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To:

Chairman Ecoles
October 6# 1938

From:

J* P* Dreibelbis

It is exceedingly difficult to picture the untenable
situation in which I find myself without at the same time reciting
incidents which, considered separately, may appear trifling and
inconsequential* In answer I will say that in relating the same
I have tried not to be petty; that while the specific incidents
i l i h I shall mention may appear disconnected, they represent only
fhc
parts of the whole, which I have drawn from memory, are cumulative
in effect, and should be considered as a whole rather than as
isolated cases; and that they illustrate and support the broader
conclusions which I shall state*
In the outset, I feel that it is proper to say that in
the 14 years I practiced law prior to becoming associated with the
Board, including employment by the City Attorney's office of
Dallas, the Federal Reserve Bank of Dallas, the Reconstruction
Finance Corporation, the Comptroller of the Currency and by a firm
in the general practice, first as an associate and then as a
partner, I have never previously, in so far as I know, failed to
enjoy and retain the confidence and friendship of my superiors and
associates* Nor have I ever previously worked in an atmosphere
where there was any jealousy of prerogative or position; where
there was any disposition to dramatise such position or unduly to
emphasize the comparative importance or urgency of onefs own work;
where every associate was not treated as an equal; or where I was
watched with suspicion and catechized concerning the minute details
of my activities* Furthermore, I can say that while my previous
associations have been entirely normal and therefore subject to the
usual disagreements and differences of opinion, such disagreements
or differences were never per se received as matters of personal
affront and mutual cooperation and mutual exchange of ideas were
matters of course*
Twice, before I finally came with the Board, in 1930 and
again in 1934 I was approached by Mr* Wyatt and discussed seriously
with him the matter of coming with the Board, but upon both occasions, upon advice of my associates and for other reasons, I declined*
From these various discussions I was lead to believe that any special
value I might be to his office lay in the fact that I had had six or
seven years of experience in connection with the practical operation
of a Federal Reserve bank, as well as outside experience of a general
nature* Then again during the course of the discussions leading up
to my present appointment these so-called qualifications were stressed
and it was repeated to me that he wanted someone of "executive and
organizing abilityft and that you and Judge Thomas were "both anxious
to strengthen the staff of this office by the addition of a man who




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has had practical experience on the firing line and is thoroughly
familiar with the practical problems of a Federal Reserve bank"*
All of this I took at face value and naturally assumed that it was
with respect to these qualities, to the extent that I might have
any of them that he desired me as his assistant to supplement his
activities along the lines discussed*
In this connection, I would not be fair if I did not state
that during the first year I was here I found him usually receptive
to such ideas and suggestions as I advanced* To illustrate, within
a short time after my arrival I observed that the atmosphere of the
office to be more that of a school room than of a law office (a
condition which still exists) and I observed that the other men in
the office were afraid of him as were the secretaries, stenographers
and file clerks* I observed that night after night the office was
doing night work when I felt reasonably sure that there was no
necessity for such action and I finally concluded that it was really
for the purpose of creating an appearance and because they were
fearful of getting demerits if they did not do it* I made that
point and, following an office conference with the entire staff of
lawyers, it ceased to all intents and purposes and except on special
occasions has been abandoned since that time*
It was only after the Board had promoted me at the end of
1S36 and after Mr* Wyatt had returned from Florida that the reverse
situation commenced to evidence itself* I had interpreted the promotion as meaning that I should work at least as close, if not more
closely with him than I had been doing, particularly with respect to
the administrative affairs of the office*
However, the net result has been so directly to the contrary that I can say with assurance that, in recent months, my
participation in the affairs of this office is solely in connection
with matters initiated entirely outside of the office and comes
about only when such matters are referred to me by the Board, some
member of the Board, or some member of the Boardfs staff outside of
the legal department*
For instance, I have observed that in recent months whatever phone calls are received in this office when Mr* USyatt for any
reason is not available are, whatever the subject matter of such
calls, referred to Mr* Vest* This, in itself, is perhaps a small
matter but I am sure that Kr* Wyattfs secretary would not take such
action in the absence of instructions from him* There may be no
reason why a phone call should be referred to me any more than to
any other member of the office, but the point is that there has been




