The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
I discussed with Mr, Sherman the possibility
of combining this file with FOMC Members * General because these two file s overlap slightly.
fie preferred that the two file s remain intact
and asked that a cross reference sheet he placed in
each file *
B. Hunter
9/9/55
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Form F. It. 131
lO A R D O F G O V E R N O R S
O F THE
F E b tfR A L RESERVE SYSTEM
Office Correspondence
To
____ t t ___________
From
3,3
Date
March 13,1956,
Subject:
Mr. Carpenter
At the
meeting
of the Board today, at which you
were
present, it was agreed, in view of the circuast&nces outlined
you# that the submission of the opinion requested by tha
Board as to the validity of the elections of the representatives
of the Federal reserve banks as members of the Federal Open Market
Coamittee would not be necessary.
I
SRC/acw
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Form F. R. 131
•30ARD O F G O V E R N O R S
o f th e
FED ER AL RESERVE SYSTEM
Office Correspondence
JbCm
‘
’
Date_March 5, 1956.
To .______ Hr# Wyatt_________________ .
From
^
Subject:---------------------------------
Carpenter
K
At the meeting yesterday, at which you were present, you were re-
< \ f
nested to submit to the Board, prior to the date of the meeting of the
Federal Open Market Cowittee to be held immediately following a conference
of the Board with the Presidents of the banks beginning March 16, 1956, an
opinion as to the validity of the election of each of the five members of
the Federal Open Market Committee elected by the Federal reserve banks to
represent the banks*
'
^^^RC/acw
y*3/s£
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Form F. R. 148 b
TELEGRAM
BOARD OF G O V ERNORS
v-
O F THE
FEDERAL RESERVE SYSTEM
L E A S E D W IR E S E R V IC E
WASHINGTON
1936
m m tm $ m m w
G&sMg m m yoiK
m a t a m , c im -w u m
$ T m m s , m m AQQ
w m i, m m m m M
m a m ** m m m s m
A98ti>* X W 1 U W J K U
‘m m » ST. LOUIS
UGORE,
If ym
that you
pie**©
haw
not
alraady
dim#
ao, Board raquaata
forward iaaiadiataly or aa m m
a« aXaatioa
hold, a ©artifiad trajaaeript of tha raoord of aiaatioa
«f rapraaantativa to Fadaral Opaa Market Canalttaa*
,>4 T
Manra*
JPD/ebb
G E N M . COUNSEL'S OFFICE,
Dictated
m
bsihm
FMSOIgGG
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe
deral
o f
O F FIC E OF
R eserve Ba
A
nk
tla n ta
Se o h e t a r t o r th e B o ie d
February
A s s i s t a n t F e d e e a l R e s e r v e A g e it t
Mr. Chester Morrill, Secretary
Board of Governors of the
Federal Reserve System,
Washington, D. C.
27, 1936*
1956 rr-n 20 PM 3
Dear Mr. Morrill;
In the absence of Mr* Kettig, Deputy
Chairman, I have for acknowledgment your letter of Febraury
25, 193&* with which you enclosed a copy of a
letter which Chairman Eccles addressed to Governor Harri
son of the Federal Reserve Bank of Hew York, transmitting
a copy of an opinion rendered on the question whether
representatives of the Federal reserve banks on the Fed
eral Open Market Committee may be elected with limited
authority and subject to the condition that they will, as
members of the Committee, act in accordance with the in
structions of the Boards of Directors which elected them*
Your letter and enclosure will be handed
to Mr. Kettig when he returns to Atlanta*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
BOARD OF G O V E R N O R S
□ F THE
FEDERAL RESERVE SYSTEM
WASHIN GTON
a
«•
9
ADDRESS
OFFICIAL C O R R E S P O N D E N C E
TD THE BOARD
February 26, 1956
Bear Mr* Morrill:
I have just received from Mr. Bethea a copy of an opinion
of Hr. Dreibelbis
m
the question whether the banking members of
the Federal Open Market Committee could be appointed by the Fed
eral Reserve Banks with limited authority subject to instructions
ty the banks.
I concur in Hr. Dreibelbis' opinion.
The Federal Open
Market Committee is an independent board and i t would be as ab
surd to tie down the banking members of this body "by instructions
from the banks as i t would be for the people of a state to elect
a Senator of the United States with limited authority.
The Senator
represents not alone his state but the whole country as well, and
the members of the Federal Open Market Committee likewise represent
the interests of the country at large.
As Mr. Dreibelbis points
out, the functions of the Committee are to give orders to the Fed
eral Reserve banks and not to receive orders from them.
Veiy truly yours,
C. S. Hamlin,
SPECIAL COUNSEL
Mr. Chester Morrill, Secretary,
Board of Governors of the Federal
Reserve System,
Washington, D. C.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
BOARD DF GOVERNORS
□ F THE
^
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS
OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
February 25, 1956.
Dear Mr* Morrill:
I have read carefully the opinion of Mr* DreibelkLs on
the natter of election of representatives of the Federal Reserve
banks to serve upon the Federal Open Market Coralttee*
The opinion is dear and-forcible and sets forth a pos
sible interpretation of Section 12A of the Federal Reserve Act*
The statute, however, is so vague that i t is iapossible to deteraine by ordinary laws of construction just what Congress had in
mind*
According to the interpretation placed upon the statute
ty Mr* Dreibelbis, Congress has in effect created aa electoral col
lege and has rearranged district lines fixed by the Organisation
Committee and has consolidated the districts fro® the original
twelre into a veiy such smaller number in connection with the
selection of representatives upon said Federal Open Market Com
mittee* According to this interpretation also, the powers granted
to Federal Reserve banks under sub-section 7, Section 4, of the
Federal Reserve Act, have been materially reduced la that power
to bind the Federal Reserve bank is given its directors, as in
dividuals, in connection with individual directors of other Federal
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. Morrill -
(£)
Reserve banks*
I t should be borne in mind that the interests, economic
and financial, of the respective districts may be veiy diverse, and
that to give the power to choose a representative on said Committee
ty the individual votes of two or more boards of directors, may
seriously affect the interests of one or the other of the Federal
Reserve banks*
The statute, as I have stated, is so vague that i t seems
hardly possible to build up from i t what the intention of Congress
was,
bat
i f there is any other construction which would relieve us
from the necessity of accepting the theory that Congress has radi
cally changed d istrict lines as originally fixed by the Organization
Committee and has radically reduced the power of the Federal Reserve
banks by giving to directors, as individuals, in cooperation with
directors of other banks, the power to bind the Federal Reserve bank,
I should prefer to seek for some construction which would not in
volve such a radical departure from the essential principles of the
Federal Reserve Act*
I t should be remembered that the Federal Reserve banks
in their relations to one another (subject, of course, to the juris
diction or power of the central body known as the Board of Governors)
are sovereign banks and I aa reluctant to believe that Congress in
tended to merge these banks together for the purpose of electing a
common representative on the Open Market Committee.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. Morrill
-
(3)
To my mind, it would certainly be consistent with the lang
uage of the statute if in the first instance, the Federal Reserve
bank by vote of its directors should agree upon a representative on
the Committee and that the other bank or banks involved should take
similar action.
They could then confer together and, if possible,
reach an agreement upon a given representative which agreement
should be referred back to the individual Federal Reserve banks for
ratification by their boards of directors.
To my mind, this would be a much fairer method than to
merge the individual directors together into a kind of electoral
college.
If such were done and there were two Federal Reserve
banks upon whom was imposed the duty of electing a common representa
tive, it is conceivable that all the votes of one of the Federal
Reserve banks might be cast for nAn, while all the votes in the other
Federal Reserve bank might be cast for nBn and you should have the
same danger of stalling that would exist if each bank cast in the
first instance only one vote.
Or to go a little further, supposing,
under the electoral college theory, there were two candidates for
representation on the Committee, "A” and t!BM, the nine votes of one
Federal Reserve bank are cast for "A” and the other Federal Reserve
bank has lost one director, we will say, because of death, but casts
the remaining eight votes for !IB,T, the result would be that "A"
would be elected although every one of the living directors of one
Federal Reserve bank might be unalterably opposed to "A" as its com
mon representative.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Mr. Morrill
-
(4)
The question may arise as to what would happen if the two
Federal Reserve banks in question could not agree upon a common re
presentative.
It seems to me, however, that that question may fairly
be postponed until such contingency should arise.
It is obvious, of
course, that in such a case the two or three banks in question would
have no representative on the Committee and the question then would
arise whether the Committee by regulation could prescribe some other
means by which a common representative might be elected, or it might
determine to refer the matter to Congress for its action.
This, how
ever, can safely rest until such a contingency should arise.
In conclusion, I would state as above, that while the inter
pretation of Mr. Dreibelbis is a possible one, it involves such serious
changes in underlying features of the Federal Reserve System that I
would hesitate to accept it if some other construction of the statute
can be found.
I believe that such a construct!cm can be found by
treating each Federal Reserve bank as a sovereign authority and en
abling it to enter into a kind of treaty with the other Federal Re
serve bank involved from which a common agreement may be reached and
referred back to each board of directors for its ratification.
Very truly yours,
C. S. Hamlin,
SPECIAL COUNSEL.
Mr. Chester Morrill, Secretary,
Board of Governors of the Federal
Reserve System,
Washington, D. C.
#
nclasstflacj / D&ctassified Holdmas-^
te ila tm a l Archives
m 25
1936
Hr.
&*
& m w rm rB
Federal Reserve Beak of b v t m k $
Hew
1'w
T
w
f c
t
Hew
& t ik m m & a t
f
&*rri»o*i:
In accordance with &ur coov^rantion o w r the
telephone .!**£ week, 1 a* incsl«*«iiw herewith fmt ytmr
inforaatiao, * copy of an aplalm. render»d fey one «£
tb© ®#fcrdf# Assistant
Counsel and can#ta$T*d
i» % the Board*# Geaeral Counsel, m the qpm#b&m
whether wvptmm'bmiXwm of t&* federal reeerve bank*
m the F*di***l Qpm Market Coaaittee M y be elected
with Halted authority aad »ubje«t t# the cooditioaa
that they will, m mw&mm of the Coaaittee, act in
accordance witk tlui ia*tr\tction* n# t&# Boards nf
Dire«tor« which elected theaI.
f«ry fr*i|^r your*.
M. S. Socle*,
Che±raan.
