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FEDERAL RESERVE BOARD
WASHINGTON
OFFICE OF GOVERNOR

September 12, 1955.
Mr* M* S* Eccles,
c/o Eccles Investment Co*,
Ogden, Utah*

/

Dear Marriner:
lou will be interested in reading th^enclosed letter )
from the Department of the Interior which confirms Otsrearlier fears
that the Federal Trade Coiiomission would not be out of the way in time
for the building program to be completed as planned* At the Board
meeting today this matter was discussed and in view of the likely delay, Thomas, Morrill and I were authorized to negotiate with the high
bidder for a postponement of the date for commencement of the demolition* Meanwhile, it has been said that Mr. Ickes took with him to
Hyde Park a memorandum on this matter*
The meeting authorized the filing of the white collar
project with the understanding that it would be limited to work in
closed banks and that any enlargement of the project would be subject
to further Board action* Meanwhile, Dr* Currie has sent letters to
the ABA and the Reserve City bankers asking for their endorsement*
The press today swings in the opposite direction from
the Kiplinger comment and as you, of course, know by now, the Secretary
held a press conference in which he stated that he was very much in
favor of your reappointment as Chairman* This, of course, will spike
all the loose talk and will probably obviate the necessity of the plan
you mentioned the other evening*
I am enclosing herewith a copy of an opinion handed
me personally by Mr* Vest on the matter of strategy wHxell WB Uicscussed
over the telephone*
Bob Fleming's speech at Atlantic City certainly reflected the views you have been expressing for many months regarding
necessity of expansion of private credit in order to get the government out of it. The new Banking Act is recognized by Fleming as
opening the gate for such a development* I have marked the most significant passages and am enclosing herewith*
Please check the enclosed proposed letter to Professor
Fisher and see if you wish it sent or not*




Yours sincerely,

,

Form No. 131

Office Correspondence
To

Mr. Clayton

From

Mru-Yest

FEDERAL RESERVE
BOARD

.

Subject:

Question* relating to

of members j&f the Board of Governors
apo

In accordance

16—852

with the request contained in your memorandum

of September 11, I have given consideration to the matter outlined
therein*

For purposes of convenience, I shall discuss the second of

your three questions first*

This question is as follows:

In the event no one is appointed until after 2/l/56
to succeed Mr* Eocles, would his present appointment
carry over until the time of such appointment?
The Banking Act of 1935 provides that "upon the expiration of
their terms ©f office, members of the Board shall continue to serve
until their successors are appointed and have qualified". The present
members of the Board are just as muoh members of the Board of Governors
as will be those appointed effective February 1, 1936*

The phrase

^members of the Board" in the sentence above quoted is unrestricted
and it appears to be applicable to the present members of the Board•
Some possible doubt is thrown on this by the provision that each appointive member of the Board in office on the date of enactment of the
Banking Act of 1935 shall continue to serve as a member until February
1, 1936*

It may be argued that this provision definitely terminates

on the latter date the service of present members of the Boardj but
the statute does not so provide, and it is believed that this provision
merely indicates the date of expiration of the terms of office of present
members and does not prevent the application to present members of the
sentenoe providing for continuance in office after expiration of term
until successors are qualified*




Mr-. Clayton - 2

It is my opinion, therefore, that the sentence above quoted
is applicable to the present members of the Board and that, if Mr#
Ecoles should not be nominated by the President prior to February
1, 1936, or if he should be nominated and confirmation denied or
delayed beyond that date by the Senate, he would continue to hold
office until his successor is appointed and has qualified*
The question also arises whether Mr. Eocles could continue
to serve as Chairman in such circumstances* The new law provides
that ^Hereafter • * * the governor and the vice-governor of the Federal Reserve Board shall be known as the chairman and the vice-chairman respectively11 and accordingly Mr* Eccles is now Chairman of tte
Board by virtue of the fact that he was Governor on the date of enactment of the Banking Act of 1935• The law, after stating the manner
in which the President shall fix the terms of successors to appointive
members in office on the date of the enactment of the Banking Act of
1935, also provides that the President shall designate a chairman from
the persons "thus appointed1*, apparently referring to persons appointed
to succeed present appointive members of the Board* Howeverf inasmuch
as Mr* Ecoles is now Chairman, it would seem that he would continue
to be Chairman if he should hold over, unless some other member were
designated as Chairman* The law does not expressly provide for this,
but it would seem to be a reasonable interpretation of the hold-over
clause which says that members "shall continue to serve*1 until their
successors are appointed and have qualified*




If the President failed

Mr* Clayton - 5
to designate any other member as Chairmanyfche Board would probably be
without a Chaixman unless this construction should prevail, for it appears very doubtful whether the President would have authority t©
designate Mr* Eocles as Chairman until he has been given a new appointment # it is believed, therefore, that Mr* Eccles would continue as
Chairman of the Board in holding over after February l f unless some one
else were designated as Chairman*
The first question stated in your memorandum, is as followst
Assume Mr* Eocles were appointed now to suoceed himself
and he were not confirmed by the Senate prior to 2/l/S6i
In such a case, would the Board be without a Chairman?
Since the statute provides that the present members shall con*
tinue to serve as members of the Board until February 1, 1936 and since
they actually are serving as suoh, in my opinion the statute evidences
an intention that the Board shall consist of seven members after February
1, 1936 and of not more than eight members until that time* On this
basis, there appear to be no vacancies in the membership of the Board
at this time* Accordingly, I know of no authority under which the
President might appoint Mr* Ecoles to become a member of the Board at
this time* Suoh an appointment might possibly be made effective February
1, 1956* but it is believed that this would require confirmation by the
Senate before he could take office, since it would have the same effect
as if made after the Senate convenes* Even if it should be considered
that there is at this time a vacancy with respect to the office of the
new seventh appointive member of the Board, and I do not believe that
is the preferred interpretation of the law, and if Mr* Eccles should
be appointed during the recess of the Senate to fill suoh vacancy, his




Mr. Clayton - 4

term under such appointment would end with the expiration of the
next session of the Senate*

Conceivably, it may be suggested that

Mr* Eoeles resign his present office to create a vacancy therein and
be reappointed now to succeed himself in such office*

If he did so,

however, it appears that his term would expire on February 1# 1956,
because he could only be appointed to fill a vacancy for the unexpired term of his predecessor*

In any of these cases, of course,

as above indicated, the provision for holding over would be applicable
in the event no successor were appointed and qualified at the end of
the term*
Your third question is as followst
In the event Mr* Eocles were appointed after Congress
convenes, how long could he serve without confirmation?
If Mr* Eccles were appointed to suoceed himself while the Senate
is in session, it is believed that it would be necessary for him to be
nominated by the President and confirmed by the Senate before he could
serve in such circumstances under such new appointment.

However, as

indicated above, it is believed that he could hold over after February
1 under his existing appointment unless his successor had been appointed
and qualified by that date*
I trust that the above discussion of this matter will give you
and Mr* Eocles the information which is desired in this connection* I
feel that the most important point above considered is that with respect
to the holding over of present members of the Board after February 1




Mr. Clayton - 5

in the event their successors have not been appointed and qualified
by that date* There is some slight doubt about this, but after
carefully studying the statute it is believed the provision for holding over is applicable not only to members hereafter appointed but
also to those now in office, so that if a successor to Mr. Socles has
not been appointed and qualified by February 1, 19S6 he may continue
to serve as a member of the Board until a suocessor has been appointed
and qualified*




Respectfully,

George B. Vest,
Assistant General Counsel•