- 3-

a conscious effort to separate me from the affairs of the office.
Kr. Yfilliams, at the time of his employment, was instructed not
to report to me and that in Mr* "Wyatt's absence he should contact
Mr. Vest or Mr. Wingfield with respect to his work. Even now it
is with embarrassment and under close scrutiny that he comes in my
office. I am watched and observed by Mr. "Wyatt's secretary, who,
I am confident, reports to him every call that I have from any
member of the Board or its staff. I know this particularly from
the fact that in his absence she catechizes other men in this
office who happen to come in my office to ascertain the subject
matter of any discussion. Without ever having mentioned the matter
to them or discussed the situation with them in any manner I have
observed that they have been embarrassed by such cross-questioning.
I do not know how to account for the change in his manner
towards me except for the fact that on a number of occasions I have
disagreed with him, such differences being invariably treated as if
each was a personal attack upon him, and the further fact that I
have had more opportunity to assert my views to the Board than have
some of the other members of the legal staff.
Chronologically, the trouble started almost immediately
after his return from Florida in March of 1937. Several things
happened in his absence which displeased him.
You will recall that about the time he left and when I
was placed in charge of the office you discussed the situation in
the office rather generally. At that time you expressed the opinion
that the office indulged ia too much "paper" work and asked me if
jt
the office was not overaanad., I agreed that we did do too much
"paper" work and expressed the opinion that the office was overmanedf
which opinion I still hold. As I predicted to you at the time Mr.
Wyatt, subsequently by asking questions iwhich I felt compelled to
answer, ascertained that fact and has resented it ever since*
Secondly, in the light of our discussion at that time and
when it became necessary to arrange office space before his return,
I arranged for a stenographic pool rather than ante rooms with
individual stenographers for all assistant counsel. I did this
because I felt that it conserved space and also gave more flexibility to our set-up by making it unnecessary to replace any of the
stenographers who might for any cause leave the Board, but even so
I did it only after consulting with you and Mr. Morrill. This
action too he resented.




Also, during his absence I was partly instrumental in one

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of the file clerks, who had been designated as a law clerk, severing her connection with the Board. In the first place she was
inefficient and in addition her husband was an attorney in the
office of the Comptroller of the Currency and at that time enjoyed
a substantial salary from that office• Furthermore, I was uneasy
at the time lest information concerning confidential work that we
were then engaged in might improperly find its way into other hands*
For all of these reasons and because the office could get along as
well if not better without her, I took advantage of a request of a
Congressional committee for information looking into the matter of
husbands and wives both receiving salaries from the Government, and,
after discussing the matter with you and Mr* Morrill, I initiated
action which subsequently resulted in her resignation* It never
occurred to me that there was any impropriety in doing this in the
absence of Mr* INyatt but this also caused resentment and in subsequent discussions all of them have been referred to by him as improprieties upon my part with the inference and, upon one occasion,
the specific charge that it represented insubordination upon my part*
The rift caused by the foregoing had hardly subsided when
the matter of procedure to be followed under Section 30 came to a
head*
I, as well as the men working with me, had become convinced that it was not necessary to burden the Board with the procedure followed in the first case* Because the language of the Act
speaks of an appearance before the Board, Mr* Wyatt could not be
pursuaded that it was proper for the Board to appoint a trial examiner and on numerous occasions we had argued the point* I had worked
out tentative procedure but had not shown it to him, hoping that
eventually we could agree, and knowing from experience that submission of the procedure already worked out would more than likely
irritate rather than pursuade him* I confess that I had not forced
the issue and hoped that we would eventually agree, and because I
felt that it would not be good for the office if he continued to
be unyielding in his view and if the Board should adopt the recommendation which I felt it would* In any event, as a pure coincidence, the day before Mr* Wyatt went to the hospital to have his
tonsils removed I received a call from Mr* Kelly of the Comptroller's
office announcing the second Section 30 case and it occurred to me
that if Mr* lyatt was not in the office it would be my full responsibility to make the recommendation and he would be relieved of any
responsibility incident thereto* Accordingly, I made excuses to
Mr* Kelly, stating that I was unable to talk to him until the next
day* The following day the certificate came over and at the next