Incloeure
M m n i s mr
FEB 251936
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tf f*i f«w T«rir*p
%i* tirtwrnl
la *m % % m 11& , m
the N a tional A rc h iv e s
Board of Governor* -*► I
bat* when elected, they are representatives of mil of the
Fieterel Reserve hasfe* and not representative* ©f the p«rl$eulw
direetors eleeted them* Bed Congress ix&egtfM that »mh repreeentettve sheuld be el#«ted as a representative of the gr ^p mf hente*
electing, *uoh MWfi&er* it would iaev* so steted rether then to have
provided that w » l W k r » should eonetitate •reprewentative* of the
Federal Heserve faenkw** 1% fell#*** therefore,, that the sfatiee and
ottiffttien*.of the federal Re*erv* bank representatives %p©» the Fed
eral Open Market Committee are te the country at' large and not to any
on* ©r froup of Federal leeerve banks*
Attong other thimpr# section 12A of the Federal Reserve Act*
as aiaended, provides that % © Federal Reserve bank shell engage or
decline to engage in epen-tierket translation* mier section 14 of this
Aet, except la accordance wrltfe the direction .of and regulation* adapted
bgr the CoB»ittee. the S-awlttee shell ooaaiier* adopt, aad treasmit
te the several Federal Beserve ba&ks* regal«tl«* relating t# the openmarket tr&tt*eoti#B* of #«©.fc bank#*'* Thus, rather than receiving ,dire#t*»
ion* from the Federal Reserve banks or the feeer&r of director* of "the
Feierel Reserve banks, members of th* Federal Open larket Coan&ttee ere
charged by law with £lvtn& &lreetlom* te the Federal Reserve bonks, and
the Federal Reserve hisfct are.:e&£r$^ by lew with the duty -of following
*u©h direction** Certainly it cannot be eeid, ttherefore* that repre
sentative* of the banks on the Federal Open lerket Committee are subject
te instructions given by the ta&* sleeting them when* % the plain
ters* of the &m% they are charged with the 4tart$r of directing the banks
In the performance of this |3erti«l*r fumetios*
Thus, neafeer* ef the Federal % e & larket Cg^ittee are pub 11#
offioer* charge! wi%h the dmty of conducting ©pe»~ffi*rfe»t eperattm m of
the Federal teeerv* System *Srith a view to eeoessaodatiiig commerce and
boeises* and with retort tetbsir bearing: upon the teneral credit sitae*
%l<m of the oeyntry** Of neeeeslty their 4elIberatioii* asl.se^loa*'must
tie"iexi?iSSi*ti* "To dleeewlnete Inforwetien m to ejmiwjtiarket policies
while being fonaulated or while im the process of being esEee^tei might
defeet the results ee&ght in 'the. exeesitlci*. of *«#h policies* Ceugr***
wm% have so eo»*liet**A when it provided in eeetioii 10 of the federal
Eeeene &et that the Board of tovernor* ©f the federal leeerve $ys%e®.
should keep e eenplete rec®rt of the aetien tak«i by the Fede^ral Open
Market Cowiittee
*11 questions of policy relettng te epen^aariet
epermtlowi and eheaii rmm «NI tMreim the vetee t«^ce» is connection with
the determination of' such petleie# and the reason* underlying the estion
of the Coimlttee and eiwlt laclude in it* sparnal report to tengr*** a
full ^eeunt of the action so taken daring the pieeedlng year*, lad
ie.ngre*» infee&lwi
the ©onsidereti.<« a»d eaakf^im of "^en«»erket
policies be isetters of public and current isf&rm&Xm there would Imve
been im nee#e*:tty for refii.iring such report to it#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Soord of
* •- 4
Tho very font thot
prorldod for th* report to bo
aodo to 1% rathor than to th* *o.iorol tieeerr* book* or thilr boardo
of dlrootort, 1* oignlfloaot*
ootion XZJk of th* >.;o-ior*l £oooroo
-iot0 *o omondad, roqniroo opon**arkat oporatlono to bo oonduatod
V i t h ra^ord to thoir boor Inc apon th* gaavml orodlt oltaotlon of
th* gentry** C«o$roo«, asd not th* boord* of dtrootor* of tho * o v
o r o O S l o r o i « i o m bank*, to tho body orfcloh roprooaisto tho public
intoreot ond Congrooo, vhllo rooornliinf tho oo**fIdantlol olmrMtor
of opoanaorkot oporotlon*, m o prorldod for roporto to bo raodo to it
o* tho body ro^rooontlng tho gonorol aolfl*ro of th* o oratory* ^od
Cosigroo* intoodod t)mt tho Fadoiml Gpan Morisot Coaaittoo or *ny of
lto nowbor* ohould mm o duty or raopooolbi IIty to rop«rt to tho
V’oord* of dlrootoro of tho Fodorol Koeervo bottk* *uoh dutla* would
haro boon iftoladod in oaotlon 10 of tha Fodoral 8o*arro Aot#
^lth roopaot to p^iblio offloors it ho* lone boon hold thot
ony oontroot or oitraoaorrt tending to haaso* <** rootrlot ouoh offloor
In the duo perforooraoe of bio doty or efciob oooko to lwr>ooo upon «uoh
offloor o rootrlotioo In oon^ootion with tho osoroloo of hi* dl*orotion
i* illegal ond o o l n * t p’iblio polioy*
In tho oooo of •o^noldor
Looaj <nl n# 40 Co*
oourt* quoting froo Oraonhool on VubI lo Polioy, ototodi
TOO, tho
*Aay oontroot whioh oootofflplnto* ooad&ot wfcieh
will onouat to on iwp— ltlco rxptm o ptibllo offloor
In tho eooreioo of hi* dltorotlon 1* void# * * * *
Any oontroot by one ootin& in o roprooentotloe oop»»
city, efcieh r «trioto tho froo ownroloo of o dlooro~
tion oootod In hi* f*r tho publlo goo4f lo void."
In tho oooo of tfowpboii f « Qffott* l&i S« W* 40It tho oo**rt
ototodi
* * * * * Th* la* roquirM of o prubUo offloor
thot bo obeli tioo hi* boot oklll o»4 juJflwrnt for tho
protootioo of tho pufeilo ir’toroot, ond on o^roommt
boforo hlo o^pointuont to divide th* fOeo of tho of*
rioo with oo ottoraey* if *u*ioined# olfht oorio*oiy
orlppio tho p u b U o oorvloot * * * »*w
Clearly, aay offort to iwitriot o a anber of tho Fodornl Opon
% r kot Caaoittoo in tho ftoo ovoroloo of bio dloorotlon in tho ptibllo
int#root m d for tha pobilo oolforo, by oonttoot c^r otnorwi*** would
b* lllocol ond Oi Oisat pwblie polloy*
In tho lav of oorporatlooo# It lo w*li oottlod thot th* d.l*»
orotlon of dlrootoro in f o r N o i n e thoir dotloo ooxmot bo liaitod or
Reproduced from the Unclassified I Declassified Holdings of the National Archives
leard of Q&mrnarm
*
yaetriofeod hf
*galx**t th* Infcorort of th* corporation with
t$* *to*kft*i4*r* or ©t>orwlo**
fhmg im m a m m r. Owtl*. £13
T* $13, 119 I* r* 5«f§ It
i* utaiod*
** + * * In oorperat* bodl**# th* power* of th*
hoard of dlr**ter* ara# la * rary iiaportaiti ******t
original a?**! a»3*l*f;*t*4* Th* cMkhaldara do »*t
oosafor* nor m m th*y rovofc* tho** p*a*r*« * * * *
A* a jgonoral rul*f th* *toMfchol<ft*r* oa&riot act 1%)
r* lot Ion to th* ordinary fea*ia*** of th* oar; nation,
nor 0*0 thay control th* dirootor* 1* th* oaorai**
of tha
is thou lafy Tirt-u* of th*ir of*
fl**» • * ♦ o 0 *arly th* law do** &ot porait tk*
< t^ofrhairier* to c~r«N*^»'"ifcr'* t ^ Y t T a ^ ri ^
dir*wfc»
or*. * *
r.........
"...^ r^'Trr^'''t~n 1,1r'n'1,f-r'-... 1 ••■
T
In th* **** ©f W**t w# Cssdaa, I M
.4b £0?* tho fi-ayr***
Court of th* $ait*d :;:tPttt*7l3*14 tfiat an *jpri<ain% by * *t**irhol3«r of
* *orooration to 'kmmp anathar p«r*oa p«raaa*atly in plao* a* m offloar
of * oorporatlon m o w o M no age>£i**t pufclio policy, tluoo *u*h aa
aaat migMfc r*«$ulr* a *%*ekh*li*r ** a dlrootor to not *w\trary to th*
tan* ist*r**t of a corporation*
la ii&ia*&oii w# Balfiotmao^ 19? $♦ 1* 576 # th* aaurt *aidi
** o * * 4a?j a* (a *%**lefc*i4«r) boi th*
right to daaaxat that aaoli dlraaiar -tl**!mrga
m
m % ia aaaordaa** with bi* p«r*«a*l
Vat ia th* fe**t tat*r**t* of th* osrpfjratii*
l>r»**n%» a o * * *
tmh&mt
hi* doty
oosstraot*
tfc**y r**
$fh*r ***** to th* **^* offaot or* *a*tb v* L*haa&fi, K S *•
17$, Ohio (Ii24)i Ba*h ▼* ^omaaMgh* l?i Ala# SSI, -soTo, "~$k (1912 b
&*rlpp* r* S**a m y « f e H m * I l l y U f i 1 # tt* 91 ( m o ) .
tt i* laoooo*ir*blo that Ooner**## la *r®*tl»n th* F*d*ral
Op»o %rlot Canaltt**v T w th* m m m d p»rp*a* of aondaafelac opon^iarkat
*|j*ratioso *%ith ro$*r^ to th*ir ^aari^c apon th* f.*a*ral oro4it *itua»
tion of tli* ootttttry^j it*t*o4*<$ to or*at* a b*ay9 fir* :«*,xbor* of whl*h
bo sm >' ol>SS*at t* th* will of * body m l»odlo« *o»**m*i prl~
«aorily wltb loo«4 list*r**t*«
It i* ay
th*r*for*t that rofr**ont*tlro* of tho
F*4o? fei
teak* ypon tit* f*d*rai Op** ^urfeat C«a*dtt** ssmy act
b* ol*ot*4 with lfcalt*4 author!’
fey to aot la a*oorda^»o with l a * t m * V
ioa* of tho board* of dirootor* *t**tiag *o*b ms,,bor# aa4 that la th*
o<j»v|tt*t of th*tr o ff loo *a*fti r««m1>or* ar* ^ l i i o o ff tear* oa^roi*!^
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Joard of Govoruor« - ^
v jb lio
fo a o tlo u *
n o o o M o rlljr
la
l a th *
th o
in t e r e s t o f th e
tixfeor»«i
of
pafcH o * * a
l o r $,rmp
th e p a r t i« a
w h o le , and
not
« to o ttn r t tom *
Koopooi f u l l y • u f c a itto * .
J« F . B fW ib o lfc le *
A ooU ta^vt Gwswral C w b h U
X h o ’s a g ifo a s o a r o f u i oontidarotloa to th* at»o<« o p i n i o n
end ocaoar la It iw ptotoly»
JfPivtt
Aaltor %att,
fewowrai 0«mm»ol*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
t* H* Curti®*, Chaiman,
Federal B o e e m Bank of Boaton,
lr»
BO ltO Q ji M aeeeC h lieette *
Iter ir« Curti»»i There ia incloeed for your inforaatton « oojsy o f *
let
Coalman Socle* hae written to Governor Berriean
of tho Federal Boeerfe Bank of Mow Torfc, transmitting & cojy
ajhrv*£,
of «i optolofr wn<l.r*l by on. of th. BotrdU
0«orel OeHneel and concurred in Iff the Board** Ganeral Couneel,
on the question whether repreeentetliwe of the Federal re*
eerte banka on the Federal Open Market Coaaittee nay be elected
with limited authority and subject to the condition that they
willy ae eenbere of the Co— ittee, act .in aecordaace with the
inatructione of the Boarde of Direetore which elected thee.
V ery tapiily / o u r i i
r\.
