Full text of Committee on the History of the Federal Reserve System : Material : Boston Bank (1953-1954), Entry 168, Box 2, Folder 4

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FEDERAL RESERVE BANK
Of BOSTON

^ / \ ^ c o m e to the new building of the
Federal Reserve Bank. In this booklet we in
troduce you by words and pictures to our
enlarged and renovated quarters. We wish to
show to you of New England how with these
improved facilities and modernized equip
ment we shall be able better to serve you.
These words and pictures indicate only the
physical side of the bank. More important
are the intangible factors of loyalty, will to
work, and cooperation of the men and women
who make up its staff. It is these unseen fac
tors which in the final analysis determine the
quality of the bank’s services.

TABLE O F C O N T E N T S
Page

Frontispiece, Marble Relief Map
of First Federal Reserve D i s t r i c t .........................................4

New L o o k ............................................................................................ 5

Comparative Statement of C o n d i t i o n .........................................

A Tour of the B a n k .......................................................................... 11

G rowth— 1922 through 1952

......................................................

Those Were the D a y s ! ....................................................................19

Architects, General Contractor and Subcontractors

.3 1

Directors and O f f i c e r s ....................................................................32

New Look
Out of the changing, noisy maze o f brick and rubble, steel and
concrete, cranes and beams, scaffolding and stone, has emerged the
new building o f the Federal Reserve Bank o f Boston. It is o f classic
design, inspired by New England Federal architecture of the early
nineteenth century. The exterior is built of limestone, to match the
original building, with pink granite trim from New Hampshire.
Large mahogany paneled doors two stories high form the en
trance. Rugged New England philosophy speaks from the six state
seals executed by Sculptor Donald De Lue which adorn the door
panels. Above the entrance is a three-bay loggia with four Ionic
columns of solid stone. Perched atop this composition on the set
back fifth floor wall o f the oval Directors’ Room is an American
eagle carved from an eighteen-ton block of stone.
Within the doors a circular entrance lobby leads from the en
trance to the main stairway. A t the head o f the first flight o f Ver
mont marble steps is a decorative relief map of the First Federal
Reserve District. This map, designed by Artist Austin Purvis, Jr.,
is carved on Vermont marble and on it are names and symbols in
different metals significant o f the economic and natural character
istics o f the various sections of New England.
In the basement is a loading and receiving room with limited
space for automobile parking and a pistol range for the protection
staff. Ground floor corridors connect the entrance lobby with the
public banking room and the Personnel and Purchasing Depart
ments. On the first floor, offices for the Chairman o f the Board, the

T H A T F R E Q U E N T RECURRENCE
TO FU ND AM ENTAL P R IN C IP L E S
A N D A FI R M A D H E R E N C E
TO JU S TIC E , M O D ER A TIO N , TEM P E R A N C E ,
I N D U S T R Y AN D F R U G A L I T Y
AR E A B S O L U T E L Y NE CES SARY
T O P R ES ER V E T H E B L E S S I N G S OF L I B E R T Y
AND K E E P G O V E R N M E N T FREE

FROM

■
»

ARTICLE

AOO*>TEO

IN T H E F E D E R A L R E S E R V E A C T
I N S T I T U T E D A G R E A T AND V IT A L B AN K I N G S Y S T E M
N O T M E R E L Y T O C O R R E C T AND CU R E
P E R IO D IC A L F I N A N C I A L D E B A U C H E S
N O T SIM PL Y I N D E E D T O AID T H E B AN K IN G C O M M U N I T Y A L O N E
B U T TO G IV E V IS I O N A N D SC OPE AN D S E C U R I T Y T O C O M M E R C E
AN D A M P L I F Y T H E OP PORTU NITIES
AS W E L L AS TO IN C R E A S E T H E C A P A B IL I T I E S
OF OUR I N D U S T R I A L L I F E A T H O M E
AND A M O N G F O R E I G N N A T I O N S

XVIII

17 77

AN AO V E N T O R E

IN C O N S T R U C T I V E

FINANCE

In s c rip t io n s in R a is e d B r o n z e Lettering
on M a r b l e W a ll s of O p p o s i t e Sides of
C i r c u l a r E n tr a n ce L o b b y

President and other officers are done in early New England Federal
style. The second floor provides space principally for the Depart
ment o f Research and Statistics and the third floor extends the
area o f the main building used for check collections. The fourth
floor is devoted mainly to services for the staff. A first-aid medical
suite has examination, treatment and rest rooms, all equipped for
modern medical needs. The main area of this floor has folding
partitions permitting the space to be used as one large meeting
room or divided into smaller areas for staff recreation and social
activities. Should the occasion arise, part o f this area can be used
for working space. The fifth floor contains the Board room, com
mittee rooms, conference room and dining rooms with kitchen
pantry. The sixth floor and penthouses contain the ventilation, airconditioning equipment and elevator machinery.
All areas are being air-conditioned for the com fort of the staff in
both the new and the original building. New, modern locker and
washrooms are provided on each floor. The entire building is pro
vided with modern, electric equipment including underfloor ducts
for flexibility o f space, protective devices, emergency call stations,
and other uses, to insure maximum protection.

Comparative Statement o f Condition
1952 1922
ASSETS

December 31,
1952

December 31,
1922
$208,146,603

Gold Certificate Reserves............................

$ 753,319,645

Other Cash.......................................................

22,031,579

15,351,719

Loans and Advances.....................................

2,214,000

61,583,891

Bankers’ Acceptances Purchased...............

25,406,781
29,593,330

U. S. Government Securities.......................

1,693,012,000

Federal Reserve Notes of Other Federal
Reserve Banks.............................................

5,996,000

1,613,130

Uncollected Cash Items................................

387,995,133

54,907,157

Bank Premises.................................................

4,071,254

4,434,271

Other Assets.....................................................

11,396,916

719,241

Total Assets.............................................

$2,880,036,527

$401,756,123

51,603,208,415

$201,313,755

Member Bank Reserve Accounts..........

835,721,105

126,342,136

U. S. Treasurer— Collected Funds. . . .

44,086,174

534,002
73,000

LIABILITIES
Federal Reserve Notes..................................
Deposits:

Foreign..........................................................

32,457,000

Other.............................................................

10,012,896

1,015,600

Total Deposits........................................

$ 922,277,175

$127,964,738

Deferred Availability Cash Items..............

293,075,152

47,789,689

Other Liabilities..............................................

713,468

211,939

Total Liabilities......................................

$2,819,274,210

$377,280,121

CAPITAL

ACCOUNTS

Capital Paid In...............................................

13,611,750

8,126,250

Surplus (Section 7 ).........................................

36,461,592

Surplus (Section 13b)....................................

3,010,527

Reserves for Contingencies..........................

7,678,448

37,376

16,312,376

Total Capital Accounts........................

60,762,317

$ 24,476,002

Total Liabilities and Capital Accounts

$2,880,036,527

$401,756,123
------

T h e E n la rg e d Q u a r te r s N o w Ex te n d in g from Fra nklin Street

A tlafor
n tic
N a t io n a l Ba nk
Digitized
FRASER
of Boston Built in 1 9 2 4

to M i lk Street on Pearl Street

C o n v e r s e B u ild in g
--------J
W h e re Federal R e se rve B a n k O p e n e d
in O c t o b e r 1 9 1 4
a n d Site of N e w A d d i t i o n

N e w E n g la n d Mutu*
Bu ild in g

A Tour o f the Bank
To appreciate the volume o f business accomplished at the Fed
eral Reserve Bank o f Boston, you need only to make a trip through
our various departments. Here you will see where and how we
make thousands o f transactions, large and small, which go into an
average day’s work. Here you will get an understanding o f the
close tie-in which exists between the bank’s operations and the
daily business needs throughout the First Federal Reserve District.
As business expands in New England, so do the operations of
the Federal Reserve Bank. There are more checks to be handled,
more currency and coin to be put into circulation, more bonds to
be issued or redeemed. The new building, where our tour starts, is
a symbol o f the expansion in our activities over the past three
decades, an expansion which has seen our staff more than doubled.
Let’s take a tour of the bank right now, so that you can observe
for yourself the operations which are so essential to the needs of
New England banks and their customers. We start at the main
entrance of the new building. As we pass down the corridor to the
right, you will see our Personnel Department where job applicants
are interviewed and vital statistics on the more than 1,400 members
of our staff are kept up to date. To your left is the public banking
room where various transactions with banks and the public are
conducted.
W e proceed into the service corridor and take the elevator to
the fifth floor. Here you will see our cafeteria where lunches are
served to our staff members at less than cost. Y ou next see some of

[11

the kitchen facilities and the dining rooms in the new building.
After viewing our Directors’ Room and Committee Rooms, we
take you down to the fourth floor where you visit our modern
Medical Department. From here we go to the staff’s recreation
rooms and to the auditorium where concerts by the glee club, organ
recitals, and other activities are held during lunch-hour periods.
Crossing the service corridor, we visit the Fiscal Agency Depart
ment where the Federal Reserve Bank performs services as agent
of the U. S. Treasury Department. This department issues and
redeems millions of dollars in savings bonds and other Govern
ment securities every business day.
Passing by the Non-Cash Collection Department where items
such as notes, maturing bonds, non-Government coupons, and
drafts are collected for member banks, we go down to the third

12]

floor where you will see our largest operation — check collection.
This department occupies the third floor of both buildings. A total
of 530 people are employed here. The output of the Check Collec
tion Department seems almost unbelievable. Last year it handled
a daily average of 966,274 items, more than double the volume
handled in 1943.
The machines you see are called “proof machines,” which are
used to sort the bundles of checks which come in to us from mem
ber banks and to add the amounts for which they are drawn. A
battery of 169 proof machines, each with 32 pockets, insures great
speed and accuracy in getting these checks to their ultimate destina
tions. Most of the incoming checks are microfilmed so that they
can be easily traced if lost or misplaced after they leave us.
We now proceed to the second floor of the new building to the
Research and Statistics Department where the Federal Reserve
Bank collects, analyzes and interprets economic information needed
by its member banks, the New England business community and
the Federal Reserve System.
Our tour takes us back across the service corridor where we visit
the Accounting Department which keeps a daily record of all the

financial transactions of the bank. Member banks are required by

law to keep a certain percentage of
their deposits in reserve with us, and
the Accounting Department maintains
this record and sends out daily state
ments to the member banks. Next to
Accounting is the Auditing Depart
ment which keeps a constant check on
all other departments.
Down on the first floor we visit
another one of the bank’s major opera
tions — the Currency Department.
Here we maintain New

England’s

supply of paper money, putting out
new money as it is ordered by the mem
ber banks and sorting out worn, muti
lated and dirty notes received from
member banks. This department re
ceived or shipped over one-half billion
pieces of currency last year. In the
currency division you will see the
money-sorting machines, and the ma
chine which slices unfit currency for
shipment to the Treasury in Washing
ton where it is destroyed.
We next visit the Discount and
Credit Department. This department
extends credit to member banks by
lending on their investments and dis
counting their customers’ notes. The

14]

adjacent Safekeeping Department re
ceives billions of dollars in securities
from member banks, holds them in
safekeeping, and clips the coupons as
they mature.
We view the Officers' quarters in the
new building and return through the
Junior Officers’ quarters,

past the

Legal Department, then down to the
ground floor to the Wire Transfer and
Planning Departments, with the Fiscal
Agency vault on the left. Around the
corner past the Registered Mail Post
Office, between the Security Court on
the right and the Currency Vault on
the left, we enter the Coin Department
where the new automatic coin-wrapping machines are in action. This de
partment handles daily in receipts and
shipments more than 36 tons of coin.
Our tour ends under the flags in the
Members’ Court.
Time has not permitted visits to
other departments, including Bank and
Public Relations, Bank Examinations,
Building Maintenance, Expense, Filing,
Mail and Messenger, Machine Repair,
Note Teller, Printing, Protection, Pur
chasing, Supply and Telephone.