- 5 -

Board meeting, at -which time I advised the Board that Mr. Wyatt entertained a different view, the Board adopted the suggested procedure, with no resulting ill effects as far as I know, except his
displeasure with me.
You are familiar with some of the circumstances leading
up to his final opinion that the Open Market Committee had authority
to direct reallocation of the System Open Market account, but I am
not sure you are aware of all of them* I have always felt that the
difficulty started when Mr. Wyatt, in an off-hand response to a
question put by Mr. Harrison, expressed the opinion that the Committee could not lawfully direct reallocation. This, I believe,
caused him to hesitate to reverse himself after more mature deliberation for fear that such reverse would reflect upon him. At the
time I was not convinced of the correctness of his informal statement but making the observation that I m s not certain seemed only
to irritate him. Thereafter, from time to time, we discussed the
question and upon such occasions, hoping that by admitting the validity of his arguments he would in turn admit the validity of mine I
leaned backwards to some extent in admitting the soundness of the
arguments on both sides of the question, but on each occasion he
seemed to become more unyielding. Finally, he stated with some feeling that I did not seem to be able to present my arguments so that
he could understand them and requested that I reduce them to writing.
This I did, and in so doing I tried not only to present the affirmative of the case but to answer also the points which he had raised
from time to time. All of this occurred over a period of several
months and when it became evident that the Committee would require
an opinion I handed him my written argument, which, as stated, was
addressed to the debate which had been occurring between us. This
was at least three weeks before the meeting of the Open Market
Committee. After reading it he called me into his office and stated
that he could not agree with it and that he got the idea it was
impudent. He then stated that you had requested that we get together and that if we could not we were to call you. Thereupon he
asked me if I felt that I could recede from my position and when I
told him that I did not see how I could he said that neither could
he and assumed that there was nothing more to do but to call you.
You will recall the two or three hours session with you, at
which time he stated that there was not even room for disagreement
among reasonable minds and that therefore he could not even go so
far as to say that the case could be argued from my viewpoint. This
was the stage at which the matter was left when we left your office
and on the way down I was accused of being unfair. He was very
angry, as was I. Seeing that he was in a rage and not feeling that




- 6 -

I wanted to be responsible for what might happen as a result of
a violent discussion, I first refused to talk with him further
on the excuse that I had an appointment, but at his insistence I
was pursuaded and we remained in his office for a couple of hours
longer* I cannot adequately describe this session because it
started in a rage and was accompanied with a display of temper
worthy of good histrionics* I would start to leave and he would
renew the discussion when finally, to my amazement, with a complete
change of demeanor he asked me to state my position once more,
which, after all, was simply that Congress had taken control from
the boards of directors of the various banks and put i£ in the
Open Market Committee* Thereupon, he stated that he thought that
he finally saw it and the next morning he advised you that he had
concluded that the Committee could direct reallocation and requested Mr* Owens to write the opinion, which he subsequently
signed*
Furthermore, since that time he has noticeably increased
his efforts to avoid any participation upon my part in any matter
under his control* This was evidenced by his conduct when the
question of the eligibility of Reconstruction Finance Corporation
obligations for purchase in the open market arose* I first knew
of this matter when Mr* Logan called me from New York because Mr*
Wyatt had refused to talk to him and I immediately got in touch
with Mr* Wyatt and Mr* Morrill* Mr* Morrill called you and Mr*
?fyattfs first remark was that he was too busy to talk to me* As I
turned to start out of the office he asked me if it was important
and I told him that I didn't know and that it had to do with a
call from Walter Logan in New York about the eligibility of Reconstruction Finance Corporation obligations for purchase in the
open market* Thereupon, he said he would handle it and that was
the end of it until Governor McKee called Mr* Wyatt and me to his
office, during the course of which he asked me about the opinion
and I told him that I had not seen it* Mr* Wyatt then stated that
he guessed that it was an Open Market matter and that he should
have sent it to me but that it did not occur to him at the time
and that he had asked one of the other men to look at it* Turning
to me he said that he would like for me to look it over when we
returned to his office and tell him what I thought of it* I do
not mean to imply that I disagreed with the opinion because I do
not disagree with the conclusion, but I do unhesitatingly say that
the appearance he tried to create before Governor McKee with respect to my participation in the affairs of the office was wholly
inconsistent with his real attitude* I may add also that I have
observed considerable difference in his demeanor towards me in the
presence of the Board or members of the Board and under other circumstances*