Cheater Morrill,
SW
^ llA
a pve te iv *♦
W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-/A
Mr* B* %* Auotin, Chairman,
Fodoral Jtooorfo Bank of !%ilad«ljibiaf
Fbiladolpbia, Poona*
Daar Hr* Auetln*
Thoro In iiieloood for y o w inforaatlofc * copy of a
^
if U
lottorjoblob Chairman EoeXoa haa vrltton to GoTomor Harriaon
.
of tbo Fodoral Rooorvo Bank of loo lark, transmitting a copy
of ob oplalocj ronderod by one of tbo Board* • Aeaiatant Gon~
oral flhnwitoi nyni o<xiounrod In by tb® Board* 0 Ganoral Oounoolf
on tbo quootloa whothar roproaantatiiroa of tbo Fodor&l ro~
iMSffo
qB tbo Fodoral Ojmki Mariiot CkMMB&ttoo m y bo ylofttod
with lisitod authority and otxbjoot to tbo c m d itim that thoy
w ill, ao aeabara of tbo Cowiittoo, aot in acoordanoo with tbo
Instruction* of tbo Boards-' of. Dirootors wblob olootod tbo*. .
Iifr truly wttn»«.
W
mW
*lWPf ^O tO ^pr
*pr T ^ O O il* ' O P v
iSi-nsd' CH^.uV’3"
v u 9 0 « 9 r WKSwTXJULf
SnOSNltaiFV*
W P N i l NP O W N # JF N
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr* 1* ®# Burk*, J r .,
Acting GhalrmaB,
Fadaral Eaaarra Bank of Cla^aland,
Claraland, Ohio*
Baar Mr* Burkat
Thara Is lncloaad for your tafoimttoo a copy of a
a v a r/3 *
lattar Which Chalraaa Eoelaa haa wrlttaa to Go'taraor Harriaon
of tha Fadaral Raaarva Bank of lav fork, traaaalttlng a copy
of an. oplnioa! randarad by oiia of Ilia Boardf» Aaatata&t Gan~
aral Counaal and concurred in by tha Board1a Gaaaral Gouaaal,
on tha quaatlon whather rapraaantatl*aa of the Fadaral raaarva banka on tha Fadaral Opan Markat Conalttea aay ba alaatad
with ll»ltad authority and aubjaat to. tha ©audition that thay
will, aa aaabara of tha CoMalttaa* aat In acoordaaea with tha
inntruetlcme of tha ioarda of $lraatora which alaatad than*
Tary truly youra*
Chaatar Morrill,
Sacratai*y#
tndoauraa
Reproduced from the Unclassified I Declassified Holdings of the National Archives
^33.
ir* f • A* D®Uno#
Baputy Chairman,
fadaraX Raaarra Bank of Richmond,
Richmond, Virginia*
Baar Hr, BaXanot
Thara ia incXoaad for your information a oojjy of a
P ^ i / b t.
... ....1 ahloh
Chairman leo ln h»* «rtttan to Qownor HmttImh
of tho FadaraX Raaarre Bank of Saw fork, transmitting a cojgr
of am opialo| randarad by on* of tho Board1* Aselat&nt Qm^
oral CounaaX and concurred in by tho Board*a Genaral Coumaal,
on tha quaation whathar rapraaantfrtivaa of the FadaraX ra■aimiBMi VAyiif new tha tiinii ftw n Karkat CoMltta* asv ba eXsotad
with Ximitad authority and subjaot to tha condition that thgy
will, aa aambara of tlia Committaa, act in aocordanoa with tha
instruction* of tha Boards of Diraotora which aXaotad tham*
Vary truly your*,
Chaster Morrill
<&a*tar HorriXX,
Saoratary*
IncXoauraa
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FIB 25 1936
Hr, W. H. Eattig, Deputy Chairawn,
federal Reserve Batik, of AtLaata*
Atlanta, Gaorgia
Dear Hr. Kettigt
Eaere is incXosad for your information a copy of a
lalrssit XccXes haa written to Goveriaor Karrison
of ttm federal Kasarve BauJt; of Sea Tork, tramidttiiig a oopy
JUA.0M'T>^ fA*$M
of an opinion!rendered by one of th© Board1* Assistant Gan*
eraX GouneeX and coccurred in by the Board1£ General Counsel,
m tha question whether representatives of tha federal re
serve basics on the Federal Opan Market Coaosittee mj be elected
with Xtfl&tad authority and subject to th# condition that they
will, as aesber* of tha Conwdttee, act in accordance with tha
instructions of.tha Boards of Directors which aXactad then.
Vary truly yoiars,
Chester lorriXXf
Secretary
A h * iclosures
<7%
/k&
v/’r'/3<
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3 3 3 .3
ftr* lagans I* Stavaas, Qiairaan,
FsdaraX Raaarva Bank of Chicago,
Chicago, Illinois.
Baar H r. itavaast
fhara is inclosad for your inforwation a oopy of s
Xattarj nfeich Chairm u lecla# has written to Ck>v«mor Harrison
of tha FadaraX Rasarya Bank of H$* York, transmitting * copy
of sn opinioa randarad by oaa of tha Board’s Assistant teaaral Counsel and concurred ia by tha Board's tawraX CounsaX,
oa Ilia question vhathar representatives of tha Federal re
serve banks on tha FadaraX Opan Market Co«*&iiee aay ba alactad
with Halted authority and subjact to tha conditio#*that they
will, as mab&r& of tha OomLttee, act in aocordanc® with tha
instructions of tha Boards of Eiraetors ifciefa elected than*
Vary truly yours,
(&£R2d; Chester Morrill '
Qkestar Morrill,
Secretary
W/fsf
Inclo»ura»
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEB 25 1936
Hr. I* 8« food* Chair»an9
Fodoral Raserr* Battle of St* Louis,
St* Lemls, Missouri*
S oar 8 lr t
Thara is IncXosad for jour Information a copgr
of a Xattor which Chalraan BoeXaa has wrlttoii to Goramor
Harrison of tha FadaraX Rasarra Bank of Baw Xork* trsa»~
Bitting a oopgr of aa opinion randarad by oaa of tho Board*s
Assistant GaaaraX CowaoaX aad oonearrad in by tha Board9s
Oanaral CooasaX, on tha qnaation whathar representatives
of tho Federal reeerve banks m tha FadaraX Opan Barkat
Coanlttaa as^ bo aXaotad with Halted authority sad subject
to tha condition that they will* aa aoabsra of tha CoMdttoaf
sat la aaeordanaa with tha Instructions of tha Boards of
^ Directors whieh aXaotad than.
/
teiy txuly r««W|
Chartar aorrilX,
X Secretary.
/
r
XaoLooares
L.
1____
Reproduced from the Unclassified I Declassified Holdings of the National Archives
f f 8 25 1936
1r» J* I# Payton, Chairman,
Federal Beserve Bank of I&xmeapolls,
Hittieapolie* Minnesota.
Bee* Hr* Peytom
Therm Is Inclosed for your Information a ©opgr of
• IMtey which CHalrnan Xeclea he* written to Governor
Harrison of the Federal Reserve Bank of Sewjfork, transnittlng * copy of an oplnlonf rendered by one of the Boards
Assistant Oeneral Counsel and concurred in by the Board *s
General Counsel, m the <jnestion whether representatives of
the Federal fetewi hank* on the Federal Open Market Cowaittee nay he eleeted with listted authority and sohjeet to the
condition that they will* as nesfcers of the Coanlttee, aet la
accordance elth the instructions of the Boards of Directors
eleeted the**
Very troly yours.
Cheater Morrill,
Secretary.
Xnelesnres
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3 3
3,
FEB 2 S IS36
Hr* J* J* ThgmA*9 Chatman*
Federal
Bank of Sanaa* City,
Kanaaa City, Miaeouri.
Dear Mr* Thonaat
Thar* la IneXoaad for j m r information a eopgr of
minhich Coalman
a latt
Kccla® haa written to
Qwmmmr
Harrlean of tha Federal Baaerre Bank of Raw Tort^ trana*it~
ting a copy of an op!jdoft/!*nd*v*6 by ona of tb* Board1*
Assistant OeneraX CotutaaX and concurred in by tha Board*a
General Connael* on tha quertlon whether repre aeatativea of
tli* Federal reaerve banka on the Federal Opan Uarket Cowdt*
tae m y be elected with Halted authority and aubj&ct to tha
condition that thay will, a* mmtibem of tha Caaalttee, act In
accordance with tha inatructiona of tha Boards of Directors
which alaetad than*
faiy iru3y yours*
fSijrned) Chester MoeslCf
Charter Morrill,
Secretary*
X»cloanr«a*
:h
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEB
25
1936
Hr. C. C* WaXah9 Chalraan.
M m l R**erra Bask of DaXXa*f
BaXlae* Taxa*,
Saar Hr* %l«ht
Ther* 1* lnelo*od for yotr Information a copy of
i.
* Xattar which Chairman Koclaa ha* wrlttan to Ooramor
Harrlaon of tha FadaraX Raaarra lank of lav Xork9 tranaolt-*
tine * eopgr of an opinion randorod by ona of tho Board’*
A**l*tant QatiaraX Counsel and eonetirrod In tgr tha Board1*
(JenaraX Coan*oX9 on tha quaatlon whathar reprasantatlva* of
tha FadaraX r i a a m bank* on tha FadaraX Opan Markat Comlttaa
nay ba aXoetod with Xtaltad authority and unbjaet to tha 00adltlon that thay «ilXf aa naribar* of tha Canalttaa9 aot In
aooordanoa with tha lnatruetioa* of tha Board* of Diraotor*
which aloetad than*
Vary truXy yottr*9
S'igii&i) UwSfitSC
Che*tar Morrill,
Baeratary.
Inclo*ura*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEB 25 1936
Mr* f* S*-Moore* deputy Chairman*
Federal Reaorwe Bank of San Franoiaco*
San Franciaco, California*
Bear Mr. M oore:
Thar* Is. incloaed for your information a copy of
a letter/ imicft Chairaan Steeles baa written to Governor
Harrison o f the Fodoral Reserra Bank of low Tork, transmitting a copy of an opinion] rtndtrtd by mm of tho Board*•
Assistant General Counsel and concurred In by tho Board*i
Goneral Counsel, on tho question whether representatiwes
of tho Fodoral reserve banka ms the Fodoral Opon Haricot
Coasdttee »ay bo elected with United authority and sub
ject to tho condition that they will# aa ®«*bera of tho
Cowaittee* act in aoeordanoo with tho instructions o f tho
Boards of Directors wbieh olootod then*
Very truly ycrnrs*
(Signed) Chester MorrHf
Cheater Morrill,
Secretary.
Incloimroii*
Reproduced from the Unclassified I Dei lassoed Holdings of the National Archives
Fe d e r a l R e s e r v e B a
o f
nk
N e w Yo r k
F e b ru a ry 25, 1936.
S i r s :
I have f o r acknow ledgm ent y o u r l e t t e r o f F e b ru a ry 20, 1956
e n c lo s in g copy o f Mr* E c c l e s ’ l e t t e r to th e C hairm an o f th e F e d e r a l
R e s e rv e Bank o f M in n e a p o lis , copy o f o p in io n o f th e A s s i s t a n t G e n e ra l
C o u n sel o f th e B oard o f G o v ern o rs o f th e F e d e r a l R e s e rv e S ystem , and
copy o f memorandum, a l l h av in g to do w ith th e s u b j e c t o f e l e c t i o n o f
r e p r e s e n t a t i v e s o f th e F e d e r a l R e s e rv e Banks to s e r v e on th e F e d e r a l
Open M arket C om m ittee.
