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Form

11
3

BOARD OF GOVERNORS
OF

FEDERAL

THE

RESERVE

SYSTEM

Office Correspondence
To

March 30, 1938

Subject: Proposed amendments to Patman Bi

Chairman Eccles

pr^m

Date

Mr. Wyatt,femora.1 Counsel




During the meeting yesterday, Governor Ransom
requested that I furnish to each member of the Board
a copy of each of the 6 amendments which Congressman
Patman has proposed to be made to his bill, H.R. 7230,
I find that these amendments have never been
printed in bill form but were published in the Congressional Record for Monday, March 21, at page 5040.
Copies quoted from the Congressional Record are attached.

Respectfully,

Walter % a t t , 6
General Counsel.

Attachment

L-557
PROPOSED AMENDMENTS TO PATMAN BILL

(Quoted from. Congressional Record of March 21,
1938, at page 5040)

1. Mandate
First, it was charged that the bill had no mandate that
was sufficient; that it was not enough for Congress to certify a
policy as outlined in section 1* We have prepared an amendment
to meet this objection, as follows:
It shall be the duty of the Board of Governors of the
Federal Reserve banks to raise the all-commodity index, or
the so-called price level, until full employment of all
persons able and willing to work shall have been achieved,
and until the price level shall at least reach the allcommodity index of 100 as established by the Department of
Labor for the year of 1926, which is the same as the average
for the years 1914-30, inclusive* Thenceforth such price
level shall be standardized and maintained at a variation
not to exceed 2 percent above or below the standard reached
as aforesaid* It shall be the duty of the Federal Reserve
Board in accomplishing these ends to expand demand bank
deposits by the purchase of United States bonds and notes,
or bonds secured by the United States, br bonds of States
and subdivisions thereof, or other sound bankable assets,
and to contract demand bank deposits by the sale of the
securities aforesaid*
2.

Removal of Board Members

Second, in order to make sure that Congress may have
charge of the agency whose duty it is to regulate the value of
money, the following amendment is proposed:




The Board of Governors of the Federal banks is hereby declared to be the agency of the Congress to create
money and regulate the value thereof, as authorized by
the Constitution of the United States, and the individual
members of such Board shall hold office subject to the
will of the Congress of the United States; and either the
Senate or the House by resolution may authorize and request
the President of the United States to nominate a successor
to a member of the Board from any Federal Reserve district
regardless of the term for which he was appointed, whereupon, the office of such member upon the passage of such
resolution shall be vacated*

-2*

3.

L-557

Composition of Board

Section 5 of our bill provides that the board of governors
of the Federal Reserve System shall consist of 15 members, including
the Secretary of the Treasury, the Comptroller of the Currency, and
the chairman of the board of directors of the Federal Deposit Insurance Corporation, who shall have voting privileges, and 12 members
appointed by the President of the United States by and with the advice and consent of the Senate.
We propose to change this so as to make the Board consist
of 12 members, one from each Federal Reserve district. The President will have the power to appoint them, but either House of Congress will have the power to remove them.
4.

Directors of Reserve Banks

Section 6 of our bill provides that class A, B, and C
directors of each of the 12 banks shall be appointed by the President by and with the advice and consent of the Senate. We propose
to change this so that they will be selected and appointed by the
Board of Governors of the Federal Reserve Banking System and subject to removal by this Board at will. This will give the Board
of Governors, the agency charged with the duty of regulating the
value of money by Congress, complete power and control. At the
same time, Congress will have a way of dealing with these members
if they fail to carry out their duties.
5*

Coordination of Other Agencies

We suggest, however, that although the Secretary of the
Treasury, Comptroller of the Currency, and Chairman of the Federal
Deposit Insurance Corporation are not to be members of the Board,
that they shall be required to coordinate their efforts and activities with the Board of Governors.
6.

Centralization

We propose further that these 12 institutions and their 25
branches be conducted as 1 institution. This will prevent much
overlapping of bookkeeping and clerical work and will cause the
system to be operated more efficiently and at much less expense.