[15

N e w A u to m a tic C o in W rappers

1922
through

1952
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• V)

Those Were the Days!
By an author whose high ideals and winning personality
have endeared him to thousands.1

STOP! HOLD EV ERYTH IN G ! DON'T TU R N THIS PAGE!
Give us a chance and let us explain. We want to tell you, very
briefly, about this bank, why and when it was started, some of
the things it has done through the years, and how it has served and
helped New England through two wars and a depression.
Let us confess at once that this is not “ a tale which holdeth chil
dren from play and old men from the chimney corner.” We be
lieve, nevertheless, that in the next few pages it can be shown that
banking, as a profession, is not as cold and austere as is commonly
supposed. Even statistics can be made interesting, believe it or not.
Give heed.
Following the financial panic of 1907, Congress established the
National Monetary Commission to study the banking system
abroad with a view toward improving the banking structure then
in existence in the United States.
Based upon the findings of this committee Congress, after a
long-winded debate, established the Federal Reserve System com
prised of twelve regional Federal Reserve Banks with the Federal
Reserve Board in Washington as the guiding head.
The Federal Reserve Act was signed by President Wilson on
December 23, 1913, but it was not until the fall of 1914 that things
really began to happen. Directors were appointed, officers were
chosen, banking quarters were obtained and clerks were hired.
1 That’s what he thinks. Let him dream. (Editor’s note.)

[19

In Boston, the Federal Reserve Board appointed
Frederic H. Curtiss, Chairman and Federal Reserve
Agent. The directors elected Alfred L. Aiken, Presi
dent of the Worcester National Bank, as Governor,
and Florrimon M. Howe, Assistant Cashier of the
Old Colony Trust Company, as Cashier. Quarters were obtained at
101 Milk Street, which, oddly enough after 38 years, is the site of
our new building.
As these rooms did not have adequate vault facilities, the first
instalment of capital stock payments amounting to $1,620,000
was received at the Subtreasury in the old Post Office Building
on November 2, 1914.
The Federal Reserve Bank of Boston was opened for business
on November 16, 1914, with three officers and fourteen clerks who
reported for duty at the unearthly hour, for bankers, of 7:30

a .m .

Having no precedent by which to judge, the officers had no idea
as to the amount of business which might confront them and it
was thought best to have every one on hand early. A lot of good
it did them.
H A RD LY A RIPPLE
In a couple of rooms containing a few desks, one telephone with
an extension, and two typewriters as total equipment,1 the entire
staff stood by in apprehension to see what would happen when the
doors were thrown open.
There was no need to be worried. A few newspaper men came
in, admired the flowers on the officers’ desks, asked some ques
tions and departed. Curiosity seekers straggled in spasmodically,
took off their hats respectfully and went out with bowed heads.
One might have thought that here was a modest wake where the
corpse had only a few friends who were faithful to the end.
1 There was also a hat rack and some coat hangers.
20]

The only real activity was at the Subtreasury where the first
payment of member bank reserves was received. A number of
clerks loaned by the Subtreasury and some of the Boston banks
started in at 8.00
pleted at 1.30

a .m .

to count these receipts. The task was com

on November 17 with total receipts of about

$14,500,000.
While most of the member banks were inclined to give the new
Reserve System a trial, a few of them were antagonistic and quite
outspoken in their criticism.
One bank made payment of its instalment of reserves by filling
an old shoe box with torn and dirty one- and two-dollar bills, in
scribing on the accompanying tag, “ Three cheers for the Union
but to hell with the way it’s run.” The same bank designated its
next reserve payment as “Another steal.”
Some months later, Senator Borah rose in all his majesty in the
Senate and gave it as his opinion1 that the Federal Reserve Sys
tem was “a sort of antediluvian mastodon, too dead for a me
nagerie and too much alive for the operating table, designed for
the Treasury but seemingly on its way to the Smithsonian Insti
tution.” Come to think of it, the Federal Reserve System seems to
have been born in argument, nurtured in controversy and matured
on criticism.
BU SIN ESS BRISK

Although business was quiet on the opening day, things picked
up a bit shortly. The next day a Vermont bank rediscounted two
notes for $5,000 each at 6 per cent. One of these notes was immedi
ately pledged with the Federal Reserve Agent as collateral and
$5,000 in Federal Reserve notes were issued, $3,000 in fives and
$2,000 in tens. Note number one of each denomination was sent
1 He didn’t like it.

[21

to the Federal Reserve Board in Washington for
preservation. This first issue of Federal Reserve
currency was quite an event and was solemnized
by the attendance of the entire official staff —
all three of them. Today several million are issued
at one time and nobody gives the matter a second thought.
By the end of 1914 only ten banks had rediscounted, earnings
were low, operating expenses were rising steadily, vault facilities
were practically nonexistent, and the officers and directors were in
a distinctly unhappy frame of mind.
Nothing much could be done about earnings at this time, but
steps were taken to alleviate the vault situation. New quarters
were leased in the Exchange Building at 53 State Street, where the
bank was able to rent vaults adequate for its needs from the State
Street Safe Deposit Company.
From this time until April 1917, when the United States became
an active participant in World War I, this bank went through a
period of gradual development. It was designated as a Depository
and Fiscal Agent of the United States Treasury on November 24,
1915, and a transfer of government funds from the Subtreasury was
made on January 1, 1916.

T R O U BLE STARTED H ER E
As Fiscal Agent, the bank coasted along without much difficulty
until war was declared by Congress on April 6, 1917. What hap
pened after that can best be described by the definition of the
word “ bedlam” in the dictionary, to wit, “ an excited crowd; a
scene of wild uproar and confusion; a madhouse.” 1 It was all of
that, doubled and redoubled.
1 Sales of aspirin increased tremendously.
22]

The bank started 1917 with 78 clerks and wound up the year
with 256, most o f them wondering if there wasn’t some other way
to make a living.
It is a regrettable thing to expand and grow strong on the
adversities o f war, but it must be confessed that the first World
W ar did much to establish the Reserve banks as instruments of
real service in their districts. The only other agencies available to
the U. S. Treasury to float the huge Liberty loans necessary to
conduct the war were a few subtreasuries and the post offices. It
was a gargantuan task as it was; it would have been impossible
otherwise.
Patriotic fervor ran high. The Liberty loan committees formed
to sell the bonds lacked no dearth o f volunteers. Neither did they
want for ingenuity in dreaming up ways and means to get every
last dollar from the populace.

NO H O M E L I F E
The Reserve Bank, faced with the assignment o f receiving the
subscriptions and delivering the bonds, found itself in an un
enviable position. Never before in the history of the country had
the government attempted to finance a war o f such gigantic
proportions.
Additional quarters were obtained at 60 and 131 State Street,
help was borrowed from banks and brokerage houses, and a strong
and determined effort was made to stem the tide. This effort was
not too successful, and many of the clerks got their first (but by no
means last) taste of night work which lasted for weeks at a time.1
During the period before each loan was announced until the
final allotment o f bonds had been delivered, the situation was
1 There were unhappy wives in the suburbs.

[23

chaotic. Many men saw their families at breakfast-time only, a
few others not at all, as rooms were reserved for them in Boston
hotels so they would be nearer the bank. Why waste time com
muting? Saturdays were full days, but Sundays and holidays were
unusually well regarded; there were no telephones that had to be
answered on those days.
Two Liberty loans were floated in 1917, two in 1918, and a
Victory loan early in 1919, along with sales o f numerous issues o f
certificates of indebtedness and W ar Savings Stamps.

DON’T STOP NOW
M any o f the borrowed clerks remained with the bank as per
manent employees after the last bond hah been delivered and the
volume o f work had receded. This was a real nice thing for them
to do. They cam e in right handy when the W ar Savings Stamps
were redeemed in 1922, and the veterans’ Adjusted Service Certi
ficates were issued in 1936.
Those who were still on the staff during World W ar II found out
that history never changes; there was plenty o f night work when
the U . S. Treasury once again had to finance a war.
Through the years the personnel of the Fiscal Agency Depart
ment has fluctuated, naturally enough, with the volume of work
handled. In 1933, smack in the middle o f the depression, there
were 18 clerks assigned to this department as compared with
nearly 280 in 1919. In 1944, at the height of the war financing,
there were 435.
The period o f Liberty loan activity witnessed the start o f the
Collateral Department. All types o f government securities, flagged
with the names o f the owning banks, were kept in small steel boxes
of assorted sizes. Each night the boxes were stored away in the

vaults, only to be hauled out again in the morning. As soon as
the management could get around to it, certain o f the vaults were
turned over to the Collateral Department and the securities were
delivered there, to be held at the pleasure o f the owning bank.
It was also during 1917 that the Discount Department cam e into
its own. Rediscounts by member banks, brought about by indus
tries in this district manufacturing arm s, munitions and other war
requisites, increased this bank’s earnings considerably.1
According to some o f the recipients, the most popular circular
letter ever to be sent out by this bank was mailed to the member
banks in December 1917. It stated in simple and direct language
that a dividend at the rate o f 6 per cent, covering all accumulated
dividends from November 16, 1914, to December 31, 1917, was be
ing credited to the member bank’s account in the Federal Reserve.
While this welcome notice hardly caused dancing in the streets, it
did serve to allay the suspicions o f many bankers that their invest
ment in the capital stock o f this bank should be written off as
a poor risk.

AND NOW COME CHECKS
Now let’s trace the gradual development o f a department that
has the dubious distinction o f probably causing m ore criticism
and more headaches than anything else the bank has undertaken.
The bank joined the Boston Clearing House on November 13,
1914, and five days later began to clear its Boston checks through
that institution. Little further progress was made until
June 15, 1915, when the collection of checks outside of
Boston was started. Forty-three banks put forth the tender
leaves of hope and joined the new undertaking. The first
day’s total number o f checks handled was 226, but as time
1 Out of the red at last.