P le a s e a c c e p t my th a n k s f o r th e in f o r m a tio n c o n ta in e d i n
th e v a r io u s d o cu m en ts.
R e s p e c tfu lly ,
C hairm an.
B oard o f G o v ern o rs o f th e
F e d e r a l R e s e rv e S ystem ,
W ash in g to n , D. C.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*\>rm F. R. 181
v.*.
"O AR D OF GOVERNORS
or THE
FtOERAL RESERVE SYSTEM
Office Correspondence
To.. Board of Governors
From
Kr* Preibelbis.
Assistant General Counsel
Date __l!!fifcrnary -24l*.19.SB...
Subject:...-Election-, of -rapre sentative s of—
Federal Reserve banks to Federal Open
Harkst. Committee ..idLth limitM_Mthority«
tr«
10—85*
21y opinion has been requested as to whether representatives
of the Federal Reserve banks upon the Federal Open Market Committee,
as provided for in section 12A of the Federal Reserve Act, as amended,
may be elected with limited authority and subject to the condition
that they will, as members of the Committee, act in accordance vdth
the instructions of the boards of directors electing them.
0PINI0H
In my opinion representatives of the Federal Reserve banks
upon the Federal Open Market Committee may not be elected with limited
authority to act only in accordance with the instructions of the boards
of directors electing such members.
DISCUSSIOF
The primary purpose of Congress in creating the Federal Open
Karket Committee was to fix responsibility for open market operations
in one body with a national viewpoint. As a compromise between the
views of those Who believed such responsibility should be fixed exclu
sively in the Board of Governors of the Federal Reserve System and
those wiho believed that it should be fixed in a committee consisting
exclusively of the then Governors of the Federal Reserve banks, sec
tion 12A, as amended by the Banking Act of 1935, provided for a com
mittee composed of the members of the Board of Governors of the Federal
Reserve System and five representatives of the Federal Reserve banks.
Hone the less, however, was the Committee created as a body charged
with the entire responsibility for the conduct of open-market operations
in accordance with the governing principles of the Act.
It is significant that section 12A provides that the Committee
"shall consist of the members of the Board of Governors of the Federal
Reserve System and five representatives of the Federal Reserve banks”,
and provides that such representatives shall be elected wone by the
boards of directors of the Federal Reserve Banks of Boston and Hew York11,
etc. The representatives of the banks are elected by the several boards
of directors of the Federal Reserve banj?5> as grouped in section 12A, as
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Board of Governors - w
amended} but, when elected, they are representatives of all of the
Federal Reserve banks and not representatives of the particular banks
•whose directors elected them* Had Congress intended that each repre
sentative should be elected as a representative of the group of banks
eleoting such member, it would have so stated rather than to have
provided that such members should constitute “representatives of the
Federal Reserve banks”* It follows, therefore, that the duties and
obligations of the ‘
Federal Reserve bank representatives upon the Fed
eral Open Market Committee are to the country at large and not to any
one or group of Federal Reserve banks*
Among other things, section 12A of the Federal Reserve Aot,
as amended, provides that tfNo Federal Reserve bank shall engage or
decline to engage in open-market transactions under section 14 of this
Act, except in accordance with the direction of and regulations adopted
by the Committee* The Committee shall consider, adopt, and transmit
to the several Federal Reserve bonks, regulations relating to the openmarket transactions of such banks.” Thus, rather than receiving direct
ions from the Federal Reserve banks or the boards of directors of the
Federal Reserve banks, members of the Federal Open Market Committee are
charged by law with giving directions to the Federal Reserve banks, and
the Federal Reserve banks are charged by law with the duty of following
such directions* Certainly it cannot be said, therefore, that repre
sentatives of the banks on the Federal Open Market Committee are subject
to instructions given by the banks electing them when, by the plain
terms of the Act, they are charged with the duty of directing the banks
in the performance of this particular function*
Thus, members of the Federal Open l&xrket Committee are public
officers charged with the duty of conducting open-market operations of
the Federal Reserve System Siith a view to accommodating commerce and
business and with regard to their bearing upon the general credit situa
tion of the country”* Of necessity their deliberations and actions must
be confidential^ To disseminate information as to open-market policies
while being formulated or while in the process of being executed might
defeat the results sought in the execution of such policies* Congress
must have so considered when it provided in section 10 of the Federal
Reserve Aot that the Board of Governors of the Federal Reserve System
should keep a complete record of the action taken by the Federal Open
Market Committee upon all questions of policy relating to open-market
operations and should record therein the votes taken in connection with
the determination of such policies and the reasons underlying the action
of the Committee and should include in its annual report to Congress a
full aocount of the action so taken during the preceding year* Mad
Congress intended that the consideration and exeoution of open-market
policies be matters of public and current information there would have
been no necessity for requiring such report to it.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Board of Governors - ^
The very fact that Congress provided for the report to be
made to it rather than to the federal Reserve banks or their boards
of directors, is significant* Section 12A of the Federal Reserve
Aot, as amended, requires open-market operations to be conducted
‘Svith regard to their bearing upon the general credit situation of
the country”* Congress, and not the boards of directors of the sev
eral Federal Reserve banks, is the body which represents the public
interest and Congress, while recognizing the confidential character
of open-market operations, has provided for reports to be made to it
as the body representing the general welfare of the country. Had
Congress intended that the. Federal Open mrket Committee or any of
its members should owe a duty or responsibility to report to the
boards of directors of the Federal Reserve banks such duties would
have been included in section 10 of the Federal Reserve Act*
stfith respect to public officers it has long been held that
any contract or agreement tending to hamper or restrict such officer
in the due performance of his duty or which seeks to impose upon such
officer a restriction in connection with the exercise of M s discretion
is illegal and against public policy.
In the case of Schneider v. Local Union, 40 So. 700, the
court, quoting from Greenhood on Public Policy, statedt
11
Any contract which contemplates conduct which
will amount to an imposition upon a public officer
in the exercise of his discretion is void. * * * *
Any contract by one acting in a representative capa
city, which restricts the free exercise of a discre
tion vested in him for the publio good, is void.11
In the case of Campbell v. Offutt, 151 S. ft. 403, the coxirt
stated:
»* * * * 'x'he law req\iires of a public officer
that he shall use his best skill and judgment for the
protection of the public interest, and an agreement
before his appointment to divide the fees of the of
fice with an attorney, if sustained, might seriously
cripple the public service: * * * *•“
Clearly, any effort to restrict a member of the Federal Open
Harket Committee in the free exercise of his discretion in the public
interest and for the public welfare, by contract or otherw3.se, would
be illegal and against public policy.
In the law of corporations, it is well settled that the dis
cretion of directors in performing their duties cannot be limited or
Board of Governor^ - %
restricted by agreements against the interest of the corporation with
the stockholders or othervd.se •
Thus, in Manson v. Curtis, 223 W. Y. 313, 119 K. E. 559, it
is stated*
H* * * * in corporate bodies, the powers of the
board of directors are, in a very important sense,
original and undelegated. The stockholders do not
confer, nor can they revoke those powers. * * * *
As a general rule, the stockholders cannot act in
relation to the ordinary business of the corporation,
nor can they control the directors in the exercise
of the judgment vested in them by virtue of their of
fice. * * * * Clearly the law does not permit the
stockholders to create a sterilized board of directors. * * *
--In the case of West v. Camden, 135 U. S. 507, the Supreme
Court of the United States held that an agreement by a stockholder of
a corporation to keep another person permanently in place as an officer
of a corporation was void as against public policy, since such an agree
ment might require a stockholder as a director to act contrary to the
true interest of a corporation.
In Baldeman v. Baldeman, 197 S. W. 376, the court said:
M* * * * And he (a stockholder) has the
right to demand that each director disoharge
as such, not in accordance with his personal
but in the best interests of the corporation
present. * # # **
further
his duty
contract,
they re
Other oases to the same effect are Lamb v# Lehmann, 143 1. K.
276, Ohio (1924); Rush v. Aunspaugh, 179 Ala. 542, 60 iso. 802 (1912).:
Scripps v. Sweeney, 160 Mich. 148, 125 N. vf. 72 (1910).
It is inconceivable that Congress, in creating the Federal
Open Market Committee, for the avowed purpose of conducting open-market
operations ltwith regard to their bearing upon the general credit situa
tion of the country*1, intended to create a body, five members of which
might be made obedient to the will of a body or bodies concerned pri
marily with local interests.
It is my conclusion, therefore, that representatives of the
Federal Reserve banks upon the Federal Open Market Committee may not
be elected with limited authority to act in accordance with instruct
ions of the boards of directors electing such members and that in the
conduct of their office such members are public officers exercising
Reproduced from the Unclassified / Declassified Holdings of the National Archives
B oard o f G o v e r n o r -
p u b lic f u n c ti o n s in th e i n t e r e s t o f t h e p u b li c a s a w h o le , and n o t
n e c e s s a r i l y i n th e i n t e r e s t o f th e p a r t i c u l a r g ro u p e le c tin g ; th em .
R e s p e c t f u lly s u b m itte d ,
J* P . D r e i b e l b i s ,
A s s i s t a n t G e n e ra l C o u n s e l,
I have g iv e n c a r e f u l c o n s i d e r a t i o n t o t h e above o p in io n
and c o n c u r i n i t c o m p le te ly *
w a it e r W yaw ,
G e n e ra l C ounsel
Reproduced from the Unclassified I Declassified Holdings of the National Archives
.RAL RESERVE BOARD fiL £
1,-425
F e b ru a r T
>
TO;
FROM:
1956.
SUBJECTJ E l e c t i o n o f r e p r e s e n t a t i v e s
o f F e d e r a l R e serv e b an k s to Fed
e r a l Open M ark et C om m ittee w ith
Mr. D r e ib e l b i s ,
A s s i s t a n t G e n e ra l C o u n sel
lim ite d a u th o rity .
B oard o f G o v ern o rs
My o p in io n h a s been r e q u e s te d a s t o w h e th e r r e p r e s e n t a t i v e s
o f th e F e d e r a l R e se rv e b an k s upon th e F e d e r a l Open M arket C om m ittee,
a s p ro v id e d f o r i n s e c t i o n 12A o f th e F e d e r a l R e se rv e A c t, a s am ended,
may be e l e c t e d w ith l i m i t e d a u t h o r i t y and s u b j e c t to th e c o n d i tio n
t h a t th e y w i l l , a s members o f th e C om m ittee, a c t i n a c c o rd a n c e w ith
th e i n s t r u c t i o n s o f th e b o a rd s o f d i r e c t o r s e l e c t i n g them .
OPINION
I n my o p in io n r e p r e s e n t a t i v e s o f t h e F e d e r a l R e se rv e b an k s
upon th e F e d e r a l Open M ark et Com m ittee may n o t be e l e c t e d w ith lim
i t e d a u t h o r i t y to a c t o n ly i n a c c o rd a n c e w ith th e i n s t r u c t i o n s o f th e
b o a rd s o f d i r e c t o r s e l e c t i n g su c h members.
