposed increase from $14,000 to $151000 in

the annual salary of Mr. A. C. Agnew, as General Counsel for

the Federal Reserve Bank of San Francisco, is within the

terms of a salary agreement which was in effect on October 3,

1942, when the salary stabilization regulations were promul-

gated and is, therefore, permissible under the regulations

and executive order.

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"In view of the fact that the legal objections to anincrease in Mr. Agnew's salary referred to in the Board'sletter of May 7 have been removed, the Board has consideredthe matter on the basis of the data submitted with your let-ter of April 3, and approves payment of salary to Mr. Agnewas General Counsel, at the rate of $15,000 per annum, forthe period May 1, 1943, to April 30, 1944, which is therate fixed by your Board of Directors."

Approved unanimously.

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

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

bered 1 to 6 contained in the Board's Regulation H, the Board approves

the bank's application for membership in the Federal Reserve System and

for the appropriate amount of stock in the Federal Reserve Bank of Chi-

cago.

Approved unanimously, together with aletter to Mr. Young, President of the Fed-eral Reserve Bank of Chicago, reading asfollows:

"The Board of Governors of the Federal Reserve Systemapproves the application of 'The State Bank of Akron',Akron, Indiana, for membership in the Federal Reserve Sys-tem, subject to the conditions presoribed 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 and theother of which you are requested to forward to the Direc-tor, Department of Financial Institutions for the Stateof Indiana for his information.

"It is understood that in the State of Indiana trustfunds deposited in the banking department of a bank arepreferred claims in the event of liquidation of the bank.Therefore, you are authorized in accordance with the gen-eral authorization previously granted by the Board towaive compliance with condition of membership numbered 6until further notice.

"Inasmuch as the amount of the losses classified inthe report of examination for membership is relativelysmall, the usual condition requiring the elimination of

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"losses has not been prescribed. It has been noted, however,that the amount classified will be eliminated upon receipt ofthe State report and it is assumed that that will be done."

Letter to the "Mechanics and Farmers' Bank of Albany", Albany

New York, reading as follows:

"The Board is glad to learn that you have completedall arrangements for the admission of your bank to theFederal Reserve System and takes pleasure in transmittingherewith a formal certificate of your membership.

"It will be appreciated if you will acknowledge re-ceipt of this certificate."

Approved unanimously.

Letter to the Presidents of all the Federal Reserve Banks, read-

ing as follows:

. "It will be appreciated if you will have the present clas-

sification of member banks in your district for electoral pur-poses reviewed and advise the Board whether, in your opinion,a reclassification of the banks should be made in advance ofthe election of directors for the term beginning January 1,

1944, and, if so, what changes in the present classificationyou would recommend.

"A number of the Federal Reserve Banks have adopted the

suggestion contained in the Board's letter, X-8102, of Sep-tember 19, 1934, that member banks be so classified as toplace in Group 2 approximately one-third of the total numberof banks in the district with the number of member banks in

Group 1 in the same ratio, so far as practicable, to the to-tal number of all member banks as the combined capital and

surplus of member banks in Group 3 is to the combined capi-tal and surplus to all member banks. If you think it desir-able to reclassify banks in your district for electoral pur-poses before the next election, please furnish the Board witha statement grouping the member banks in your district ac-cording to combined capital and surplus, those having the

smallest capital and surplus to be shown first and those

having the largest capital and surplus last, together with

cumulative figures of combined capital and surplus and ofthe number of banks.”

Approved unanimously.

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Telegram to Yr. Woolley, Vice President of the Federal Reserve

Bank of Kansas City, reading as follows:

"Re Regulation 1" inquiry suggest consideration of section 8(a)relating to loans secured by first liens. We assume propertyis mortgaged and that holder of first mortgage would certainlyhave an interest in seeing that the work is done."

Approved unanimously.

Letter to Mr. Hale, Vice President of the Federal Reserve Bank

of San Francisco, reading as follows:

"Thank you for your letter of June 17 enclosing a copyof a letter which you have addressed to the Federal ReserveBank of Chicago enclosing reports of apparent violations ofRegulationWby branches of State Finance Company of DesMoines, Iowa.

"The principal question appears to be whether the Reg-istrant has accepted 'in good faith' the statements de-scribed in sections 6(d) and 8(c) of the Regulation, andthis point is well covered in the reports of your investi-gators.

"Accordingly, we assume that your bank, in coopera-tion with the Federal Reserve Bank of Chicago, will followthis matter up in the usual way by personal interview, cor-respondence, reinvestigation, or such other means as you,in the light of your knowledge of existing conditions, maydeem advisable; and in the circumstances we have no sugges-tions to offer as to the enforcement procedure to be fol-lowed."

Approved unanimously.

Thereupon the meeting adjourned.

Secretary.

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