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A meeting of the Board of Governors of the Federal Reserve

SYstsmwas held in Washington on Monday, January 22, 1940, at 11:30

PRESENP: Mr. Eccles, ChairmanMr. SzymczakMr. 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--lIrter -1-

eferred to was taken by the Board:

Bonds, in the amount of 0.0,000 each, executed under date of

10 1940, by Messrs. Carl Schelling as Assistant Federal Re-

Cent' W• R. Diorcks as Alternate Assistant Federal Reserve

-13-u Bernard L. Raether as Federal Reserve Agent's Representa-tive,

°11 Xanuary 12, 1940, by Mr. Robert E. Wood as Federal Re-

sel,,ire A

ve'sent) all at the Federal Reserve Bank of Chicago.

Approved unanimously.

Letter to Mr. Sinclair, President of the Federal Reserve Bankor 1„hiladelPhia, reading as follows:

thst :It is noted from your letter of January 17, 1940,c al e bank plans to pay Mr. Warren F. Whittier, Class

Phiarrtor, who resides between 40 and 50 miles fromto 1

1-1'4elPhia, a per diem allowance of $10.00 in addition

rp.ct s fees for attending meetings of the Board of Di-him and of the Executive Committee, and to reimburse

lor his transportation expenses.its he Board appreciates your bringing this matter to

attention and in view of the statments contained in

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%rout' letter interposes no objection to the payment ofthe abovementioned per diem Olowance to Mr. Whittier."

Approved unanimously.

Letter dated January 20, 1940, to the board of directors of

t:48 nden State Bank", Linden, Indiana, stating that, subject to

c°114-itic1ls of membership numbered 1 to 3 contained in the Board's

and the following special condition, the Board approvesthe b

application for membership in the Federal Reserve System

11c1 the appropriate amount of stock in the Federal Reserve Bankor

Chicaao:

Such bank shall make adequate provision for de-Preciation in its banking house and furniture andfixtu-r.es."

Approved unanimously for transmis-Sion through the Federal Reserve Bank ofChicago.

Letter to Mr. C. B. Upham, Deputy Comptroller of the Currency,

ug es t011OWS:

refers to your letter of January 6, 1939, in-Z-17-ng as to the applicability of section 22(g) of thei„el

bt 'al Reserve Act and the Board's Regulation 0 to theN'ci"tTedness of Mr. Claus Ehlers, President of the Iirst

°nal Bank in Scribner, Nebraska.is t ePpears from your letter that President Ehlerswhiel-,rectlY indebted to his bank in the amount of

tothe 18 the balance due on an obligation which he owed

Old First National Bank of Scribner, and which wasth;-:red by the present institution when it took overIt -ceePtable assets of the old bank on August 27, 1934.detttaPPssrs that the indirect indebtedness of Presi--18 in the amount of ,i,490 was incurred in August

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:1936. Your letter states that the direct indebtednessaPParently not considered a loan or extension of credit

within the meaning of section 1(c)(iii) of Regulation 0,lei" You inquire whether the additional indebtedness is?eld in violation of the law and the regulation or whetheraresident Ehlers is entitled to incur an obligation up to" not exceedinc, ;;'2,500 in addition to the indebtednessaniountinc, to :2,650.term'Secti 1(c)(iii) of Regulation 0 provides that the„ loan' and 'extension of credit' do not include 'the-e'Pisition of any note, draft, bill of exchange, or otherof enee of indebtedness, through a merger or consolidationas 'anke or a similar transaction by which a bank acquiressets and assumes liabilities of another bank or otherOrr,

.e4ectler section 22(g) of the Federal Reserve Act an

officer, with the prior approvalof a majoritythe entire board of directors, may become indebted to

of ,1,3,ahk 'in an amount not exceeding 2,500.' Section 3tha;ue Board's Regulation 0 provides, among other things,11„ the provisions of section 2 of the regulation shallapply:

'(1) To any loan or extension of creditbY e member bank, provided that, as a result ofellch loan or extension of credit, an executive(Ifficer of the member bank does not became in-debted to it in an amount in excess of 42,500. .f.

of , "In the circumstances, it is the view of the BoardtheTlern°1's that the indebtedness of President Ehlers inti,;;(31Int of -,2,650, which was acquired by the First Na-of7' Bank in Scribner from the old First National Bankbut X-bher. is excepted from the prohibition of the law,debte'X any subsequently incurred addition to such in-tionnl ese is not permissible under the law if such addi-ila 0;-' indebtedness increases the aggregate to an amountBoal;ce8e of Z2,500. Accordingly, it is the view of the14 that the indirect indebtedness of President Fhlers

v4' by e„ -.4vUnt of .+490 incurred in August 1936 is prohibitedlaw.

tio, :‘,1Q above conclusion is predicated upon the assump-unat

President Ehlers is an executive officer of thess cowl-thin the meaning of the definition of that term14di ntained in the Board's Regulation 0. There is some

c"i°11 ill Your letter that President Ehlers may be

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4aactive. If it is provided by resolution of the board?I' directors or the bank's by-laws that President Ehlers18 not authorized to participate in the operating manage-

Zirt of the bank and he does not actually participatetrrein, then, of course, the provisions of the law and4") Board's Regulation 0 would not be applicable to him."

Approved unanimously.

Letter to the Presidents of all Federal Reserve banks, reading&S follows:

oi "There are enclosed a copy of a circular from theof the Bureau of the Budget to the heads of ex-(-34.-Give departments and a copy of a letter from Chairman

c the Central Statistical Board to Chairman Eccles con-,erning the establishment of a quarterly reporting ser-;lice t° Provide information on new, revised, or discon-

rtued report forms of Federal agencies. Through this

uIterlY reporting service it is planned to keep up to

„.e_e information such as that sent to us in August by the-Lsearch department of your bank.

"Ththe Bt.,

eprovisions in the circular of the Director of

pes„ reau of the Budget do not extend to the lederalSystem but we feel that the System should coop-

the with the Bureau in this project. To facilitateth: Rreparation of a quarterly report to the Bureau ofto 4Udget coverinr; the forms used by the System and alsoceovid for -or greater uniformity and value of statisticstheteheted bY the Federal Reserve banks, it is requestedproareafter you submit to the Board for advance ap-ilia;,-"L anY new or revised report forms proposed for reg-or ; use bY your bank in obtainine data for statisticalett-Xeerch purposes from banks, individuals, businessO r i.--t"Ilaes, and others, also any proposed discontinuance1.1e by report forms of a similar character now in1/4102?ur bank. cuestionntlires intended for a singleelirr " la connection with the program for expanding14:It business information need not have prior approvalslleC ell as this might cause undue delay, but copies ofknowl:?ort forms should be sent to the Board. In ac-

this letter, please advise what, if any,ktideIs in regular report forms of this character were

-uring the three months ended December 31, 1939.'

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Approved unanimously, and the Divisionof Research and Statistics was authorized topass on forms used by the research departmentsof the banks for collecting statistics ontrade and industry, with the understandingthat doubtful cases and cases involving ques-tions of System policy would be referred tothe Board with recommendations.

Thereupon the meeting adjourned.

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