DISCUSSION
The p rim a ry p u rp o se o f C o n g ress i n c r e a t i n g th e F e d e r a l
Open M arket C om m ittee was to f i x r e s p o n s i b i l i t y f o r open m a rk e t
o p e r a t io n s in one. body w ith a n a t i o n a l v ie w p o in t. As a com prom ise
b etw een th e v iew s o f th o s e who b e l ie v e d su ch r e s p o n s i b i l i t y s h o u ld
be f i x e d e x c l u s i v e l y i n th e B oard o f G o v ern o rs o f th e F e d e r a l Re
s e r v e System and th o s e who b e l ie v e d t h a t i t s h o u ld be f i x e d i n a
com m ittee c o n s i s t i n g e x c l u s i v e ly o f th e th e n G o v ern o rs o f th e Fed
e r a l R e se rv e b a n k s , s e c t i o n 12A, a s amended by th e B anking A ct o f
1 9 5 5 , p ro v id e d f o r a com m ittee composed o f th e members o f th e B oard
o f G o v ern o rs o f t h e F e d e r a l R e se rv e System and f i v e r e p r e s e n t a t i v e s
o f th e F e d e r a l R e s e rv e b a n k s . None th e l e s s , h o w ev er, was th e Com
m i t t e e c r e a te d a s a body c h a rg e d w ith th e e n t i r e r e s p o n s i b i l i t y f o r
th e c o n d u c t o f o p e n -m a rk e t o p e r a t io n s i n a c c o rd a n c e w ith th e g o v e rn
in g p r i n c i p l e s o f th e A c t.
I t i s s i g n i f i c a n t t h a t s e c t i o n 12A p r o v id e s t h a t th e Com
m i t t e e " s h a l l c o n s i s t o f th e members o f th e B oard o f G o v ern o rs o f
th e F e d e r a l R e se rv e System and f i v e r e p r e s e n t a t i v e s o f th e F e d e r a l
R e se rv e b a n k s ” , an d p r o v id e s t h a t su c h r e p r e s e n t a t i v e s s h a l l be
e l e c t e d "one by th e b o a rd s o f d i r e c t o r s o f th e F e d e r a l R e se rv e Banks
o f B o sto n and New Y o rk ” , e t c . The r e p r e s e n t a t i v e s o f th e b an k s a r e
e l e c t e d by th e s e v e r a l b o a rd s o f d i r e c t o r s o f th e F e d e r a l R eserv e
b anks a s g ro u p ed i n s e c t i o n 12A, a s am ended; b u t , when e l e c t e d , th e y
a r e r e p r e s e n t a t i v e s o f a l l o f th e F e d e r a l R eserv e b an k s and n o t
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r e p r e s e n t a t i v e s o f th e p a r t i c u l a r banks whose d i r e c t o r s e l e c t e d them .
Had C o n g ress in te n d e d t h a t e a c h r e p r e s e n t a t i v e s h o u ld be e l e c t e d a s
a r e p r e s e n t a t i v e o f th e g ro u p o f b an k s e l e c t i n g su ch member, i t w ould
h av e so s t a t e d r a t h e r th a n to h av e p ro v id e d t h a t su ch members s h o u ld
c o n s t i t u t e " r e p r e s e n t a t i v e s o f th e F e d e r a l R e s e rv e b a n k s 11. I t f o ll o w s ,
t h e r e f o r e , t h a t th o d u t i e s an d o b l i g a t i o n s o f th e F e d e r a l R e se rv e bank
r e p r e s e n t a t i v e s upon th o F e d e r a l Open M ark et Com m ittee a r e to th e
c o u n try a t l a r g e and n o t to any one o r g ro u p o f F e d e r a l R e se rv e b a n k s .
Among o th e r t h i n g s , s e c t i o n 12A o f th e F e d e r a l R e serv e A c t,
a s am ended, p r o v id e s t h a t nNo F e d e r a l R e se rv e bank s h a l l engage o r d e
c l i n e to engage i n o p e n -m a rk e t t r a n s a c t i o n s u n d e r s e c t i o n 14 o f t h i s
A c t, e x c e p t i n a c c o rd a n c e w ith th e d i r e c t i o n o f and r e g u l a t i o n s a d o p te d
by th e C om m ittee. The Com m ittee s h a l l c o n s id e r , a d o p t , and t r a n s m i t
t o th e s e v e r a l F e d e r a l R e se rv e b a n k s , r e g u l a t i o n s r e l a t i n g to th e o p e n m a rk e t t r a n s a c t i o n s o f su ch b a n k s ." T h u s, r a t h e r th a n r e c e i v i n g d i r e c t
io n s from th e F e d e r a l R e se rv e b an k s o r th e boardfe o f d i r e c t o r s o f th e
F e d e r a l R e se rv e b a n k s , members o f th e F e d e r a l Open M ark et Com m ittee a r e
c h a rg e d by law w ith g iv in g d i r e c t i o n s to th e F e d e r a l R e se rv e b a n k s , and
th e F e d e r a l R e se rv e b an k s a r e c h a rg e d by law w ith th e d u ty o f f o llo w in g
su c h d i r e c t i o n s . C e r t a i n l y i t c a n n o t be s a i d , t h e r e f o r e , t h a t r e p r e
s e n t a t i v e s o f th e b an k s on th e F e d e r a l Open M ark et Com m ittee a r e su b
j e c t to i n s t r u c t i o n s g iv e n by th e b an k s e l e c t i n g them when, by th e p l a i n
te rm s o f th e A c t, th e y a r e c h a rg e d w ith th e d u ty o f d i r e c t i n g th e b an k s
i n th e p e rfo rm a n ce o f t h i s p a r t i c u l a r f u n c t i o n .
T hus, members o f th e F e d e r a l Open M ark et Com m ittee a r e p u b lic
o f f i c e r s c h a rg e d w ith th e d u ty o f c o n d u c tin g o p e n -m a rk e t o p e r a t io n s o f
t h e F e d e r a l R e se rv e System "w ith a v iew to accom m odating commerce and
b u s in e s s and w ith r e g a r d to t h e i r b e a r in g upon th e g e n e r a l c r e d i t s i t u a
t i o n o f th e c o u n tr y 11. Of n e c e s s i t y t h e i r d e l i b e r a t i o n s and a c t i o n s m ust
be c o n f i d e n t i a l . To d is s e m in a te in f o r m a tio n a s to o p e n -m a rk e t p o l i c i e s
w h ile b e in g fo r m u la te d o r w h ile i n th e p r o c e s s o f b e in g e x e c u te d m ig h t
d e f e a t th e r e s u l t s so u g h t i n th e e x e c u tio n o f su ch p o l i c i e s . C o n g ress
m ust have so c o n s id e r e d when i t p ro v id e d i n s e c t i o n 10 o f th e F e d e r a l
R e se rv e A ct t h a t th e B oard o f G o v ern o rs o f th e F e d e r a l R eserv e System
s h o u ld k eep a c o m p le te r e c o r d o f th e a c t i o n ta k e n by th e F e d e r a l Open
M ark et C om m ittee upon a l l q u e s ti o n s o f p o li c y r e l a t i n g to o p e n -m a rk e t
o p e r a t io n s and s h o u ld r e c o r d t h e r e i n th e v o te s ta k e n i n c o n n e c tio n w ith
th e d e te r m in a tio n o f su ch p o l i c i e s and th e r e a s o n s u n d e r ly in g th e a c t i o n
o f th e C om m ittee and sh o u ld in c lu d e i n i t s a n n u a l r e p o r t to C o n g ress a
f u l l a c c o u n t o f th e a c t i o n so ta k e n d u r in g th e p r e c e d in g y e a r . Had
C o n g ress in te n d e d t h a t th e c o n s i d e r a t i o n and e x e c u tio n o f o p e n -m a rk e t
p o l i c i e s be m a tte r s o f p u b lic and c u r r e n t in f o r m a tio n t h e r e w ould have
been no n e c e s s i t y f o r r e q u i r i n g su ch r e p o r t to i t .
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The v e ry f a c t t h a t C o n g ress p ro v id e d f o r th e r e p o r t to be
made to i t r a t h e r th a n to th e F e d e r a l R e se rv e b an k s o r t h e i r b o a rd s
o f d i r e c t o r s , i s s i g n i f i c a n t . S e c tio n ISA o f th e F e d e r a l R eserv e
A c t, a s am ended, r e q u i r e s o p e n -m a rk e t o p e r a t io n s to be c o n d u c te d
" w ith r e g a r d to t h e i r b e a r in g upon th e g e n e r a l c r e d i t s i t u a t i o n o f
^he c o u n tr y ” . C o n g re s s , and n o t th e b o a rd s o f d i r e c t o r s o f th e se v
e r a l F e d e r a l R eserv e b a n k s , i s th e body w hich r e p r e s e n t s th e p u b lic
i n t e r e s t and C o n g re s s , w h ile r e c o g n iz in g th e c o n f i d e n t i a l c h a r a c t e r
o f o p e n -m a rk e t o p e r a t i o n s , h a s p ro v id e d f o r r e p o r t s to be made to i t
a s th e body r e p r e s e n t i n g th e g e n e r a l w e lf a r e o f th e c o u n tr y . Had
C o n g ress in te n d e d t h a t th e F e d e r a l Open M ark et Com m ittee o r any o f
i t s members s h o u ld owe a d u ty o r r e s p o n s i b i l i t y to r e p o r t to th e
b o a rd s o f d i r e c t o r s o f th e F e d e r a l R e se rv e b an k s su ch d u t i e s w ould
have b een in c lu d e d i n s e c t i o n 10 o f th e F e d e r a l R e serv e A c t.
W ith r e s p e c t to p u b li c o f f i c e r s i t h a s lo n g b een h e ld t h a t
any c o n t r a c t o r a g re e m e n t te n d in g to ham per o r r e s t r i c t su ch o f f i c e r
i n th e due p e rfo rm a n c e o f h i s d u ty o r w hich s e e k s to im pose upon su ch
o f f i c e r a r e s t r i c t i o n i n c o n n e c tio n w ith th e e x e r c is e o f h i s d i s c r e t i o n
i s i l l e g a l and a g a i n s t p u b lic p o l i c y .
I n th e c a s e o f S c h n e id e r v . L o c a l U n io n . 40 So. 7 0 0 , th e
c o u r t , q u o tin g from G reenhood on P u b lic P o l i c y , s t a t e d :
’’Any c o n t r a c t w hich c o n te m p la te s c o n d u c t v/hich
w i l l am ount to an im p o s itio n upon a p u b lic o f f i c e r
i n th e e x e r c i s e o f h i s d i s c r e t i o n i s v o id . * * * *
Any c o n t r a c t by one a c t i n g i n a r e p r e s e n t a t i v e c a p a c
i t y , w hich r e s t r i c t s th e f r e e e x e r c i s e o f a d i s c r e
t i o n v e s te d i n him f o r th e p u b lic good, i s v o i d ."