- 7-

At one time I was hopeful that we would finally arrive
at a satisfactory working basis• Upon at least three occasions
we have had frank discussions* However, each of such occasions
was the result of some incident -which had provoked him, such as,
the incident in connection with the real location opinion* Another
such incident occurred when you asked me in Board meeting one day
following Christmas of 1937 if I had talked to Mr* Hitt of the
St* Louis Bank regarding taking someone in our office in their
legal department upon Mr* McConkey^ retirement* Upon each of
these occasions, before reaching any sort of an accord, it was
necessary for me to let personal discourtesies pass unnoticed,
such as accusations that I was "unfair", "insubordinate" or "conceited" or was trying to "undermine" him* On these occasions I
have tried to be fair with him without capitulating, I have tried
to impress him with the fact that I wanted to assist him, in so
far as it was within my power to do so, I have tried to convince
him that I was perfectly aware of his superior position and that
I had no designs upon his job and, when upon one occasion he more
or less broke down and stated that he did not believe that he had
the confidence of the Board and felt that, except for his family
responsibilities, he should resign, I tried as best I knew how to
reason with him concerning his temperament as related to the office*
He said that he knew that he was subject to what he termed "brain
storms" "which often got him in trouble and we ended the discussion
upon a note of accord which really made me feel that something had
been accomplished* This was true to a lesser extent on each of
the other occasions but experience proved that two or three days
or even the next morning would find him reverting to the same
attitude of suspicion and the same desire to isolate me from the
affairs of the office*
Moreover, I sometimes have the feeling that he is deliberately trying to maneuver me into an embarrassing position* For
instance, he knew that in response to questions from you that I
had stated that the office was over-staffed* He knew that I thought
that the office wrote unnecessarily long memoranda on relatively
unimportant matters* He knew that I did not feel that it was necessary for each assistant counsel to have one stenographer* He knew
that everyone else in the office had become accustomed to the
present technique of the work and for the most part had never known
any other method* Consequently, when at the end of 1937 the Board
requested a survey of the work in each division, he requested
separate written comments from each assistant general counsel* I
felt that more could be accomplished by informal discussion before
opinions had become fixed by reducing them to writing and protested
twice upon the basis that I thought it would be more desirable to




- 8 -

handle it upon the basis of an informal discussion* But at his
insistence I addressed a memorandum to him, a copy of which is
attached and idiich sets out my views then and now« None of these
suggestions were ever discussed further with me or so far as I
know with any of the other assistant general counsel•
While I am on the subject of memorandums, I would like
to say that in connection with each dayfs work in this office all
correspondence and memoranda is passed among all of the attorneys*
This is known as the "current"* It is not unusual for Mr* Wyatt
to include remarks in the "current" criticizing the work of a
particular lawyer* Upon occasion they are very abrupt and dictatorial in their tone, if not outright discourteous* I have saved
and attach one or two of these which have been directed to me and
which are mild in comparison to some directed to some of the assistant counsel•
Also, I have observed that many times written and detailed
instructions to members of this office, supposedly relayed from the
Board or a member of the Board are wholly different from the instructions originally given* I call your attention to a memorandum
attempting to convey an instruction from Governor Ransom to me with
special reference to the extraordinary time limit for completion of
the job and the extraordinary limitation upon with whom I should
work, in comparison with the memorandum from Governor Ransom, which
as a coincidence he sent to me the same day, together with the subsequent memorandum from Mr* Wyatt* The difficulty of working intelligently under such circumstances is apparent*
I have referred to the fact of Mr* TSyattfs discourtesies,
to his resentment at any suggestions I may make, to his inability
to interpret the Board's requests unless made literal, and to his
obvious effort to eliminate me from any office activities* I recall
one incident which illustrates all of these characteristics* You
will recall that when the Board was working upon a statement to be
filed in connection with the Patman Bill Mr* Wyatt was requested to
prepare a statement* I was not asked by Mr* Wyatt to turn a hand in
connection with the same and in fact, by every means except express
direction, I was eliminated from the matter* I observed that he was
preparing a section by section analysis, which in the light of the
real purposes of the Bill seemed to me to be wholly inadequate and
to mean nothing* I intruded myself into the work enough to tell him
that in my view of the matter the analysis should be directed at the
underlying philosophy rather than at a section by section analysis*
I was rebuked in this effort and subsequently when Governor Ransom