[25

went on the situation slowly improved until on October 15, 1915,
the department racked up the outstanding number of 1,803
checks handled in one day.
The real beginning o f the Check Collection Department, how
ever, took place on July 15, 1916, when this bank took over the
so-called Foreign Department of the Boston Clearing House, a
department that handled checks drawn on New England banks.
As m ost o f the member banks outside of Boston preferred to
send their checks to their Boston correspondents for collection,
progress was far from rapid in the new department for some time.
FTowever, with the elimination, on June 15, 1918, o f the service
charge which had been imposed on member banks for clearing
their checks when the system was first inaugurated, volume picked
up considerably.

START OF NIGHT FORCE
The average number o f New England checks handled daily in
creased from 9,000 to 35,000, requiring a force of 116 clerks, to
say naught o f three men who had been inveigled into forming a
Night F orce (probably frustrated with their daily existence and
wanted to try something different.1 They got it.).
Several different procedures and systems have been adopted by
the bank in an endeavor to speed up the work and get the clerks
out at a reasonable hour with enough energy left to enjoy the
evening.
The system used in the beginning was thorough, to say the least.
Each check was handled eight times: first, at the sorting table;
second, listed on block sheet; third, run through endorsing m a
chine; fourth, examined to be sure check had been endorsed; fifth,
sorted into rack; sixth, rechecked for missorts; seventh, listed on
outgoing cash letter; and eighth, listed again for verification.
1 They had no reason for going home. They were bachelors.

26]

The clerks got attached to the checks after so long an associa
tion and hated to see them leave the bank at the end of the day.
Incidentally, it is said that one girl, when she encountered a check
for a million dollars, took it home to show her mother. When she
brought it back the next day she couldn’t understand why the
manager seemed so upset and distraught.
The personnel of this department has increased through the
years. In 1917 there were 25 clerks handling checks and there are
now 346 on the day force. With three as a start in 1917, the Night
Force now has a staff of 184, mostly women.
As the Fiscal Agency and Check Collection departments grew
and expanded through the early years, so did other departments
which were no less important, especially from the viewpoint of
providing service to the member banks. Prominent among them
were the Accounting, Non-Cash Collection and Currency and
Coin departments, all of which required the service of a sizable
number of clerks.
NOT EFFIC IEN T
In 1918 the various departments of this bank were spread all
over the financial district. The main office was at 53 State Street,
check collections were handled at 84 State Street and the Fiscal
Agency could be found at 131 State Street. The Accounting,
Auditing and Supply departments were located at 20 Kilby Street.
Messengers wore out a lot of shoe leather unnecessarily.
In four years the number of personnel had increased from the
original 17 to nearly 300 and was continually climbing. Space
was at a premium and, what was worse, the vault situation had
become acute once more.
The directors got busy and appointed a Building Committee
which canvassed the city for available sites on
which to erect a building sufficiently large to house

[27

✓

all the departments of the bank and all the vaults they needed.
After several months a plot of land bounded by Pearl, Franklin
and Oliver streets was acquired, an architect was chosen, and on
March 1, 1920, work was started on tearing down the old buildings.
Many problems were encountered as the building took shape.
There was a period of uneasiness throughout the country, unem
ployment was severe and robberies and holdups were frequent.
This situation made the Building Committee nervous and one
meeting of the committee clearly showed their apprehension.
The matter of protection came up for discussion. One member
thought it would be a good idea to have two revolving turrets
above the main door containing two men, armed with sawed-off
shotguns, peeping out through slits in the walls. Another favored
water as the best means of dispersing a mob without bloodshed,
and suggested water curtains for the doors and high-pressure hose
placed at strategic spots.1
A third member, who had taken no part in the discussion sud
denly remarked, “Mr. Chairman, I move that this matter be
referred to the Secretary of W ar.” It sounds amusing now but the
situation was serious then.

ROSY FU T U R E
On March 20, 1922, the building was officially opened with a
total personnel of 775. Vault accommodations were excellent. In
stead of one main vault it had been decided to build the vaults
three stories high and group the departments which handled cash
or securities around them.
A Security Court that opened on Oliver Street provided guarded
entrances and exits for armored cars carrying cash or securities.
1 A few soldiers could have been installed in the basement.

28 ]

A Members’ Court, easily reached from the main entrance, was
available to officers and guests o f member banks who desired a
meeting place.
As originally designed, this Court was supposed to have two
rows o f potted trees leading to a bubbling fountain in the rear. A
member o f the Building Committee took the view that trees would
attract bugs which, in turn, would necessitate spraying. This, to
complete the vicious circle, would require extra labor which would
run into money. And there was also the dread possibility, he
pointed out, that stray dogs might get by the guards occasionally.
So trees never grew in the Members’ Court.

F E D E R A L R E S E R V E S O C IET Y
The fountain bubbled nicely for many years but it also leaked.
After one o f the girls fell into it, in a careless moment, it was torn
out and the present memorial to members o f the staff who served
in World W ar II was installed.
The Members’ Court has served as a meeting place for Stock
holders’ meetings, Federal Reserve Society affairs, panel discus
sions and the like for many years. It will, o f course, be superseded
by the auditorium in the new building.
A cafeteria was opened on the fifth floor for the benefit o f the
clerks, and rest and smoking rooms were provided for both sexes.
A reference library was started with a handful o f books, later
to expand and to assist in the work of the Research Department
which has done so much for the New England economy.
Shortly after the end o f the first World W ar the bank club,
called the Federal Reserve Society, was formed and later a monthly
publication for the benefit of the employees was started.
Plays, mock trials and minstrel shows have been produced,

[ 29

parties held in the cafeteria and summer outings enjoyed. An an
nual dinner at some Boston caravansary has been paid for by the
bank since 1919.
W e have com e a long way since November, 1914. There are
clouds on the horizon once more and no one can tell what lies
ahead. But com e what may, there is one thing certain: This bank
has served New England in the past to the best of its ability; it will
continue to do so in the future.

L e w i s E. S t o y l e
First em ployee o f the F ed era l Reserve Bank
o f Boston

Architects

H a r beso n , H o u g h , L ivin g sto n & L ar so n , Philadelphia

K ilh a m , H opkins, G r e e l e y & B ro d ie , Boston, Associated Architects

General Contractor
G eorge A. F u l l e r C o m p a n y , Boston

Subcontractors
Acoustical Work
P

it c h e r

& C

o m pan y,

Cambridge, Massachusetts

Electrical Work
H

ix o n

l e c t r ic

Elevators
Ons E l e v a t o r
Granite
T

J ohn Sw

o m pan y,

en so n

Boston, Massachusetts

r a n it e

o m pan y,

I n c .,

Concord, New Hampshire

Interior and Exterior Millwork
T

h eo d o re

Sc h w

amb

o m pan y,

Arlington, Massachusetts

Interior Marble and Slate
V e r m o n t M a r b l e C o m p a n y , Boston, Massachusetts
Light and Ornamental Iron Work
B a b c o c k - D a v i s A s s o c i a t e s , I n c . , Boston, Massachusetts
Limestone
M a t t h e w s B r o t h e r s C o m p a n y , Bloomington, Indiana
Metal Doors and Frames
T h e P a r k e r C o m p a n y , I n c . , Boston, Massachusetts
Metal Furring, Lathing, Plain and Ornamental Plaster Work
J a m e s H. B o y l e & S o n , Cambridge, Massachusetts
Painting
J o h n s o n - F o s t e r C o m p a n y , I n c . , Somerville, Massachusetts
Plumbing, Heating and Air-Conditioning
C r a n e P l u m b i n g & H e a t i n g C o m p a n y , Cambridge, Massachusetts
Structural Steel
G r o i s s e r & S h l a g e r I r o n W o r k s , Somerville, Massachusetts
Tile, Terrazzo and Bluestone Flagging
R i n a l d i T i l e C o m p a n y , I n c . , Cambridge, Massachuset
Asphalt Tile, Linoleum and Cork
J o h n H. P r a y & S o n s C o m p a n y , Boston, Massachusetts
Furniture
I r v i n g & C a s s o n —A. H. D a v e n p o r t C o m p a n y , Cambridge, Massachusetts
Interior Decorating
L e w i s F. P e r r y S o n s C o m p a n y , I n c . , Wellesley, Massachusetts
Rugs. Floor Coverings and Draperies
T h e C . B. S w i f t C o m p a n y , I n c ., Boston, Massachusetts

[31

FEDERAL

R E S E R V E BANK OF BOSTON

Officers — Jo sep h A . E ric k s o n , President
A l f r e d C. N e a l , First Vice President
Jo h n J . F o g g , Vice President
R o b e r t B. H a rv e y , Vice President and Cashier
E a r l e O. L a th a m , Vice President
C a r l B. P itm an , Vice President
O s c a r A . S c h l a ik j e r , Vice Pres, and Gen. Counsel
R o y F . V an A m rin g e , Vice President
A n s g a r R . B e r g e , Secretary, Assistant Counsel

and Assistant Federal Reserve Agent
D avid L . S t r o n g , General Auditor
A r t h u r A . B r i g h t , J r . , Director o f Research
F r a n k C. G ilb o d y , Assistant Vice President
E d w a r d W . O 'N e il, Assistant Vice President
D an a D. S a w y e r, Assistant Vice President
L o u is A . Z e h n e r , Assistant Vice President
D. H a r r y A n g n e y , Assistant Cashier
E l l i o t S. B o a rd m a n , Assistant Cashier
W illia m R . K in g , Assistant Cashier
J o h n J . R o c k , Assistant Cashier
Jam es D. M a c D o n a ld , C h ief Exam iner

Directors — H a r o l d D. H o d g k in so n , Chairman o f the Board
and Federal Reserve Agent , B o sto n , M assachusetts
Ames S te v e n s, Deputy Chairman o f the Board,
Low ell, M assachusetts
F r e d e r i c k S. B l a c k a l l , j r ., W o on so ck et, R . I.
L lo y d D . B r a c e , B o sto n , M assachusetts
H a r o l d I. C h a n d l e r , K een e, N ew H am pshire
K a r l T . C om p ton, C am bridge, M assachusetts
H a rv e y P. H ood , B o sto n , M assachusetts
E a r l e W . Stamm, N ew L o n d o n , C on n ecticu t
H a r r y E . U m p h rey , Presque Isle, M aine

M em ber o f Federal Advisory Council —
E r n e s t C la y t o n , Providence, Rhode Island

32]

“ I See Great Days Ahead”
In this brochure we have dealt with yesterday
and today. W hat o f tom orrow? N o one knows
what lies ahead, but read what Carl Sandburg
says in an interview with Frederick Van Ryn
quoted from This W eek:

“I have spent as strenuous a life as any man sur
viving three wars and two major depressions, but
never, not for a moment, did I lose faith in Amer
ica’s future. Time and time again, I saw the faces of
her men and women torn and shaken in turmoil,
chaos, and storm. In each major crisis, I have seen
despair on the faces of some of the foremost
strugglers, but their ideas always won.
“I see America, not in the setting sun of a black
night of despair ahead of us. I see America in the
crimson light of a rising sun fresh from the burning,
creative hand of God. I see great days ahead, great
days possible to men and women of will and
vision. . . .
“May I offer my favorite toast? ‘To the storms to
come and the stars coming after the storm. . . ”

Reprinted from This Week Magazine;
copyright 1953 by the United Newspapers
Magazine Corporation

REPORT
ON

STEPS TO M AINTAIN
EC O N O M IC STA BILITY
BY T H E

Committee on Economic Stabilization
o f the B o a r d o f D ir e c to r s o f the
F e d e r a l R e se rv e B a n k
o f B o sto n

PREFACE
J u n e 9, 1952, the Board of Directors of the Federal Re
serve Bank of Boston appointed a committee of its members
to study and formulate a program of economic stabilization for
submission to the Board. The committee members were Harvey P.
Hood, Class B Director (Chairman), Karl T. Compton, Class C
Director, and Earle W. Stamm, Class A Director.
The committee’s report was adopted and approved by the Board
of Directors on December 22 and released for distribution to mem
ber banks in the First Federal Reserve District and others having
an interest in the subject. The views expressed in the report are
not necessarily those of the Federal Reserve System or of those
persons listed below.
The committee was assisted in preparing the report by Dr.
Alfred C. Neal, First Vice-President, and members of the research
staff at the bank. Acknowledgment is made of helpful sugges
tions from the following persons who replied to the committee’s
request for comment upon an early draft: O. Kelley Anderson,
President, New England Mutual Life Insurance Company; Robert
B. Bangs, Special Assistant, Office of the Secretary, United States
Department of Commerce; Bernard M. Baruch; Albert Bradley,
Executive Vice-President, General Motors Corporation; Paul F.
Clark, President, John Hancock Mutual Life Insurance Com
pany; Grover W. Ensley, Staff Director, Joint Committee on the
Economic Report; Ralph E. Flanders, Senator from Vermont;
William A. Irwin, Economist, The American Bankers Association;
O. B. Jesness, Chief of Division of Agricultural Economics, Uni
versity of Minnesota; Arthur Kemp, Assistant to Herbert Hoover;
Henry C. Murphy, International Monetary Fund; Howard B.
Myers, Committee for Economic Development; Edwin G. Nourse;
Ralph Robey, Vice-President and Chief Economist, National
Association of Manufacturers; Harold V. Roelse, Vice-President,
Federal Reserve Bank of New York; Beardsley Ruml; Emerson

P. Schmidt, Director of Economic Research Department, Cham
ber of Commerce of the United States; Sumner H. Slichter,
Lamont University Professor, Harvard University; Walter E.
Spahr, Executive Vice-President, Economists’ National Com
mittee on Monetary Policy; George Terborgh, Research Director,
Machinery and Allied Products Institute; Donald B. Woodward,
Vice-President for Research, The Mutual Life Insurance Company
of New York; and Ralph A. Young, Director of the Division of
Research and Statistics, Board of Governors of the Federal
Reserve System.
In releasing this report, the committee and the Board of Direc
tors of the Federal Reserve Bank of Boston do not represent that
it contains anything particularly original or revolutionary. The
report is intended as a consistent composite of many points of
view which is intended to secure a maximum of agreement from
those who have studied the problem.
It is this Board’s belief that to make a program of economic sta
bilization effective requires concerted effort by practically everyone,
including governmental agencies. It is its belief that although selfinterest is a dominant motive in human behavior, economic stabil
ity is sufficiently in the long-range interest of all that a program to
maintain economic stability should secure wide support. It is its
further belief that at least a part of the recent inflation could have
been prevented by more prompt and vigorous action along the
lines suggested in this report without materially affecting produc
tion or employment. Such action might have been taken earlier
had there been a clearer understanding of the problems involved
and of the action appropriate for dealing with them.
It should be noted finally that the report is written in the light
of existing monetary policy. Policy in this field is in an evolution
ary state and is subject to new developments which may modify
some of the statements made here.

Board of Directors
FEDERAL RESERVE BANK OF BOSTON
H arold D. H o d g kin son ,

Chairman o f the Board

Vice-President, General Manager and Chairman of Management
Board, W m . F i l e n e ’ s S o n s C o m p a n y , Boston, Massachusetts

Deputy Chairman o f the Board

A mes S teven s ,

President, A m e s

o rsted

C o m pan y,

Lowell, Massachusetts

F r ed e r ic k S. B l a c k a l l , jr .

President and Treasurer, T h e T a f t - P e i r c e
Woonsocket, Rhode Island
L l o yd D. B race

M a n u f a c t u r in g

C o m pan y,

P re s id e n t, T

ir s t

a t io n a l

B ank

B o sto n ,

Boston, Massachusetts
H a ro ld I. C h an d ler
Vice-President and Cashier, T h e K e e n e N a t i o n a l B a n k ,
Keene, New Hampshire
K a r l T. C om pton
Chairman of the Corporation, M a s s a c h u s e t t s I n s t i t u t e o f
n o l o g y , Cambridge, Massachusetts

ech

H a r vey P. H ood

President,

H o o d & S o n s , I n c .,

Boston, Massachusetts

R o y L . P a t r ic k

President,

ock o f

g es

C o r p o r a t io n ,

Burlington, Vermont

E ar le W. S tamm

President, T h e N a t i o n a l B a n k
New London, Connecticut

C o m m erce

ondon,

Joseph A . E rickson

President, F e d e r a l R e s e r v e
Boston, Massachusetts

ank of

o sto n ,

Boston, Massachusetts
January, 1953

INTRODUCTION
A m erican economy has been subject to recurring periods
of unhealthy boom accompanied often by inflationary price
increases and followed by periods of depression and widespread
unemployment. These conditions — whether of feverish boom or
paralyzing depression — because of their demoralizing effect on
many individuals give rise to attacks upon our system of private
competitive enterprise, attacks which often lead to the develop
ment of programs of expediency rather than programs which
produce long-term solutions. We believe that the overwhelming
majority of Americans abhor the devaluation of their dollars as
they do the loss of work or wages and would therefore welcome
any effort directed toward maintaining greater economic stability.
Economic stability at progressively rising levels of employment
and production has become a matter of more than domestic con
cern. Greater stability will strengthen our own capacity for defense
and that of our allies. Friendly nations abroad, united with us in
resisting Russian Communism, depend heavily for their own
economic strength and stability upon the American economy.
We are now and will be in the future seriously affected by the
results of two major world wars and the limited fighting war within
a world-wide “cold war” in which we are engaged. Principles
drawn from previous peacetime conditions cannot be applied
easily to the conditions which may prevail in the next few years.
If, however, the next few years are to be characterized by inter
national tension and high defense expenditures, it is all the more
important that stabilizing measures consistent with a free economy
be better understood and more effectively applied. Should war be
come more widespread, stronger measures might well be required,
and some principles now appropriate could not then be used.
The only possibility of all groups joining unanimously in sup
port of a program for greater stability is a statesmanlike approach
to the problem with recognition that the long-time gain for all is

more to be desired than the immediate short-time profit for any
particular group. To insure precedence of long-time over shorttime interest, it is important that the objective should be agreed
upon in advance, and that the causes and effects should be under
stood as clearly as economic variables will allow, so that the
Federal Reserve System and others will be encouraged at all times,
courageously and without delay, to take those steps which they
believe will be most helpful toward maintaining that stability which
is in the best interest of the nation as a whole. Agreement on a
common objective should permit minor differences to be sub
merged in a joint endeavor.
In considering measures for maintaining stability, we have been
guided first of all by the principle that we wish to preserve the
maximum degree of freedom in the economy. We have therefore
concentrated upon general measures which affect the whole
economy, or at least a major part of it, rather than measures which
involve displacing private decisions and bargains by decisions of
public officials. By this test, we do not favor imposing direct con
trols, such as price and wage controls, except in war emergencies
which are not considered in this discussion.
Similarly, we have emphasized those measures which are likely
to be most effective and which at the same time are not subject to
such diverse views that they would not be generally accepted. By
this test, the immediate return to free convertibility of all money
into gold coin is not discussed, even though eventually such a
standard might well be appropriate to a period of lasting economic
stability.
Because we believe that a free economy is the most efficient for
raising production and the standard of living, we have made no
attempt to specify a “fair” level of profits, salaries, or other com
pensation. The rewards of enterprise, work, or investment should,
in a free economy, be determined by economic forces as free as
possible from government control.
8]

R e p o r t

o n

STEPS T O M A IN T A IN E C O N O M IC STABILITY

What is Economic Stability?
When economic stability is set up as a desirable goal, economists

and the public usually have in mind a state of affairs characterized
by a high and rising level of production and a minimum amount of
unemployment, coexisting with a reasonably stable average level
of prices. These conditions are explained below.
A high and rising level of production provides the basis for a high
and rising standard of living. The stability which we desire, there
fore, does not involve a fixed level of production. Our objective
requires a growing national output and increased production per
person. Increasing total output must accompany a growing popu
lation, and increasing production per person will permit rising
consumption per person — a higher standard of living.
A minimum amount of unemployment admits that some unem
ployment must exist even when the economy is stable because
people are between jobs or laid off because production is unevenly
distributed through the year or interrupted by temporary shut
downs for various causes. A person is considered to be unemployed
when he is ready, able, and willing to work but cannot find a job.
Because unemployment is not easily measured and its severity
depends upon how long it has persisted, upon adequacy of unem
ployment compensation and relief, and upon other considerations
as well, it is not possible to specify in advance precisely at what
point unemployment exceeds a practicable minimum. Any sub
stantial increase in unemployment would be cause for concern.
A reasonably stable level of prices means that the purchasing
power of the dollar is maintained. Stable purchasing power pre
serves both the letter and spirit of long-term contracts, maintains

Report on
normal incentives to save and invest and so to improve productive
capacity, removes much of the pressure exerted by special interest
groups, and avoids distortions of business planning which accentu
ate booms and depressions.
The level of prices which we seek to stabilize must be a realistic
one. It would not serve the interests of stability to try to return to
a prewar price level, because a major deflation of a price level is
accompanied almost invariably by declining production, rising un
employment, and inequities comparable to those caused by infla
tion. Therefore it is probably desirable to try to maintain a level
of prices close to that which has prevailed in the recent past.
Stability as defined does not mean that individual prices would
not be free to move. For example, increased and more efficient
production of a specific commodity may make possible a reduc
tion in its price. Higher cost or temporary scarcity may result in
higher prices of other commodities. Because many prices have
been distorted by the Korean war, some readjustment of present
price relationships is likely and desirable. Only a pronounced and
persistent general drift of prices upward or downward over a
period of six months to a year would indicate a departure from
price stability.
Stability does not mean a fixed level of either money incomes or
what they will buy, but is consistent with a rising level of both.
For example, so long as money wages do not rise faster than in
creases in output per man-hour of work, higher money wages do
not raise costs or prices. Historically, we have had great gains in
productivity and in wages, often with lower prices.
It is possible for the worker, farmer, owner, and consumer a
to profit as a result of increased production per man-hour of work,
whether made possible by more efficient machinery, a better use
of time, or some other means. And of course this has been t e
historical evolution. It is not our purpose to get into the question
10]