I n th e c a s e o f C am pbell v . O f f u t t . 151 S. W. 4 0 5 , th e c o u r t
s ta te d ;
»»* * * * The lav/ r e q u i r e s o f a p u b lic o f f i c e r
t h a t he s h a l l u s e h i s b e s t s k i l l and ju d g m en t f o r th e
p r o t e c t i o n o f th e p u b lic i n t e r e s t , and an a g re e m e n t
b e f o r e h i s a p p o in tm e n t to d iv i d e th e f e e s o f th e o f
f i c e w ith an a t t o r n e y , i f s u s t a i n e d , m ig h t s e r i o u s l y
c r i p p l e th e p u b li c s e r v i c e : * * *
C l e a r l y , any e f f o r t to r e s t r i c t a member o f th e F e d e r a l Open
M ark et Com m ittee i n th e f r e e e x e r c is e o f h i s d i s c r e t i o n i n th e p u b lic
i n t e r e s t and f o r th e p u b li c w e l f a r e , by c o n t r a c t o r o th e r w is e , w ould
be i l l e g a l and a g a i n s t p u b lic p o l i c y .
I n th e law o f c o r p o r a t i o n s , i t i s w e ll s e t t l e d t h a t th e d i s
c r e t i o n o f d i r e c t o r s i n p e rfo rm in g t h e i r d u t i e s c a n n o t be l i m i t e d o r
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r e s t r i c t e d by a g re e m e n ts a g i n s t th e i n t e r e s t o f th e c o r p o r a t io n w ith
th e s to c k h o ld e r s o r o th e r w is e .
T hus, i n Manson v . C u r t i s , 223 N. Y. 513, 119 N. E. 559, i t
is s ta te d :
t'-a- * * * j n c o r p o r a te b o d ie s , th e pow ers o f th e
b o a rd o f d i r e c t o r s a r e , i n a v e ry im p o r ta n t s e n s e ,
o r i g i n a l and u n d e le g a te d . The s to c k h o ld e r s do n o t
c o n f e r , n o r can th e y re v o k e th o s e p o w ers. * * * *
As a g e n e r a l r u l e , th e s to c k h o ld e r s c a n n o t a c t i n
r e l a t i o n to th e o r d in a r y b u s in e s s o f th e c o r p o r a t i o n ,
n o r can th e y c o n t r o l th e d i r e c t o r s i n th e e x e r c i s e
o f th e ju d g m en t v e s te d i n them by v i r t u e o f t h e i r o f
f i c e . * * * * C le a r ly th e la w d o es n o t p e r m it th e
s to c k h o ld e r s to c r e a t e a s t e r i l i z e d b o a rd o f d i r e c
to rs ♦ *
I n th e c a s e o f W est v . Camden, 135 U. S. 5 0 7 , th e Supreme
C o u rt o f th e U n ite d S t a t e s h e ld t h a t an a g re e m e n t by a s to c k h o ld e r o f
a c o r p o r a t io n to k eep a n o th e r p e rs o n p e rm a n e n tly i n p la c e a s an o f f i c e r
o f a c o r p o r a t io n was v o id a s a g a i n s t p u b li c p o l i c y , s in c e su ch an a g r e e
m ent m ig h t r e q u i r e a s to c k h o ld e r a s a d i r e c t o r to a c t c o n t r a r y to th e
tr u e i n t e r e s t o f a c o rp o ra tio n .
I*1 Haldeman v . H aldem an, 197 S. W. 376, th e c o u r t s a i d :
«i* * * * And he (a s to c k h o ld e r ) h a s th e
r i g h t to demand t h a t ea c h d i r e c t o r d is c h a r g e
a s s u c h , n o t i n a c c o rd a n c e w ith h i s p e r s o n a l
b u t i n th e b e s t i n t e r e s t s o f th e c o r p o r a t io n
s e n t . * * * *«»
fu rth e r
h i s d u ty
c o n tra c t,
th e y r e p r e
O th e r c a s e s to th e same e f f e c t a r e Lamb v . Lehmann. 143 N. E.
276, Ohio (1 9 2 4 ); Rush v . A unspaugh. 179 A la . 5 42, 60 So. 802 (1 9 1 2 ) ;'
S c r ip p s v . Sw eeney. 160 M ich. 1 4 8 , 125 N. W. 72 (1 9 1 0 ).
I t i s in c o n c e iv a b le t h a t C o n g re s s , i n c r e a t i n g th e F e d e r a l
Open M ark et C om m ittee, f o r th e avowed p u rp o se o f c o n d u c tin g o p e n -m a rk e t
o p e r a t io n s " w ith r e g a r d to t h e i r b e a r in g upon th e g e n e r a l c r e d i t s i t u a
t i o n o f th e c o u n tr y 11. in te n d e d to c r e a t e a b o d y , f i v e members o f w hich
m ig h t be made o b e d ie n t to th e w i l l o f a body o r b o d ie s c o n c e rn e d p r i
m a rily w ith l o c a l i n t e r e s t s .
I t i s my c o n c lu s io n , t h e r e f o r e , t h a t r e p r e s e n t a t i v e s o f th e
F e d e r a l R e se rv e ban k s upon th e F e d e r a l Open M ark et Com m ittee may n o t
be e l e c t e d w ith l i m i t e d a u t h o r i t y to a c t i n a c c o rd a n c e w ith i n s t r u c
t i o n s o f th e b o a rd s o f d i r e c t o r s e l e c t i n g su ch members and t h a t i n th e
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c o n d u c t o f t h e i r o f f i c e su ch members a r e p u b li c o f f i c e r s e x e r c i s i n g
p u b lic f u n c t i o n s i n th e i n t e r e s t o f th e p u b li c a s a w h o le, an d n o t
n e c e s s a r i l y i n th e i n t e r e s t o f th e p a r t i c u l a r g ro u p e l e c t i n g then*.
R e s p e c t f u lly s u b m itte d ,
(S ig n e d )
J . P . D r e ib e lb is
J . P. D re ib e lb is ,
A s s i s t a n t G e n e ra l C ounsel*
I h av e g iv e n c a r e f u l c o n s id e r a tio n to th e above o p in io n
and c o n c u r i n i t c o m p le te ly .
(S ig n e d )
W a lte r W yatt
W a lte r Iftlyatt,
G e n e ra l C o u n se l.
/
(? .
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL R ESE R V E BANK
OF DALLAS
C .C .W A L S H
CHAIRMAN O F T H E BO ARD
AND F E D E R A L R E S E R V E A O E N T
February 24, 1936
Board of Governors of the
Federal Reserve System
Washington, D* C.
036 FFB 27 AM 9
Attention Mr. Chester Morrill, Secretary
Gentlemen:
Receipt is acknowledged of your letter of Februoutlining the Board* s position in regard to
(a) the premature election by a certain Federal reserve
bank of its President as a member of the Federal Open Mar
ket Committee, and (b) the functions and powers of persons
chosen by Federal reserve banks to serve as alternates of
their respective representatives on the Federal Open Market
Committee*
As instructed, I have informed each member of
our board of directors of the contents of your letter*
Yours very truly,
Chairman of the Board
r
|0
Reproduced from the Unclassified I Declassified Holdings of the National Archives
(/
F e d e ra l R e s e rv e B a n k
o f
%^ y-~
N e w Yo r k
F e b ru a ry 2 1 , 19S6.
D ear Mr. M o r r i l l :
R e c e ip t i s acknow ledged o f y o u r l e t t e r o f F e b ru a ry 1 9 ,
1956 c o n c e rn in g th e o f f i c i a l a p p o in te d , and th e m anner o f h i s
a p p o in tm e n t, by one o f th e F e d e r a l r e s e r v e b a n k s , a s a member
o f th e F e d e r a l Open M arket C om m ittee.
T h is l e t t e r was p r e s e n te d to o u r b o a rd o f d i r e c t o r s
a t i t s m e etin g on F e b ru a ry 2 0 , 1 9 36.
V ery t r u l y y o u r s ,
M r. C h e s te r M o r r i l l ,
S e c r e t a i y , B oard o f G o v ern o rs o f th e
F e d e r a l R e se rv e S y stem ,
W ash in g to n , D. C.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e b ru a ry 2Q, 1936.
Ur* Frsdsrlo 1* Curtiss, Chairman,
Fsdsral Esssrrs Sank of Boston,
Boston, Masssohmsstts*
D . . r H r. C u r t l . . .
fhsfi is Inslossd for your information a
oopy of a lettarwhloh Mr* Esslss has ad&rssssd to Mr*
4* !• Fsyton, Chalraan of ths Board of Dirsotors of ths
Fedsral Eassrrs Bank of Minneapolis, transmitting, in
accordanss with his rsqusst, a oopy of an opinion o f ths
Board's Counsel with rsfsrsnea to ths qusstlon of whsthsr
In slsoting rsprsssntativss of ths Fsdsral Esssrvs hanks
to ssrrs on ths Fsdsral Opan Markst Com&ittaa, saeh dir*
sotor has a vota or sash bank has ons* A oopy of suoh
opinion is also lnolossd, togsthsr with a oopy of ths
memorandum sotting forth ons suggsstsd proosdurs for
h o ld in g suoh slsotions*
fsry truly yours,
'£* *; '/'A& :
C h s s ts r M o r r i l l ,
Ssorstary•
Inolosurss*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fobruairy 20, 19S6*
Mr* 4* H* Cato, Chairaan,
Fodoral ioaoinro lank of low York,
Sew fork9 How York*
Dear Hr* Cuti
| There it inolotod for your information a copy
of * lottort whioh Hr* JSoolot hot addrottod to Mr* «?* *•
FoytoB^'tSiTijfafcs of tho Board of Dlrootort of tho Fodoral
Motorto Bonk of Mianoapollt# tran«*ltting# in aooordanoo
with hit roquoat, a oopy of on opinion of tfeo Board *t
Countol with roforonoo to tho quottion of whothor, in
elooting roprotontatlroa of tho Fodoral iiotorro banka to
torro on the Fodoral Gpo» Markot Coaraittoo, oaoh director
hat a TOta or oaoh bank hat obo * A oopy of tuoh opinion
it alto inclotod, togothor with a oopy of tho noatoranduai
totting forth ono tuggottod proooduro for holding tuoh
olootiomt*
Yory t r u l y
yourt#
C h o tto r M o r r i l l ,
S o o ro ta ry *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
i
i
i
!