- 9 -

had received a copy of Mr* Wyattfs 16 page analysis he called
me and I made the same observation, which I gathered accorded
with his view* I then wrote an analysis of 5 pages, which I gave
to Governor Ransom and at his suggestion to Dr* Goldenweiser*
You will recall that at the Board meeting the following morning
Mr* Wyattfs tentative draft at Governor Davisfs suggestion was
discarded completely and Dr* Goldenweiser was directed to prepare
the statement, which subsequently was made the basis of the statement you read at the hearing* Following this Board meeting Mr*
Wyatt called Messrs* Vest,ffingfieldand Williams* Later, he instructed his secretary to call me and when I entered his office
he turned to me and stated that he had first thought he would call
me in to discuss further work upon the analysis but that my
presence "would only confuse the matter and further muddy the
water", whereupon I, of course, retired from the meeting* The
final touch was a request to prepare another memorandum showing
Patmanfs philosophy, which I did, only to receive still another
request by formal memorandum* This memorandum is both typical
and interesting and I have therefore attached it* As I stated,
Dr* Goldenweiser prepared the statement which subsequently you
used, but in addition Mr* Wyatt had Mr* Solomon prepare still
another section by section analysis of 31 pages, which was also
circulated among the members of the Board*
The story on the Smathers Bill (the Banking Agencies Bill)
has been pretty much the same* First, there was a section by section analysis by Mr* Hackley, they Governor Ransom asked me to
independently summarize the Bill, which I did to the best of my
ability* I now discover that, in addition, an 86 page analysis
has been prepared by several men in the office and has been circulated among the Board members*
Laying aside the personal aspect of the matter, I would
like to make a few comments concerning some of the office practices
affecting the work in general, as well as the attitude assumed towards the other men in the office* We still engage in what I
consider to be too much paper work* For instance, we make four
copies of practically everything written in this office* We still
write lengthy memoranda unnecessarily* Naturally there are occasions where the very nature of the question requires lengthy
treatment but we seem to treat every question as if it was in that
category* We engage in the exchange of formal memoranda between
the men in the office concerning trivial and unimportant matters,
when several words of conversation would accomplish the desired end*
It is, of course, necessary for us to maintain files and particularly is this true in connection with legal opinions and actions




- 10 -

constituting precedents by which the lawyers may be guided. However, we maintain such an elaborate system of filing as, in my
opinion, to create unnecessary confusion and to require unnecessary labor*
Concerning the attitude assumed towards the other men in
the office I can only repeat that the atmosphere of the office is
very much that of a school room class• None of the men are permitted to do any work which he feels is of any importance to the
Board except under his personal supervision* None are permitted to
assume any responsibility, with the result that more and more they
are less inclined to assume any responsibility* While perhaps he
may not intend to be, he is dictatorial and the other men in the
office are not treated as equals* I may add that this extends to
the treatment accorded to the men by his secretary, who I have heard
speak to various of the men as though they were children and to say
the least, in a manner not consistent with the respective positions
they are supposed to occupy* It is not unusual to receive what is
termed a "stand by" order for more llurgentfl jobs, which sometimes
lead either to nothing or to a great deal of confused work done in
an uproar, with the result that, almost invariably it is ultimately
discarded* Very seldom has the aftermath of a "stand by" order
proved the wisdom of the bedlam it has caused*
Although the situation has become unendurable from my
standpoint I cannot help but say that I sympathize to some extent
with Mr* Wyatt's situation* He probably considers himself to be
very benevolent and he might be the last to think that he does any
man in this office an injustice* Nevertheless, he is given to fits
of temper, is dictatorial and, largely because he likes to appear
important, forces others in the office into positions of virtual
obscurity* Moreover, the assumption of any responsibility by anyone else creates jealousy*
As I have already stated, I have never worked in such an
atmosphere and I am not so constituted that I can receive the very
generous salary paid to me by the Board without at least trying to
give value received* In my present position I am having less and
less opportunity in which even to try* I like the work, admire the
members of the Board individually, and am grateful for the opportunities which the Board has given me* Indeed, the fact that such
is the case makes the problem more difficult because it makes explanation of the trouble more difficult* It is for that reason that
I have perhaps unduly extended this statement but I hope, in the
light of *what I have said, that you will appreciate the impossibility
of my trying to continue indefinitely under existing conditions*