STEPS

MAINTAIN

ECONOMIC

STABILITY

of how gains from increased productivity should be divided, nor
do we believe that ordinarily the government should resolve the
debate by the use of its power or influence.
However, to the extent that any group gains more than it has
produced, the extra gains must come from somewhere else. As
other groups resist an inroad into what they have considered their
share of gain, or perhaps simultaneously seek a greater share for
themselves, the result is likely to be pressure toward higher prices
as a line of least resistance. A rising level of prices results in a levy
being made upon those who have invested in government or other
bonds, pensions, life insurance, and similar savings programs, and
upon those whose salaries are relatively inflexible.
If either workers, farmers, or owners endeavor to gain more
than advances in productivity warrant, and provided they have
the power to gain their demands, the end result is likely to be
inflation unless the majority of public opinion insists otherwise.
In other words, little can be done about inflation unless public
opinion wants something done about it.
Some economists take the position that the best way for all to
share in the fruits of increased productivity is to lower the costs of
enough commodities and services so as to bring about a slightly
lower average price level from year to year. With the inflationary
forces that exist at present and may be in prospect, we believe,
however, that we will do well to maintain a reasonably stable price
level over the years ahead.
Stability of the average level of prices is fundamentally the
result of the over-all relationship between the total supply of
money and the available supply of goods, together with the aver
age rate at which the supply of money is spent. Simply stated, too
much money chasing too few goods means inflation, usually
resulting in higher prices. Too many goods chasing too little money
means deflation, usually resulting in lower prices.

[11

Report on
The price level is affected by many things which disturb the
money-goods relationship. For example, a government deficit
financed by additions to the money supply adds to the money side
of the relationship; if nothing else happens, it has an inflationary
effect. An increase in wages not accompanied by a corresponding
increase in output also adds to the money side of the relationship
but not proportionately to the goods side; its effect is inflationary.
Dumping goods from inventory adds to the goods side of the rela
tionship; taken alone, the effect is deflationary. Reducing the pay
for the same amount of work reduces the money side of the rela
tionship without affecting the goods side; the effect is deflationary.
Can we have rising production and minimum unemployment
with a stable price level and increased consumption per person?
Such stability has prevailed in this country for limited periods in
the past, and to us there are no convincing reasons why a goal
encompassing these conditions should not be a sound goal that
we should hope to attain. The nation has never followed consistent
policies directed toward these objectives, and until it has tried such
policies it would be premature to conclude that greater stability
than we have had in the past is impossible.

12]

STEPS

MAINTAIN

ECONOMIC

STABILITY

What is Economic Instability?

Instability has characterized our economy for a much longer
period than stability. Instability occurs in one form when prices,
production, profits, and employment all move down persistently
for a period of time. Such movements are called deflations or
depressions. By our standards, anti-deflationary action may be
required when production lags to such an extent that unemploy
ment exceeds a reasonable minimum for a significant period and
prices generally move downward or remain at reduced levels.
The task of preventing or offsetting a recession or deflation will
be easier to the extent that the previous boom has avoided excesses.
Timely and courageous use of the steps called for in an inflation
ary period will weaken the causes of recession and render less
difficult the task of offsetting it. The best remedy for recession or
deflation is to avoid the inflationary conditions which precede it.
Our objective, if deflation sets in, should be to work toward the
previously stable level of prices and to raise production and em
ployment to and beyond the level prevailing under previously
stable conditions.
Instability also occurs when prices move up at a time when
production and employment are at very high levels. Our objective,
then, should be to work toward the price level that prevailed under
previous conditions of stability without materially affecting the
level of production and employment. At such times, we should be
as quick to fear inflation as at other times we are quick to fear
deflation. It is far less harsh on the community to prevent inflation
than it is to endure a subsequent depression.

[13

Report on
Steps which Might Be Taken to Preserve
or Restore Stability

Systematic action to preserve economic stability must come pri
marily from the monetary and financial activities of government,
but the citizens and private organizations of the nation can help
provide economic leadership, and they can contribute to the goal
through their own financial and other economic decisions.

Because economic forces do not move in fixed patterns or com
binations, it is impossible to prescribe in advance precise rules as to
when or how much action should be taken to correct what might
be an inflationary or deflationary situation. A general method
which has been followed in the past and which appears still to be
appropriate involves a continuous review of economic develop
ments with special study of those forces which are most influen
tial at the time. On the basis of these studies, forecasts are made at
frequent intervals. If the forecast is definite and subsequent events
immediately begin to confirm it, action is taken. If the forecast is
somewhat uncertain and subsequent events do not give a clear
indication of what may happen to the level of the economy, action
should be withheld until events clarify the situation. The strength
of any action that should be taken depends upon its timing, the
definiteness of the forecast, the size of the job to be done, and the
reaction to any steps taken previously.
So far as Federal Reserve action is concerned, an attempt to
obtain agreement with other agencies of government on proposed
Federal Reserve actions may delay and inhibit action. Consulta
tion and exchange of information should be continuous, but the
Federal Reserve must take sole responsibility for those actions
which are within its jurisdiction. Therefore, the Federal Reserve
must be so well equipped, both in terms of its economic intelligence
14]

STEPS

MAINTAIN

ECONOMIC

STABILITY

work and in terms of men of judgment and courage in policy
making positions, that it is competent to act independently in those
matters which are under its control. Only in this way can it assert
the leadership expected of it in its inception and required by con
temporary conditions. A record of courageous and correct leader
ship should be persuasive to other agencies of the government and
should progressively command wide public support and approval,
despite temporary objection from those who may feel injured by
any particular action.
The following sections indicate steps which would be appropriate
if unstabilizing forces are imminent or are apparent. The steps are
grouped into those appropriate to inflation and those appropriate
to deflation or recession.
Some or all of these steps would be appropriate to particular
inflationary or deflationary situations. The number used and the
vigor with which they are used must depend upon the degree of
certainty as to the outlook and the strength of the forces to be combatted. For convenience, those steps which are subject to the
authority of the Federal Reserve and those which are not are indi
cated. Order does not indicate relative importance or desirable
sequence of use.
M onetary and C redit Control P olicies
— Inflation

Inflation cannot occur unless there is an increase in money or
money turnover in relationship to goods. The principal part of the
money supply is bank deposits. Member banks of the Federal
Reserve System, which together have about 85 per cent of all bank
deposits in the country, must keep about one dollar of reserves
with the Federal Reserve Bank for every five dollars of their
deposits. Control over increases in the supply of money, therefore,

[15

Report on
depends largely upon controlling member bank reserves, which in
turn influences the expansion or contraction of bank credit.
When the Federal Reserve System buys government securities
on the open market it allows an increase in total bank deposits
equivalent approximately to five dollars for every dollar it spends.
This is because banks can create deposits, through loans and in
vestments, of about five dollars for every new dollar they add to
their reserves with the Federal Reserve System, and the purchase
of securities by the System introduces new dollars which the banks
can use for this purpose. The Federal Reserve System, other things
being equal, can affect the money supply in a similar way by lower
ing the reserve requirements which member banks must keep on
deposit with the System.
Effective control of credit (and the money supply) in an infla
tionary situation depends upon a coordinated policy with respect
to required reserves, discount rates, and open market operations
which affects the supply, availability, and cost of credit, and which
also can impose restraint upon the banks because of uncertainty
as to what Federal Reserve policy will be.
In addition to reserve requirement, discount and open market
policy, the Federal Reserve at times may impose selective con
trols which prescribe terms and conditions on which credit of cer
tain types may be extended, e.g., real estate and consumer credit
and credit for purchasing or carrying securities. (Consumer credit
control is not presently authorized by Congress.) These selective
controls influence the use of credit and supplement the general
control exercised by discount and open market policy.
The following are the steps available to the Federal Reserve
System for combatting inflation.
(Within Federal Reserve Authority)
16]

STEPS

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ECONOMIC

STABILITY

a. Increase the discount rate.
The discount rate is the rate of interest a bank must pay when
*it obtains reserves by borrowing from its Federal Reserve Bank.
An increase in the discount rate would indicate that monetary and
credit policy is being directed toward restraint.
An increase in the discount rate usually exerts a significant in
fluence on credit psychology, inducing the banking system to re
examine its lending policies and other lenders to reappraise credit
conditions. This result occurs whether or not the volume of mem
ber bank borrowing from the Reserve Banks is substantial and
whether or not the increase in the rate indirectly raises the costs of
customer borrowing, as it is likely to do for the more sensitive part
of the market.
b. Adopt a restrictive open market policy.
The availability of credit to borrowers is likely to be reduced
when customer borrowing demand exceeds the volume of lending
permitted by the existing volume of reserves. Under these condi
tions, unless the banking system can obtain additional reserves by
making net sales of government securities through the open mar
ket to the Federal Reserve or by borrowing from the Federal
Reserve, it cannot maintain or increase the volume of its loans and
investments or deposits. If the ratio of required reserves to deposits
is one to five, the banks must reduce deposits (and therefore loans
or investments) five dollars in order to get one dollar of reserves.
The extent to which the Federal Reserve is prepared to make
purchases or sales of government securities in the open market or
to lend will thus determine the extent to which the banking system
will need to borrow to obtain reserves. The Federal Reserve can
follow a range of open market action running from restraint to
outright restriction.