February EO# 1936*
Mr* k* L* Austin, Chairman,
Federal leeerre Sank of .Philadelphia,
iiiiladelphia, Pennsylvania •
Dear Mr* Austint
I There is inclosed for your information a copy
of a lottorf which Mr* loolas has addressed to Mr* J* I*
Peyton^^hairmen of tho Board of Direotore of tho Federal
Reserve Bank of Minneapolis, transmitting, in aeoordanoo
with his request, a copy of an opinion of the Board *s
Counsel with reference to th© question of whether* In
electing representatives of tho Federal Meserre banks to
serve on tho Federal Open Market Committee* eaeh director
has a vote or eaeh bank has one* A eopy of suoh opinion
is also inclosed* together with a copy of the memorandum
setting forth one suggested procedure for holding suoh
elections*
Very truly yours*
(Sinned; Ghost-®?' M orrill
Chester Morrill,
Secretary*
Xnclosures*
JPD /ebb
GENERAL COUNSEL’S OFFICE,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 2-0* 198 i*
Mr* I# S« Burk®, Jr** Aeting Chairman*
Fadaral Reserve Bant of Cleveland,
Cleveland* Ohio*
Dear Mr* Burkei
! there It inclosed for your Information a copy
of a l e t t e r ] mfaloh Mr* Eeeles hat addressed to Mr* 4* h»
Feyton* Chairman of the Board of Direotore of the Federal
Reserve Bank of Minneapolis* transmitting* in aoeordanee
with his request, a copy of an opinion of the Board*e
Counsel with referenee to the question of whether* in
elooting representatives of the federal Reserve banks to
serve on the Federal Open Market Committee* eaeh director
has a vote or eaeh bank has one* A copy of suoh opinion
is also inclosed* together with a oop> of the memorandum
settimg forth one suggested procedure for holding sueh
elections*
Very truly yours*
(SignU) CneCter
C h e s te r M o r r ill*
S e c r e ta r y *
Inolosures*
JPD/ebb
fet vE-AL COUNSEL'S O ff ICE,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr* Frederic A* Delano, Deputy Chairman,
Federal fieserve Bank of Richmond,
Richmond, Virgin!a*
Dear Mr* Delano«
rV ^ ¥ ^ 4
/ Thor® if inoloaed for your information a eopy
of a,latter which Mr* iooles haa addressed to Mr* <1* £U
i'eyton, Chairmazi of tho Board of Dir actor a of tho Fodoral
Eoaorvo Bask of Minneapolis, transmitting, la aooordanoe
with hla request, a eopy of am opinion of tho Board*•
Counsel with reference to tho question of whether, In
electing representatives of tho Fodoral fieserve hanks to
sorvs on tho Fodoral Opon Market Oomdttoo^ oaoh director
has a veto or oaoh bank haa oso« A oopy of auoh opinion
is aloo inclosed, together with a eopy of tho memoranda*
sotting forth one suggested proooduro for holding suoh
elections*
Very truly yours,
C h e s te r M o r r i l l ,
S e c re ta ry .
Inolosuros*
JPD/ebb
6_';ERAL COUNSEL'S OFFICE,
Revised by
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 20, 1936*
Mr* i. H* Kettlg, Deputy Chairmen,
Federal Reserve Bank of Atlanta,
A t l a n t a , (ie o rg la *
Deer Mr* Kettigf
PfZA/bh
I There it Inclosed for your infora*tion a copy
of a letter which kr* Eecles he* addressed to Hr* J* M*
Peyt o ^ r m I r a a n of the Board of Directors of the Federal
Reserve Bank of Minneapolisf transmitting, In accordance
with his request# a oopy of en opinion of the Board's
Counsel with refere&ee to the quest!Oil of whether, In
electing representatives of the Federal Reserve benks to
serve on the Federal Open Market Cosudttee, eaeh director
has e vote or eaeh bank hes one* A oopy of sueh opinion
Is elso Inclosed, together with a oopy of the memorandum
setting forth one suggested procedure for holding sueh
elections*
Vary truly yours,
(Signed)
Chester Morrill,
Secretary*
Inclosures*
JPD/ebb
GENERAL COUNSEL'S OFFICE,
w&nrn
rceproaucea rrom the Unclassified I Declassified Holdings of the National Archives
Mr* I* M* Stevens, Ch*ir*an,
Federal Beserve Bank of Chleago,
Chicago, Illinois*
Deer Mr* Stevensi
there is inclosed for your i n f ernetio n a copy
of * lstter which Hr* hocIs« ha* addressed to Mr* J. 1*
Peyton, Chairman of the Board of Directors of the Federal
Reserve Bask of Minnesipolis, transmitting, la accordance
with his request, a copy of an opinion of the Board's
Counsel with reference to the question of whether, In
electing representatives of the Federal ieserve banks to
servs on the Federal Open iaarket Coanittee, each direst or
has a vote or eaeh bank has one* A eopy of suoh opinion
is also inclosed, together with a oopy of the memorandum
setting forth one suggested procedure for holding such
elections*
Very truly yours,
*
Chester Morrill,
Secretary*
Iselosures*
JPD/ebb
GENERAL COUNSEL'S OFFICER
Dictated b
Approved Dy
ftavised by..
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 20, 1956*
Hr* J* S* Wood, Chairman,
federal Keaerro Bank of St* Louie,
St* Loula, Miaaouri*
Bear Mr* loodi v
/ There la inoloeed for your infonaation * cop;
of a JjttW whioh Mr* Boolea haa addreaaed to Mr* <1* 1*
Payton, Ghainaan of tha Board of Plreetora of tha Fadaral
Reaerve Bank of Mlnneapolia, tranamittlng, In accordance
with hia raquaat, a oopy of an opinion of tho Board*a
Counsel with reference to tha queetion of whether, in
electing representatives of tha Fadaral teaerre banka to
aorta on the Federal Open Market Conalttee, eaeh direotor
haa a vote or each bank haa one* A oopy of auoh opinion
la alao lncloaed, together with a oopy of the Bemorandus
aetting forth one suggested prooedure for holding auoh
elections.
Very truly youra.
C h e a te r M o r r i l l ,
S e c r e ta r y *
Xnoloaurea*
JPD/ebb
GErtERAL COUNSEL'S OFFICE,
Dictated b
Approved by..............
Revised b y .• • • • • • • • • • « * » • « « *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 20, 1936*
Mr* J* «f* fhoaas, Chairman,
Federal £eserve Bank of Kansas City,
Kansas City, Missouri*
Dear Hr* Thomsi
There is inclosed for your inforaation a copy
of a
which Mr* ificcles has addressed to Mr* J* B*
Psgrton, Chairman of the Board ©f Dire©tors of the Federal
teserve Bank of Minneapolis* transmitting* is accordance
with hi* request, a oopy of an opinion of the Board's
Counsel with referenoe to the question of whether, in
electing representatives of the Federal lieserve banks to
•erve on the Federal Open Market Committee, each director
has a vote or each bank has one* A oopy of such opinion
is also Inclosed, together with a copy of the memorandum
setting forth one suggested procedure for holding such
elections*
V«ry truly your*.
Chester Morrill,
Secretary*
Inclosures*
JPD/ebb
GENERAL COUNSEL'S OFFICE,
Approved b y ..
Revised by.........................
i
Li
3 )
M S
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February EG, 1956*
Mr* C* €* leieh, Chairman,
Federal Reserve Bask of Dallas,
Dallas* fexas*
Dear «r* itialah*
! there Is Inclosed far your information a copy
of aJLi&fltJt ahiah Mr* leoles has addressed to Mr* J* M*
Payton, Chairman of the Board of Directors of the Federal
Heserve Bank of Minneapolis, transmitting, In accordance
with his request, a copy of an opinion of the Board’s
Counsel with referenee to the question of whether, in
electing representatives of the Federal Heserve banks to
serve on the Federal Open Market Committee* each director
has a vote or each bank has one* A copy of suoh opinion
Is also Inclosed, together with a copy of the memorandum
setting forth one suggested procedure for holding such
elections*
Very truly yours#
Chester Morrill,
Secretary*
Inolo«ure».
JPD/ebb
GENERAL COUNSEL’S OFFICE
Dictated
> ••**
Approved by......... ..
Revised b)
ii
Li
Li
Reproduced from the Unclassified I Declassified Holdings of the National Archives
:
*
F e b ru a ry 20* 1936*
Mr* Dalton i». Moore, Deputy ^hairnan,
Federal Jieserte Bank of Sen Francisco,
Sen Francisco, California.
Dear Mr# Moorat
j<y ^ o( ,5«►
( There i t inclosed for your information a oopy
of a Itttar whioh Mr. Boolaa hat addressed to Mr. J. H.
Peyton, Chaitmn of tha Board of Birectore of tha Fadaral
Reserve Bask of Minneapolis, transmitting, in aooordanca
with hit request, a oopy of an opirion of tha Board’s
Counsel with reference to tha question of whether, in
eleoting representatives of tha Fadaral leserve hanks to
serve on tha Fadaral Open Market Coanalttae, eaoh director
has a vote or eaoh hank has one. A oopy of sueh opinion
Is also inclosed, together with a oopy of the nettorandu*
setting forth one suggested proeedure for holding sueh
elections.
Very truly yours,
(Slfined'
/
Chester Morrill,
Secretary.
Inclosures.
JPD/ebb
GENERA* COUNSEL'S OFFICE,
r::> ;
J
v //
1
,•
-
*
ReproducecHrom the UnclassHref'/'OeclSssified'Holdings' of the National Archives
i
Mr* 3+ S* Peyton, Ghairaan,
Federal fteterre Bank of Minneapolis*
Minneapolie* Minneaota*
r
Boar Ir* Payton*
In accordance with your requeat, I am Inclosing
herewith for your Information a eopy of an opinion toyone of the Board.*t Aasiatant denerel Ueunael, concurred
in by lit General Oomnael, on tho quettion of whether,
in electing rapretentati’tet of the Federal Ee terra banka
on the Federal Open Market Cowaittee, oaoh direotor it
entitled to one rote, or each bank it entitled to one.
iilto, at requested by you, I a* ineloaing a eopy
of a asaorandua setting out one asthod of procedure whieh
h a t bean suggested in connection with holding tuoh elect! ona*
Thit, of course, doet not iaply that it it the only one
whieh nay be followed.
Very truly youra,
1* S* ieeles,
Cfeairaan*
Inclosuret*
f
ll^pWWBBHWPWWWWWPWBBBWWWWpW iiW |P|p|P|pPW|lll*"|WWWBM
^
i ■»i» ....... .
Reproduced from the U rtc l^fr® ^ /l!® S ® § ^ ^ ™ 'ld in g s of the National Archives
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
F e b ru a ry 2 0 , 1936
tfr« <1* i* P a y t ob # w H oirm zi,
Fodoral U m w m t w Ba»k of tflBaaapolio,
MiHBOapoiia, MittXMlSOt**
Do&r Mr* rflytcra*
In te«ordti«* with year roqu«»»t, 1 am lcclooliag
her•with for your lnforaotia® * copy of am opinion t>y
obo of tho Soard’a Meltt»*t CfoBoral ^ou»*oi, concurrod
in by Its dwftorml vounaol, on tlio quoatloa of whothor,
Is olootlnf roproooBtativoa of tho Fadoral iaaorvo bonk*
on tho Fodoral Qpoa Harkat Cowilttoo* ««eh dirootor !•
*Btitlad to oao vott, or oaeh bonk la «utitled to o b o *
» laa# os raquoatod by you, rfas inelo»in6 * eopy
of a nasorandmm aatti&& out obo ®«tIjJdQf prooodora whioh
hat boas lug ortod in c o n m o o t i j M p ^ t h ^ l d i n * , aaeh olaotiomi
Thi»# of oouraa, doaa mot
it la tbo only & m
whlalt m y bo folloawd*
Vory truly youra,
1*
&aaiaa,
OhalraiaB*
JBcloawraa*
-----T O O H S osr
FEB 201936^
^fr\
One S u g g ested P ro c e d u re f o r H o ld in g E l e c t i o n
o f R e p r e s e n t a ti v e s of F e d e r a l R eserv e Banks
t o M embership Upon F e d e r a l Open M arket
Com m ittee
/t
In view o f t h e f a c t t h a t each e l e c t i o n of r e p r e s e n t a t i v e s
of F e d e r a l R eserv e b an k s t o m em bership on th e F e d e r a l Open M arket
Comm ittee i s by th e d i r e c t o r s o f two o r t h r e e d i f f e r e n t F e d e r a l Re
s e rv e b an k s a p r a c t i c a l p ro b lem a s t o th e m ethod of c o n d u c tin g such
e l e c t i o n h a s a r i s e n . W ith o u t i n anyw ise s u g g e s tin g t h e im p r o p r ie ty
o f some o th e r fo rm o f e l e c t i o n , th e f o llo w in g h a s b een s u g g e s te d a s
one p r a c t i c a l means by w hich such e l e c t i o n c o u ld be c o n d u c te d .
