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A. meeting of the Board of Governors of the Federal Reserve

SYstem was held in Washington on Monday, June 13, 1938, at 11:45

PRESENT: Mr. Eccles, Chairman

Mr. Ransom, Vice Chairman

Mr. SzymczakMr. McKeeMr. DavisMr. Draper

Mr. Morrill, Secretary

Mr. Carpenter, Assistant Secretary

Mr. Paulger, Chief of the Division of

ExaminationsMr. Leonard, Assistant Chief of the

Division of Examinations

Mr. Ransom referred to the discussions which had taken place

between representatives of the Board of Governors, the Federal Deposit

InsUrance Corporation, the office of the Comptroller of the Currency,

4nd the Treasury on the question of a uniform policy relating to the

classification of loans and the treatment of depreciation in securi-

ties in reports of examinations of banks, and stated that, as the mem-

bers of the Board had been advised informally, he had been told by

141% Upham, Special Assistant to the Secretary of the Treasury, who

4" Participated in the discussions as the representative of the

Tl'easury, that an agreement had not been reached as to the policy that

ahauld be adopted. He said that he had discussed the situation over

the telephone with 'Mr. Upham who had stated that he intended to submit

the matter to the Secretary of the Treasury, pointing out the ques-

tions on which an agreement had not been reached. Kr. Ransom added

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that, at his suggestion, Mr. Upham had prepared an outline of the dif-

ferences involved in the positions taken by the representatives of

the Board of Governors, the Federal Deposit Insurance Corporation and

the Comptroller of the Currency. Mr. Ransom read memoranda prepared

by Mr. Upham on the points at issue and these were discussed in detail.

During the discussion Mr. Thurston, Special Assistant to the

Chairman, entered the room.

As it appeared that the members of the Board were in agreement

that there were matters of policy of fundamental character involved

la the points at issue, Mr. Ransom suggested that there be prepared a

statement of the Board's position, together with the reasons therefor,

which could be presented to the Secretary of the Treasury and by him

to the President. He also stated that he and Chairman Eccles were to

heve luncheon with the Secretary of the Treasury tomorrow and that the

Secretary had requested that they be prepared to discuss the matter with

htm at that time.

At the conclusion of the discussion

Messrs. Thurston and Paulger were requested

to prepare a statement, in accordance with

the suggestion made by Mr. Ransom, for con-

sideration at the meeting of the Board to-

morrow morning.

Further reference was made to the letter presented at the meet-

of the Board on rune 10, 1938, from President Harrison of the

leederal Reserve Bank of New York, with respect to the proposed trip of

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Messrs. L. W. Knoke, Vice President of the bank, and 'Emile Despres,

ala employee in the foreign and research departments of the bank, to

-rope for a period of approximately six weeks for the purpose of visit-

ing European central banks, including the Bank for International Settle-

alents. The opinion was expressed that, inasmuch as it appeared that

the Purpose of Mr. Knoke's visit was to broaden his acquaintance with

certain officers and technical operations of foreign central banks

Illther than for the purpose of discussing questions of policy, and since

the trip would be valuable from the standpoint of facilitating the work

Of the foreign department of the Federal Reserve Bank of New York, it

IlcUld be desirable for 'Mr. Knoke to make the trip.

The Secretary was requested to advise

President Harrison that the Board inter-

poses no objection to Messrs. Knoke and

Despres making the trip for the purposes

stated in President Harrison's letter.

At this point Messrs. Thurston, Paulger and Leonard left the

tileeting and consideration was then given to each of the matters herein-

ter referred to and the action stated with respect thereto was taken

bY the Board:

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

44cral Reserve System held on June 10, 1938, were approved unanimously.

Telegram to Mr. Young, Vice President of the Federal Reserve

4111k of Chicago, reading as follows:

"Your telegram June 13. Time within which 'First

State Bank', Churdun, Iowa, may accomplish membership is

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"extended to fuly 13, 1938."

Approved unanimously.

Thereupon the meeting adjourned.

C49

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ec etary.

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