[17

Report on
Net sales of government securities by the Federal Reserve reduce
member bank reserves because the Federal Reserve must be paid
in reserve funds. Reduction in their reserves causes banks to re
strict their lending and investing. Such restriction causes interest*
rates on various types of securities and on loans to go up, and
moves up rates in the market in relation to the discount rate, and
may prepare the way for an increase in the discount rate. Small
fluctuations in the market rates create uncertainty which, by in
ducing caution, further serves to restrain credit.
Open market operations are undertaken at the initiative of the
Federal Reserve and are broad and impersonal in their effects. On
the other hand, member banks take the initiative in borrowing
from the Federal Reserve and the amount of credit released is
determined by the need of the particular bank; the effect thus tends
to be regional. Borrowing is subject to repayment and since banks
are disinclined to go into debt and since the Federal Reserve dis
courages them from staying in debt, these funds tend to be repaid
as soon as other funds become available.
Open market operations enable the Reserve Banks to maintain
continuous contact with the money market and the existing credit
situation. By coupling open market operations with the rediscount
mechanism, the System is able to graduate the degree of intensity
of its restrictive policy.
A coordinated discount and open market policy operating in the
interests of stability would be directed toward providing the bank
ing system with a volume of reserves adequate to permit it to
finance a high and rising volume of production and employment
without putting upward pressure on the price level.
c. Impose or tighten selective controls on stock market credit,
consumer credit, and real estate credit to the extent per
mitted by law.
18]

STEPS

MAINTAIN

ECONOMIC

STABILITY

Selective controls do not have a direct effect on the amount of
bank reserves. These controls provide specific terms under which
credit may be used for certain purposes and thus they influence
the demand for credit. They reinforce the action specified in
a and b.
d. Increase required reserves, thereby reducing the reserve
base for credit expansion.
An increase in required reserves raises the amount of reserves
which member banks must keep per dollar of deposits. Raising
required reserves causes banks either to acquire more reserves or
to reduce deposits by curtailing lending and investing activities.
Changes in required reserve ratios are not generally suited to the
continuous need of credit policy and increases should be limited to
those circumstances where it is necessary to adjust the total reserve
requirements of the banking system in order to prevent a signifi
cant credit expansion, control of which for one reason or another
is beyond the influence of other instruments.
An increase in reserves is a broad and blunt device because it
affects banks with and without excess reserves. An increase in
required reserves is particularly appropriate when it is necessary
to absorb excess reserves which are well distributed among the
banks throughout the country.
The existence of authority on the part of the Reserve System to
increase reserves may, even if that power is used infrequently,
induce banks to be more cautious and thus reinforce a restrictive
credit policy. Required reserves are presently at the maximum
limits permitted under present law, except in New York and
Chicago (central reserve city) banks.
e. Discourage banks from making speculative loans or other
loans which do not contribute to the maintenance of sound
credit conditions.

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In an inflationary period, the Federal Reserve Banks should take
special steps to discourage the extension by member banks of an
undue amount of credit for speculative purposes in securities, real
estate, or commodities, or the extension by member banks of other
credit which would be inconsistent with the maintenance of sound
credit conditions. If these steps fail, access to the credit facilities
of the Federal Reserve Banks in specific instances, or generally,
may be denied to the member banks concerned.
(Outside Federal Reserve Authority)
f. Suspend or tighten government loan and loan-guarantee
programs.
Government loan and loan-guarantee programs have been ap
propriate and effective as anti-depression, relief, or veterans’ bene
fit measures. There is danger that they will be continued unchanged
through inflationary periods.
Government encouragement to lending and borrowing, as in
the case of the FHA and GI housing loans, GI business loans,
Farm Credit and RFC loans, even though it may not involve
direct use of bank credit, nevertheless stimulates economic activity
which results in credit expansion by banks and establishes credit
terms which encourage banks to expand their own loans. There
fore, government loan and loan-guarantee activities stimulate bank
credit expansion in inflationary periods and should be reviewed in
terms of general credit policies.
M onetary and C redit C ontrol Policies
—

Deflation or Recession

It is generally accepted that monetary and credit policies can
be more effective in checking a boom than in checking a recession.
20]

STEPS

MAINTAIN

ECONOMIC

STABILITY

However, if the excesses of the boom have been avoided, the task
of checking a recession will be easier.
The essential task of monetary and credit policies in a recession
is to provide abundant monetary and credit resources for expan
sion. There is not much that the Federal Reserve System itself can
do to utilize the resources that it makes available. Recovery from
a recession depends, therefore, more importantly upon other
measures than upon actions by the Federal Reserve System, but
the Federal Reserve System and the banking system should do
everything they can to foster the forces of revival.
(Within Federal Reserve Authority)
a. Adopt an expansive open market policy.
The Federal Reserve should add to its holdings by purchasing
securities in the open market, thereby providing reserves to the
banking system. It should exchange or replace maturing securities
so as to avoid the deflationary effect resulting from the retirement
of government debt held by the Federal Reserve System.
b. Reduce discount rate.
Although banks are not likely to borrow heavily from the Fed
eral Reserve in a recession, a lower discount rate signalizes credit
ease and encourages any borrowing that may be necessary.
c. Reduce required reserves.
Lowering required reserves provides the banking system with
unemployed funds, which banks usually seek to put to work.
d. Relax or eliminate selective controls on consumer credit,
real estate credit, and stock market credit.
e. Encourage banks to give more consideration to loans
which might be made with the assistance o f Section 13b
of the Federal Reserve Act.

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Section 13b loans to private business for working capital pur
poses can be made by the Reserve Banks, participated in by the
Reserve Banks, or guaranteed by them. They are loans which
would not otherwise be made by existing financial institutions.
F iscal P olicy, G overnm ent E xpenditures, and D eb t
M anagem ent — Inflation

It should be recognized that monetary and credit control actions
within the control of the Federal Reserve System may or may not
be fully effective in checking a boom or inflation. The power of the
Federal Reserve over the supply of money is not absolute. For
example, although the Federal Reserve does not guarantee the
rates on new issues of government securities, it nevertheless as a
matter of policy cannot permit disorderly markets to develop dur
ing the issuance or refunding of marketable securities, and it may
have to add to its holdings at such times unless some other means
can be devised to eliminate the need for such action. Similarly,
very rapid and explosive increases in the turnover of money through
rapidly increased business, consumer, or government spending
cannot be offset adequately by Federal Reserve action alone. For
these and other reasons, not the least of which is the fact that the
Federal Reserve is responsible to the Congress which determines
whether the federal budget is to be balanced or to run a cash
surplus or deficit, the maintenance of stability depends upon the
coordination of many actions and policies devoted to that end. The
most important of these are the fiscal and debt management actions
of the government itself
(Outside Federal Reserve Authority)
22]

STEPS

MAINTAIN

ECONOMIC

STABILITY

a. Reduce government expenditures and/or increase taxes so
as to produce a cash surplus in the budget.
Possibilities of increasing tax rates further without damaging
effects to the economy have been virtually exhausted in the present
situation. Federal, state, and local taxes are now taking more than
a third of the national income. In our judgment this is well above
the proportion which is compatible with the most efficient opera
tion of the American economy in the absence of a full-scale war.
In all-out war, of course, the peacetime limits to taxation can be
stretched. Because the over-all burden of taxes cannot safely be
increased, the major change required to produce a cash surplus
must be a reduction in expenditures.
b* Reduce government debt, particularly in the forms held by
the commercial banking system and the Federal Reserve
Open Market Account.
In a boom or inflationary period the government should achieve
a substantial net cash surplus from taxes. The net cash surplus
provides one of the most effective instruments for reducing infla
tionary pressures.
The effect on the supply of money of using a net cash surplus from
taxes to retire federal debt is a combination of the following three
possibilities, which depend upon whether the public, commercial
banks, or the Federal Reserve Banks hold the debt which is
retired. (Usually, all three types of holders are involved.) In all
three cases, the collection of the cash surplus in the form of an
excess of cash receipts over expenditures reduces (a) private
deposit accounts, reduces (b) member bank reserve accounts as
the checks are collected by the Treasury, and eventually* increases
(c) the Treasury’s account at the Federal Reserve Banks.
* The funds may remain for a time in Tax and Loan Accounts of the banks,
but are eventually called in to the Treasury’s accounts at the Reserve Banks.

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(1) When the Treasury uses a current cash surplus to pay off debt
held by the public, its checks will be deposited to (a) private ac
counts and will increase (b) reserve accounts of the banks when
the checks are collected by a charge to (c) the Treasury’s account
at the Reserve Banks. Therefore, the use o f a current Treasury
cash surplus to retire debt held by the public restores private deposits
and reserve accounts.

(2) When the Treasury uses a current cash surplus to pay off debt
held by commercial banks, the banks will collect the Treasury’s
checks and obtain increased reserves (b) as the Treasury’s account
(c) is charged. Private deposits (a), reduced by the tax collection,
are not restored. Therefore, use o f a cash surplus to retire debt held
by the commercial banks will reduce the money supply (bank de
posits) dollar fo r dollar.

(3) When the Treasury uses a current cash surplus to pay off debt held
by the Reserve Banks, the Treasury’s checks when collected reduce
the Treasury’s account (c) at the Reserve Bank. Reserves (b) and
private deposits (a) which were reduced by the collection of the
surplus are not restored. Therefore, reserves are reduced, and be
cause one dollar of reserves supports about five dollars of de
posits, the banking system is put under pressure to reduce its
deposits by five dollars for every one dollar of debt retirement.
Retirement o f Federal Reserve held debt is therefore the most antiinflationary use o f a Treasury cash surplus.

c. The Treasury should offer savings bonds more attractive

to the public and both new and refunding issues which are
more attractive to noncommercial bank investors.

Increased saving, both personal and business, provides one of
the most effective means of promoting stability in inflationary
periods. If additions to savings are invested in government securi
ties, the government obtains funds without resort to the use of
additions to the money supply which are likely to result from gov
24]

STEPS

MAINTAIN

ECONOMIC

STABILITY

ernment borrowing from the banks. When the government bor
rows additional saving made by the public, private spending is
reduced by the amount the government borrows and spends.
When the government borrows from the banks in an inflationary
period, the government’s spending of the funds borrowed is not
likely to be accompanied by a reduction in private spending.
In a boom or inflationary period the competition of private de
mand for credit is likely to require higher rates on government
securities. If the Treasury does not offer higher rates, its issues will
not be well received in the market, and the Federal Reserve System
may be asked to support them to prevent their failure. Further
more, in an effort to attract the funds of noncommercial bank in
vestors from uses that will add to inflation, the Treasury should
offer intermediate and long-term issues at rates which are attrac
tive to such investors. In particular, the Treasury should offer sav
ings bonds on such terms that the public will buy and hold increas
ing amounts.
If in an inflationary period the Treasury persists in offering only
short-term issues or issues not attractive in rate, noncommercial
bank investors may not buy the securities in a volume which
would permit the Federal Reserve to stay out of the market. It is
therefore essential in a boom or inflationary period that the Treas
ury’s issues be attractive to the noncommercial bank market. This
will mean offering competitive rates and making a vigorous effort
to place intermediate and long-term securities with investors for
whom such securities are suitable.
d. Tax policy should be directed toward restricting demand
without restricting production.
Excise taxes (e.g., taxes on tobacco, automobiles, jewelry, etc.)
remove buying power from the consumer goods’ markets without
discouraging the expansion of productive capacity generally as do

