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BOARD OF" GOVERNORS DF' THE FEDERAL RESERVE SYSTEM S-263 WASHINGTON ADDRESS DF"F"ICIAL CORRESPONDENCE TD THE BDARD Mav' 13, 1941 Dear Sir: Referring to Mr .. Draper 1 s wi.re to you of May 9, 191;.1, 1elating to the establishment of Priori- ties field offices in a number of important cities, there are attached for your information copies of a letter dated May 8 and a 1:1emorandum dated Uay 9, 1941, from Mr. Francis J. Tracker, Acti:1g Chief, Defense Contract Service, and a co~J of the Board's letter of May 12, 1941, to Mr. Trccker, all of which are self-eA~lanatory. Very truly yours, ~hi~ Chester Morrill, Secretary. Attachments 3 TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS 295 S-263-a Social Security Building Washington, D. c. lVlay !j, 1941 Governor Ernest G. Draper, Board of Governors of' the Federal Re9erve System, Washington, D. G. Dear Governor Draper: The Division of Priorities some time ago requested permission to use the Defense Contrect Service field offices as distribution points for contracts and preliminary inforn;ation on priorities. These duties have been carried on up to the present time. However, the tremendous impact and the necessary technical and detailed training required to handle .J,Jriorities vroblems made it necessary that more adequate and especially pr:i.orities tJ'ained pa:rsom.el be in the field to give first hand advice to the manufacturers. Due to the above reasons, it was decided by the Priorities Division to ask the :Federal Reserve System to make available to them space so that priori ties could install their own personnel. Mr. Philip D. Reed of the Priorities Division has asked m•:3 to ·convey to you the .t'riorities Division reG.uest for space and acco:nmodations similar to that which you have so kindly extencied to the Dv3f'ense Contrect Service Section of the Office of .Production li.ianag·.Jmsnt. • .. ~ It is their intention to establish in the following cities .Priorities field offices: Boston New York Philad.elphia Atlanta St. Louis Chicago Cincinnati Cleveland Denver San Francisco J:littsburgh Dallas Detroit Los Angeles Seattle These field offices, it is pro 1)osea, will work in close coordination with the Defense Contract Service. However, authority f'or their actions, financing, ana similar J:)roblems will be hand.led entirely and directly from Washington Division of ~riorities. QuotaUon from their letter of transmittal to us outlining their proposed set-up is as :t'ollows: "Our present plan is to have in each of the indicated offices a District .Mana~er, an Assistnnt to t.be District Manaeer, a Product ion and Inventory J.IJ~elyst, and a secre ... tary to the District Manager. As more field work is • S-263-a -2- "required in the administration of additional mandatory controls i.m.posed by the Division, there will undoubtedly be an increase in the number of production and inventory analysts, especially in the 10 or 1.2 large:3t cities, and this should be borne in mind." Furthennore, it is the Priorities Division's plan at the start to have the men in the aboYe mentioned cities cover an area as large as necessary around that city so as to be of service to all of the present established Defense Contract Service offices. Their memorandum further states that they would like to have it planned in the future to expand into other cities in which Defense Contract. Service is established as needed. As discussed in the meeting between representatives of Defense Contract Service and Priorities Division, it is the plan to. have the Priorities- staff directly tutder the control and on the pay roll of the Priorities Division. Priorities entire agreement with Federal Reserve is to be similar to the agreement between Defense Contract Service o.nd the Federal Reserve Syster:t, narnely, that all pay roll is the responsibility of the Priorities Division, including clerical and secretarial help. It is further understood that the B.:mks will not be r•.Jimbursed for the use of spo.ce, if available, in the Federal Reserve Bank and Branch Bank buildings nor for the use of Federal Reserve office equipment loaned temporo.rily to the Priorities Division by the Bank, but the Bank will be rein1bursed for rent paid for outside office space and for office equipment purchased for the account of the Office of Production Management Priorities Division for the use of Priorities activities. . ... It is recommended that the Priorities Division and the Federal Reserve System meet to determine the method of financial reimbursement from Priorities Division to the Federal Reserve System in case office equipJilent be needed and also fo::: determination of policy concerning all expenses connected therewith. Would you be good· enough to transmit this letter to the Board of Governors? We would appreciate confirmation that this letter clearly sets forth the understanding betvmen Priorities Division, and the Federal Reserve Banks and is similar to the present existing agreement between Defense Contract Service and the Federal Reserve System. (Si 6nod) Francis J. Trecker Francis J. '£reeker, Acting Chief, Defense Contract Service. 297 S-263-b OFFICE OF PRODUCTION MANAGEMENT Social Security Building Washington, D. c. Mey 9, 1941 ME.i\iORA.NDUi,l 1'o: Governor Ernest G. Draper From: Francis J. Trecker This memo:.·andum is directly connected with, and should be attached to, the letter of f.ley 8 from Francis J. Trecker to Governor Ernest G. Draper, Board of Governors of the Federal Reserve System, which was written to outline the proposed working agreement between the Division of Priorities, Office of Production Ma..Ylagement, the Federal Reserve Ba...."lk System, and the Defense Contract Service. In the above-mentioned letter, it is stated that "Priorities entire agreement with Federal Reserve is to be similar to t.he agreement between Defense Contract Service and the Federal Reserve B,ystem, name]..y, that all pay roll is the responsibili t:r of t.1e Pr·iori ties Division, including clerical and secretarial help." .. This statement should be enlt~ged to cover the fact that the Defense Contract Service agreement provides that the Federal Reserve Banks pay the salaries of tho Coordinator's staff and, in turn, are reimbursed later qy the Defense Contract Service. In the case of the Priorities Division, it is intended that Priorities' agreement will differ from that of the Defense Contract Service in that Priorities' staff, including District Manager, his assistant, clericrLl and stenographic personnel, will be paid di~ectly from the Priorities D;i.vi~ion in Wt'.shington, and the Federal Reserve Bo.nks will have no financial pcy roll to carr;r for the Priorities Division • (Signed) F. J. Trecker FHANCIS J. TRECKZR 298 S-263-c May 12, 1941 Mr. Francis J. Trecker, Acting Chief, Defense Contract Service, Production Division, Office of Production Management, Social Security Building, Washington, D. C. Dear Mr. Trecker: Your letter of May 8, 1941 and your memorandum of May 9, to Governor Draper, with respect to the establishment • • and maintenance of local field offices of the Division of Priorities of the Office of Production Management at certain of the Federal Reserve Banks and Branches, have been presented to the Board of Governors. The Board has authorized me to advise you that the Federal Reserve Banks are prepared to furnish space, if available, and render the services requested to the Division of Priorities under the same terms and conditions they now render service to Df:lfense Contract Service of the Office of Production Management, subject to the understanding stated in the last paragraph of your memo .... randurn of May 9, 1'141. It is understood that persons on the Pl·iori ties staff assigned to duty at a Federal Reserve Bank or Branch will be satisfactory to the District or the Area Coordinator and to the President of the Federal Reserve Bank. Very truly yours, - (Signed) Chester Morrill Chester Morrill, Secretary.
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