[25

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taxes on business or personal income. During an inflationary
period, productive capacity is likely to be inadequate to meet con
sumer demand. Therefore taxes which reduce consumer demand
without generally discouraging expansion of productive capacity
provide a means of restricting demand to the available supply.
The replacement of obsolete or high cost plant and equipment
constitutes a major source of economic progress and can be a
means of promoting stability. Such replacement can be stimulated
by making it easier to recover capital invested in plant and equip
ment through depreciation allowed for federal tax purposes.
Liberalization of these allowances can be made an instrument for
influencing both the volume and timing of capital expenditures on
plant and equipment, and is a subject which should be studied by
the Congress.
e. Government expenditures which can be postponed —
particidarly public works — should be laid on the shelf\
Government expenditures for public works compete for men
and materials with expenditures for expanding productive capac
ity. Deferment of government public works expenditures would
permit the expansion of productive capacity without undue strain
and if undertaken in a later period of slack business activity would
serve to support the level of economic activity.
f. Scheduled increases in tax rates to support the existing
social security and unemployment compensation programs
should be made at this time .
Taxes for old age and unemployment insurance serve to reduce
current consumption in the interest of paying adequate retirement
and unemployment benefits. Adequate tax payments during in
flationary periods help to preserve stable employment by with
holding purchasing power from the market at such times.
26 ]

STEPS

MAINTAIN

ECONOMIC

STABILITY

F isca l P olicy, G overnm ent Expenditures, and
D eb t M anagem ent — Deflation or Recession

(Outside Federal Reserve Authority)
a. Reduce taxes which most discourage investment and
consumption.
It would be appropriate to reduce the corporate income tax, to
allow accelerated depreciation on new investment in plant and
equipment, and to reduce excise taxes which discourage consump
tion.
If the Federal budget runs a deficit by pursuing the policies out
lined in this report, it would be theoretically logical to finance a
fairly substantial proportion by temporary borrowing from the
banking system. However, the proportion so financed should de
pend in part upon the intensity and probable duration of the
recession or deflation and in part upon the success which had been
obtained in selling government securities outside the banking sys
tem in a previous period of inflationary tendencies (i.e., on how
inflated the money supply was at the time).
b. Encourage the Treasury to issue securities for refunding
or for new money, if necessary, which are attractive to
commercial bank buyers.
To make new securities attractive to commercial banks may
mean increasing the proportion of short or intermediate term
securities. Commercial bank purchases of government securities in
a period of recession put otherwise idle credit facilities to work and
serve to maintain the volume of bank investments and so to main
tain the supply of money.
c. Inaugurate federal, state, and local public works prograins
which have been planned in the preceding boom and increase
public works expenditures.

[27

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d. Make unemployment compensation payments under exist
ing law and provide relief if needed, when unemployment
compensation is exhausted.
O ther M easures to M aintain Stability
—

Inflation

While monetary and fiscal policies provide the main tools to be
used in an attempt to preserve stability, other policies of govern
ment, of business, and of consumers are also important in this
connection. The appropriate direction of some of these policies is
indicated below.
(Outside Federal Reserve Authority)
a. Existing programs of supportforfarm prices and o f lending
or guaranteeing loans by federal agencies should be re
examined to determine whether they are flexibly adminis
tered in the interest of economic stability, and those
elements which contribute toward inflation should be
modified.
b. Wage increases geared to genuine improvements in output
per man-hour o f work are non-inflationary and might be
made in a boom or inflationary period, but other types of
general wage increases not compensatedfor by increases in
output should be discouraged.
c. New business investment o f all types should be geared to
long-range growth.
Avoidable investments such as those relating to a change in de
sign or model should be discouraged unless they result in signifi
28 ]

STEPS

MAINTAIN

ECONOMIC

STABILITY

cant economies in labor and materials. Design and model changes
and deferrable maintenance should be avoided so far as possible.
d. Business expendituresfor research and development should
be maintained at a high level.
Because research and development expenditures lower costs,
bring about increased productivity, and lead to new products which
can expand markets in depressed periods, they should be held at
the highest sustainable rate at all times. Such expenditures should
not be increased in booms and curtailed in depressions.
e. Savings should be encouraged by all possible methods.
One of the most important means of saving is repayment of
debt. Expansion of debt should be discouraged, consumer credit
and mortgage terms should be kept at restrictive levels, and out
standing debt should be paid off so far as possible. Savings bond
sales and other means of saving should be pushed vigorously.
f. Imports should be encouraged so as to increase the domestic
supply o f goods in relation to domestic income.
g. Government financed foreign investment programs should,
like public works programs, be planned but not encouraged
or expanded during this period except to the minimum
extent required by our obligations abroad.
h. All citizens should make the utmost effort to encourage
economy and efficiency in government at all times.
Local and regional demands for public works, river and harbor
improvements, reclamation projects, and the like should be re
sisted during a boom period; desirable economic projects of these
types might be undertaken in a recession.

[29

Report on
O ther M easures to M aintain Stability
—

Deflation or Recession

(Outside Federal Reserve Authority)
a. Let competition determine prices subject to continuing
programs designed to insure against disorderly markets.
b. Maintain social security and farm price support programs
at reasonable levels.
Both of these programs will in a recession help to maintain the
purchasing power of a large number of people.
c. Maintain established programs to guarantee mortgages,
other credits, and bank deposits.
d. Stimulate foreign investment and exports.
e. Encourage private capital investment by both business and
consumers.
In addition to fixed capital expenditures justified by the long
term outlook, expenditures for research, development, and promo
tion of new products and for housing should be maintained and
expanded if possible.

30 ]

STEPS

MAINTAIN

ECONOMIC

STABILITY

The New England Banker’s Contribution
to Stability
Economic stability or instability of a region, state, or community
depends generally upon stability or instability in the nation. Finan
cial and other leaders in each community recognize the interde
pendence of local and national stability, and their actions can con
tribute importantly to preserving stability. They can help to lessen
the impact of inflation on the local economy as well as help to
preserve local employment and income when downturns in busi
ness threaten.
An informed public opinion is a first requirement for maintain
ing stability. Bankers who are well informed of national trends and
of the kinds of action appropriate to each type of situation can in
their daily contacts make a substantial contribution toward better
public understanding of steps needed to preserve stability. Their
understanding of fundamental economic relationships enables
them to initiate or support the right actions at the right times. It
is both a privilege and an obligation of member bankers to exer
cise intellectual leadership along these lines.
Bankers are also participants, through the operations of their
own institutions, in actions which can help or hurt stability. If the
national trend is inflationary and the local economy reflects this
condition, bankers can help by making efforts to hold down the
use of credit by their own customers to minimum needs, to dis
courage avoidable borrowing by local or state governments, to
encourage economy in government, and to stimulate repayment of
debt and the accumulation of savings, including the sale of savings
bonds. The ability of bankers to follow these desirable policies
depends upon their competitors following similar policies. All
banks are more likely to be able to follow similar helpful policies if

[31

Report on
federal and state governments and their agencies and the Federal
Reserve take those actions which are appropriate for preserving
stability that have been outlined in this report.
If the national trend is deflationary, bankers in operating their
own institutions can help by encouraging borrowing for sound
purposes, supplementing their own facilities, if necessary, with
loans from the Reserve Banks or participations in 13b loans.
Their own problems, like those of the nation, will be less if they
have avoided excesses in the preceding boom.
The leadership of bankers should extend to state and local gov
ernment finances. Perhaps the greatest opportunity for contribu
tions to economic stability by state and local governments is
through stabilizing necessary capital expenditures by means of
advance planning. Government capital outlays should be scaled
down if possible when inflation threatens and increased when de
flationary tendencies become strong. Similarly, state and local
governments should balance their budgets and repay debt in good
times so as to be able to finance capital outlay and relief programs
if depression occurs.
Because economic stability requires growth to provide for an
increasing population and a rising standard of living, bankers have
a leading role at all times in the financing of new and growing
businesses. The importance of this function is critical in communi
ties which are likely to suffer more than others because they are
tied to unstable or declining industries. It would not be in the in
terest of stability in a community with a large amount of unem
ployment to try to restrict sound loans for business expansion,
even though restriction of such loans might be desirable in most
other areas of the country.
Leaders in the banking community can and do influence growth
and balance in the economy which they serve. They help local
businesses to raise needed capital from sources outside the regular
32 ]

STEPS

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ECONOMIC

STABILITY

banking structure, where such action is appropriate, and they assist
local firms with management advice to the full extent of their
ability. They cooperate with local development groups seeking to
diversify or strengthen the industrial structure of the community.
And they encourage research by local firms to use more effectively
the community’s human and natural resources through the de
velopment of new products or processes. In performing these and
other functions, bankers and other local leaders contribute to both
local and national economic stability.

[33

FED ER A L RESERVE

BANK OF BOSTON

BOARD OF DIRECTORS
HAROLD D. H O D G K IN S O N
C HA IRM A N AND F E D E R A L

RESERVE

AGENT

E X E C U T IV E

DAVID L. STR O N G
GENERA L

LOAN AND DISCO UNT
CO M M ITTEE

S A L A R Y G O M M IT T E E

J O S E P H A . E R IC K SO N

A LFR E D C. N E A L
R O B E R T B .H A R V E Y
D. H A RRY A N G N E Y

ANSGAR R. BERGE
A S S T VICE PRES.

VIC E PRES,

ASST. V IC E PRES.

EDWARD W. 0NE1L
ASST.

VICE PRES.

LORING C.NYE

G. GORDON WATTS

CHAS. E.T U R N ER

A S S T . C A S H IE R

A S ST. C A S H IER

C R E D IT

H. S TO N E

S E C R E TA R Y

ROTATION AND
TRAINING COMMITTEE

P LA N N IN G C O M M IT T E E

A L F R E D C. N E A L
R O B E R T B. H A R V EY
E A R L E 0. L A T H A M
D. HARRY A N G N E Y

E L L IO T S. BOARD M AN
FRANK C. G IL B O D Y
D. H A R R Y A N G N E Y

VIC E

PR E SID E N T

F IS C A L A G EN C Y OPERATIONS
S P E C IA L AS SIG N M E N TS
BAN K R E L A T IO N S

OSCAR A. SCHLAIKJER

E A R L E 0. LATHAM
V IC E P R E S ID E N T

VICE PRES,

BANK EX A M IN A TIO N S
S P E C IA L A S SIG N M E N TS

FRANK C. GILBODY

DANA D. SAWYER

ASST. VICE PRES.

ASST. V IC E PRES.

ASST. VIC E PRES.

PURCHASING
S U PPLY
PLA N N IN G
BUDG ET
BUILDING MAINTENANCE

WILLIAM R. KING
A SST
B ANK

CASHIER

R E L A T IO N S

F IS C A L A G E N C Y
R E G U L A TIO N S T & U

A C CO UN TIN G
EXPEN SE
P R IN TIN G
T A B U L A T IO N
WAR EMERGENCY PROGRAM

JOHN J. ROCK
ASST CASHIER
C O L L A TE R A L
WIRE TR A N S F E R
TE L E P H O N E S
F IL E S

a GEN. C O U N .

LEGAL
P U B L IC R E L A T IO N S
R E G U L A TIO N S W S X

“

ELLIOT S BOARDMAN

A S S T . C A S H IE R
C H E C K C O L L E C T IO N

ROY F. VAN AMRINGE

C A S H IE R

GEN. BANK O PE R ATIO N S
PR O TE C TIO N

D- HARRY ANGNEY

PERSONNEL

CHECK C O L L E C T IO N
N O N -C A S H C O L L E C T IO N
M ESSEN GERS 8 MAIL

LOANS

A LFRED C,NEAL

R O B E R T B. HARVEY

PR E SID E N T

PERSONNEL
C A F E T E R IA
M E D IC A L
E D U C A TIO N a W E L F A R E

LO ANS
C R E D ITS
R E G U L A T IO N V

LAURENCE

F IR S T VICE PRESID ENT

C A R L B. P IT M A N
LOANS
C R E D ITS
R E G U L A TIO N

JO SEPH A. E R IC K S O N
P R E S ID E N T

A LFR ED C. N E A L
EA R L E 0. LATHAM
CARL 0. P ITM A N
OSCAR A S C H LA IK JER

VIC E

C O M M IT T E E

HAROLD D. H O D G K IN SO N
F R E D E R IC K S. B L A C K A L L , JR .
L L O Y D D. B R A C E

a u d it o r

LOU IS A .ZEHN ER
ASST. V IC E PRES.
A G R IC U L T U R A L

GEORGE H. ELLIS

PARKER B, W ILLIS

D IR EC TO R OF RESEARCH

F IN A N C IAL ECONOM IST

C R E D IT

BA N K a P U B L IC

RELATION S

JOHN E. LOWE
ASST. CASHIER
CURRENCY a COIN
R EG ISTER ED MAIL

JAS. D. MaeDONALD
CHIEF

EXAMINER

CONDUCT OF EXAM S
ANALYSIS a C U S TO D Y
OF REPORTS OF EXAMS
S ECUR ITIE S a PERMITS

October 1954

FEDERAL RESERVE BANK O F BO STO N

BOARD OF DIRECTORS
ROBERT C. SPRA G U E
C H A IR M A N A N D F E D E R A L R E S E R V E AGENT

d R. K IL L IA N
_____________ D E P U T Y

C H A IR M A N ______________

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GENERAL

EXECUTIVE

SALARY COMMITTEE

P R E S IO C N T

V IC E
PERSO N N EL
C A F E T E R IA
M E D IC A L
E O U C A T lO N

C R E D IT S
R E G U L A T IO N V

A S S t V ICE PRES.
LOANS
C R E D IT S
R E G U L A T IO N

LORING C. NYE
A S S T . C A S H I E R ____

LOANS
C R E D IT
R E G U L A T IO N

EDWARD W OVJEIL
ASST

V IC E P R ES,

C H E C K C O L L E C T IO N
N O N -C A S H C O L L E C T IO N
M E S S E N G E R S S M A IL

CHARLES E. TURNER
__________A S S T , C A S H IE R
C H E C K C O L L E C T IO N
S P E C I A L A S S IG N M E N T S

ALFRED C. NEAL

D. HARRY ANGNEY

P R E S ID E N T

LOANS

ANSGAR R. BERGE

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ROTATION AND
TRAINING COMMITTEE

PLANNING COMMITTEE
E L L I O T S. B O A R D M A N
F R A N K C. G I L B O D Y
C H A R L E S E. T U R N E R

A L F R E D C. N E A L
E A R L E a LATHAM
D. H A R R Y A N G N E Y

F IR S T V IC E P R E S ID E N T

CARL B. PITMAN
V IC E

JOSEPH A ERICKSON

A L F R E D C. N E A L
EARLE a LATHAM
D. H A R R Y A N G N E Y

J O S E P H A. E R IC K S O N
A L F R E D C. N E A L
E A R L E a LATHAM
C A R L ft P IT M A N
O S C A R A. S C H L A IK J E R

C O M M IT T E E

R O B E R T C. S P R A G U E
F R E D E R IC K 3. B L A C K A L L , JR.
L L O Y D D. B R A C E

AUDITOR

LOAN AND DISCOUNT
COMMITTEE

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DAVID L. STRONG

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ELLIOT SL BOARDMAN

O S C A R A. SCHLAIKJER

P R E S ID E N T

LEGAL
R E G U L A T IO N S

W ELFARE

JOHN E. LOWE

Vice

C A S H IE R

A SST.

PRES.

C U R R E N C Y 6 C O IN
R E G I S T E R E D M A IL
P R O T E C T IO N

F IS C A L A G E N C Y
R E G U L A T IO N S T « U

P U R C H A S IN G
SU PPLY
P L A N N IN G
BUDGET
B U IL D IN G
M A IN T E N A N C E

G. GORDON WATTS
A SST .
PERSO NNEL

C A S H IE R

W a

W AR E M E R G E N C Y

DANA a SAWYER

A S S T V IC E P R E S

EARLE Q LATHAM
V IC E

V IC E P IIC S . a G E N . C O U N S E L

JOHN J. ROCK
asst

. c a s h ie r

S A F E K E E P IN G
W IR E T R A N S F E R
TELEPH ONES
F IL E S

PROGRAM

FRANK C. GILBODY
ASST. V IC E

P R E S ID E N T

B A N K E X A M IN A T I O N S
S P E C I A L A S S IG N M E N T S

PRES.

GEORGE H. ELLIS
O IR E C T O R OF R E S E A R C H

A C C O U N T IN G
EXPEN SE
P R IN T IN G
T A B U L A T IO N
W AR E M E R G E N C Y P R O G R A M

S T A T IS T IC S
RESEARCH
S P E C IA L A S S I G N M E N T S

JAMES D. Mac DONALD
C H IE F

E X A M IN E R

C O N D U C T OF E X A M S
A N A L Y S IS B CUSTODY OF
REPORTS OF E X A M S
S E C U R I T I E S a P E R M IT S

PARKER a W ILLIS
F IN A N C IA L ECO N OM IST
F IN A N C IA L R E S E A R C H
S P E C IA L A S S IG N M E N T S

ASST. V IC E P R ES._______
B A N K R E L A T IO N S
A G R IC U L T U R A L C R E D I T

WALLACE DICKSO N
ADMINISTRATIVE ASSISTANT
P U B L I C IN F O R M A T I O N
E D U C A T IO N

LOUIS A. ZEHNER

WILLIAM R. KING
A S S I C A S H IE R
B A N K R E L A T IO N S

January 1956

FEDERAL RESERVE BANK OF BOSTON

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BOARD OF DIRECTORS
ROBERT C. SPRA G U E
C H A IR M A N AND FED ERA L R E S E R V E AGENT

J.R. K IL L IA N

_____________ D E P U T Y

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DAVID L. STRONG
GENERAL

GH A I Ft MAH______________

EXECUTIVE

C O M M IT T E E

LAURENCE

R O B E R T C. S P R A G U E

AUDITOR

H STONE

SECR ET A RY

F R E D E R IC K S. B L A C K A L L , JR.
L L O Y D Q BRACE

LOAN AND DISCOUNT
COMMITTEE

P R E S ID E N T

LOANS
C R E D IT S
R E G U L A T IO N

V ICE PRES.

LORING C. NYE
A S S T . C A S H IE R
LO AN S
C R E D IT

REGULATION V

EDWARD
ASST

W O’NEIL

V IC E PRES.

C H E C K C 0 L L £ GT ION
N O N -C A S H C O L L E C T IO N
M E S S E N G E R S ft M A IL

CHARLES E. TURNER
_________ ASS T . C A S H IE R
C H E C K C O L L E C T IO N
S P E C I A L A S S IG N M E N T S

E L L IO T S. B O A R D M A N
F R A N K C. O I L BODY
C H A R L E S E. T U R N E R

A L F R E D C. N E A L
E A R L E 0. L A T H A M
D. H A R R Y A N G N E Y

ALFRED C. NEAL

D. HARRY ANGNEY
__________ V IC E

O S C A R A. SCHLAIKJER

P R E S ID E N T

C A F E T E R IA
M E D IC A L
E D U C A T IO N

LEGAL
R E G U L A T IO N S
tt W E L F A R E

W a

WAR E M E R G E N C Y

ELLIOT a BOARDMAN

DANA a SAWYER

JOHN E. LOWE

A S S T V IC E P RES.

ASST. V IC E P R E S .

C ASHIER

F IS C A L A G E N C Y
R E G U L A T lO N S T A U

P U R C H A S IN G
SU PPLY
P L A N N IN G
BUDG ET
b u il d in g
M A IN T E N A N C E

EARLE Q LATHAM
________ V IC E

V IC E P R E S , a G E N . C O U N SE L

PERSONNEL

LOANS
C R E D IT S
R E G U L A T IO N V

ASST

PLANNING COMMITTEE

F IR S T V IC E P R E S ID E N T

CAR L B. PITMAN

ANSGAR R. BERGE

ROTATION AND
TRAINING COMMITTEE

P R E S ID E N T
A L F R E D C. N E A L
E A R L E O. L A T H A M
0. H A R R Y A N O N E Y

J O S E P H A. E R IC K S O N
A L F R E D C. N E A L
C A R L E a LATHAM
C A R L B. P IT M A N
O S C A R A. 3 C H L A IK J E R

V IC E

JOSEPH A. ERICKSON

SALARY COMMITTEE

CURRENCY S
R E G IS T E R E D
P R O T E C T IO N

CO IN
m a il

PROG RAM

FRANK C. GILBODY
ASST.

VICE

P R E S ID E N T _______

B A N K E X A M IN A T IO N S
S P E C IA L A S S IG N M E N T S

PR ES .

A C C O U N T IN G
E XPEN SE

GEORGE H. ELLIS
D IR E C T O R OF R E S E A R C H
S T A T IS T IC S
RESEARCH
S P E C IA L A S S I G N M E N T S

p r in tin g

PARKER a W ILLIS
F IN A N C IA L ECO N OM IST
F IN A N C IA L R E S E A R C H
S P E C IA L A S S IG N M E N T S

LOUIS A. ZEHNER
ASST. V IC E P R ES.
B A N K R E L A T IO N S
A G R IC U L T U R A L C R E D I T

t a b u l a t io n

W AR E M E R G E N C Y PR O G R A M

G. GORDON WATTS
ASST

C A S H IE R

JOHN J. ROCK
A S S T C A S H IE R
S A F E K E E P IN G
W IR E T R A N S F E R
TELEPHONES
F IL E S

L A U R E N C E H. STONE
ASST.

COUNSEL

JAMES D. MacDONALD
CHIEF

E X AM I NE R

C O N D U C T OF E X A M S
A N A L Y S IS B CUSTODY OF
R E P O R T S OF E X A M S
S E C U R I T I E S a P E R M IT S

WALLACE D ICKSO N
A D M IN IS T R A T IV E

A S S IS T A N T

P U B L I C IN F O R M A T IO N
E D U C A T IO N

WILLIAM R KING
ASST

C A S H IE R

B A N K R E L A T IO N S

February 1956