1 . The b o a rd s o f d i r e c t o r s o f each o f th e s e v e r a l F e d e r a l
R e serv e banks a s g rouped i n s e c t i o n 12A o f th e F e d e r a l R eserv e A ct
co u ld m u tu a lly a g re e upon some o f f i c e r o f any o f su ch banks t o a c t
a s t e l l e r i n th e c o n d u c t o f such e l e c t i o n .
2 . Each b o ard o f d i r e c t o r s o f a F e d e r a l R eserv e bank
w ith i n a p a r t i c u l a r group o f F e d e r a l R eserv e b an k s c o u ld th e n nom i
n a te from among th e f u l l tim e r e g u l a r l y a c t i n g e x e c u tiv e o f f i c e r s
of su ch b an k s c o m p ris in g such group one o r a s many c a n d id a te s a s th e
members of such b o ard m ig h t d e s i r e and fo rw a rd su ch n o m in a tio n s t o
th e t e l l e r a l r e a d y a p p o in te d .
3* The t e l l e r a f t e r r e c e i p t of a l l n o m in a tio n s c o u ld
p r e p a r e b a l l o t s and fo rw a rd th e same to each d i r e c t o r o f a F e d e r a l
R eserv e bank i n th e group f o r w hich such t e l l e r was a c t i n g .
4 . xUach d i r e c t o r c o u ld th e n c a s t h i s v o te w ith th e t e l l e r
and a f t e r eac h d i r e c t o r had had a r e a s o n a b le o r a g re e d tim e w ith i n
w hich t o c a s t h i s v o te th e t e l l e r c o u ld can v a s th e b a l l o t s and a n
nounce th e r e s u l t s o f t h e e l e c t i o n .
5 . C a n d id a te s would be e l e c t e d by a p l u r a l i t y o f th e v o te s
c a s t and i n th e e v e n t o f a t i e i t w ould be n e c e s s a r y t o h o ld a n o th e r
e le c tio n . u
FEB 201936.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
i3i
3
)A R D OF GOVERNORS
O F THE
FEDERAL RESERVE SYSTEM
Office Correspondence
To
Date F e b ru a ry 20, 1956.
Subject: E l e c t i on of F e d e r a l R e serv e b a n k 1s
Board o f G overnors
From_Mr. D r e i b e l b i s . A s s i s t a n t G en eral C o u n s e l.
I.
r e p r e s e n t a t i v e s to F e d e r a l Open
Market Comm it t e e .
QUESTION PRESENTED
My o p in io n h a s been r e q u e s te d a s t o w h e th e r i n t h e e l e c t i o n
o f r e p r e s e n t a t i v e s o f th e F e d e r a l R e se rv e banks t o th e F e d e r a l Open
M arket C om m ittee, p u r s u a n t t o th e p r o v is io n s of s e c t i o n 12A o f th e
F e d e r a l R e se rv e A c t, a s amended by th e B anking A ct o f 1935, each bank
or each b o a rd of d i r e c t o r s o f a b an k a s a u n i t i s e n t i t l e d t o one v o te ,
or w h eth er each d i r e c t o r i s e n t i t l e d to a v o t e .
II.
OPINION
I t i s my o p in io n t h a t s e c t i o n 12A of th e F e d e r a l R e se rv e A c t,
a s amended by th e B anking A ct o f 1955, c r e a t e s an e l e c t o r a l body composed
of th e d i r e c t o r s of t h e F e d e r a l R e se rv e b an k s a s grouped i n s a id s e c
t i o n f o r th e p u rp o se of e l e c t i n g a member t o th e F e d e r a l Open M arket
Comm ittee and t h a t eac h d i r e c t o r i s e n t i t l e d t o c a s t a v o te i n th e
e le c tio n .
III.
DISCUSSION
S e c tio n 12A o f th e F e d e ra l R e se rv e A ct p r o v id e s f o r r e p r e
s e n t a t i o n of th e F e d e r a l R e se rv e b an k s upon th e F e d e r a l Open M arket
Com m ittee by th e e l e c t i o n o f f i v e members t o th e C om m ittee. I t i s
p ro v id e d t h a t su ch r e p r e s e n t a t i v e s s h a l l be e l e c t e d Mone by th e b o a rd s
o f d i r e c t o r s o f th e F e d e r a l R e se rv e Banks o f B o sto n and New Y o rk ,” e t c .
No d i s c u s s io n o c c u rre d i n th e h e a r in g s b e f o r e th e House and
S e n a te C om m ittees o r i n t h e .d eb ates a s t o w h e th e r i t was c o n te m p la te d
t h a t each b o a rd of d i r e c t o r s sh o u ld v o te a s a u n i t , th u s g iv in g each
bank one v o te , or w h e th e r th e v o tin g sh o u ld be by th e d i r e c t o r s o f eac h
b an k , th u s g iv in g each bank n in e v o t e s .
I t i s h a r d ly c o n c e iv a b le t h a t C o n g ress in te n d e d t h a t each
b o a rd of d i r e c t o r s s h o u ld v o te a s a u n i t , b e c a u se t h i s c o u ld f r e q u e n t l y
r e s u l t i n d e a d lo c k . I t i s w e ll s e t t l e d t h a t w here th e m eaning o f a
s t a t u t e i s n o t f r e e from d o u b t i t w i l l be g iv e n t h a t c o n s t r u c t i o n
w hich le a d s t o p r a c t i c a l and n o t im p r a c t i c a l r e s u l t s . M is s o u ri P a c i f i c
mmm m
FEB 2 0 1 9 ^
Board of Orovernors - 2
Railroad Company v» Holt, 293 Fed* 155* certiorari denied 264 13. S.
584} 13kewi.se it will be given that construction which will carry out
rather the.n defeat the purpose of the legislature. The foully and the
Uarolyn, 9 tiiheat. 381. Also it has been said that "where £reat inconvenience will result from a m r ticular construction that construc
tion is to be avoided unless the meaning of the legislature is plain”.
United States v. Fisher, 6 U. S. 368.
Thus, in election cases upholdlrg elections by plurality
rather than by majority, courts have based their decisions upon the
grounds that "any system of par15gjrcentary tactics, or any condition of
membership, however well meant, calculated to 'defeat such an organi
zation, or any construction of the statute leading to such result,”
shoulc be avoided.
This is illustrated by the following quotation including
the foregoing one from the case of State v. Anderson, 12 itf. ft. 666*
"In this state the plurality principle has been
and is applied generally to elections. * * * The legislature
not having designated any mode of electing the officers at
the organization of the council, nor prescribed the number of
votes necessary to eleot, but simply required the members to
organize by ‘electing*, it is a fair inference, in the ab
sence of anything to indicate a different intent or meaning,
that the term *electing* was used in its popular and generally
received sense of choosing by a plurality of votes. This in
ference is aided by the context, as well as by the manifest
object of the statute. One leading purpose was to effectuate
a prompt, if not an immediate, organization. As is said by
Johnson, J., in State v. Green, 37 Ohio St. 232} *The council
is charged with an important public trust. It is essential
to the exercise of that trust that a soeedy organization
should be had.* *They (the members present, if a quorum)
shall forthwith proceed to organize,* is the unmistakable
language of the statute. *«here the question involved is
difficult of solution, any system of parliamentary tactics,
or any conduct of members, however well meant, calculated to
defeat such an organization, or any construction of the
statute leading to suoh result, will not be favored unless
clearly required by the terms of the law. •** 12 £ug. 656, 658
(Ohio, 1887)
Should the pertinent portion of section 12A be interpreted
as allowing each bank or each board of directors as a unit one vote, as
distinguished from allowing each director of a Federal Reserve bank a
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Board of Governors - 3
vote, the power to deadlock an election and even to defeat the will
of the majority would be put within the hands of a minority* For in
stance, in a case where two Federal Tieserve banks are grouped together,
five directors of one bank might favor candidate a, while the other
four directors and the nine directors of the other bank might favor
candidate B* In such case the five directors could control the vote
of the board they represented and thus deadlock the election* In a
case where three Federal Reserve banks are grouped together, five
directors of each of two banks might favor candidate A, whereas the
other directors of suoh banks, together with the nine directors of the
third, bank, might favor candidate B* In such case ten directors of two
Federal Reserve banks would control the election, as against the wishes
of seventeen other directors* Such a construction could result in great
inconvenience, would be impractical, and might defeat rather than carry
out the purpose of the legislature*
In addition, it is very significant that with respect to
the election of class A and class B directors to the board of directors
of each Federal lieserve ban!’, section 4 (paragraph lb) of the Federal
Reserve Act clearly provides that the votir.g shall be done by the
member banks and that each member bank Mby resolution of the Board or
by an amendment to its by-laws shall authorize its president, cashier,
or some other officer to cast the vote of the member bank in the election
of the class A and B directors11*
Thus, where Congress intended that the voting should be done
by the member banks as units, it specifically provided that each bank
should have one vote and prescribed the means whereb/ such vote should
be cast* In connection with section 12A of the Federal Keserve Act,
however, it was provided that the election should be by "the boards of
directors of the Federal Reserve bankstt*
ihere is, of course, little distinction between a bank cast
ing one vote and Sts board of directors as a unit casting one vote*
i:ad Congress, in creating the Federal Open market Committee, intended
that each Federal Reserve bank should cast a vote, it would have made
provision, as it did in the case of the election of class A and B dir
ectors to the boards of directors of Federal Reserve banks, for the
selection b,y such boards of someone to cast such vote* itot having done
so, Congress must have intended that the directors of the several Fed
eral Reserve banks, as grouped in section 12A of the Federal Reserve Act,
should constitute several electoral bodies, each charged with the duty
of selecting a representative of the Federal Reserve banks to the
Federal Qoen /viarket Committee.
In view of the fact that the wording of section 12A of the
rio&rd of Governors - 4
Federal Reserve Aot is in itself novel, there is no direct authority
squarely upon the point, but somewhat analogous situations have arisen
in connection with other statutes*
For instance, there is a statute in the State of Massachu
setts providing that towns of a certain population may unite for the
purpose of employing a superintendent of schools and providing that the
school committees of each town shall form a joint commit t:ee and choose
a superintendent of schools* In the case of Reed v. Barton et al. 47
k* &. 961, it appeared that, pursuant to such statute, three small
towns proceeded to elect a superinte&dogtt of schools through their re
spective committees* As the committees of two of the towns consisted
of only three members, whereas the third town had a committee consist
ing of nine members, the voting m s equalized by giving each town the
same number of votes,if all committeemen were present Ibut the towns
did not vote as units* Subsequently, the election was questioned and,
in upholding the election, Chief Justice Holmes held thst, ’’The members
of the joint committee provided by St* 1898, c* 466, no doubt are in
tended to vote individually and not by towns11*
In view of all of the considerations stated above it is my
opinion, that the election contemplated by Uongress in the enactment
of section 12A of the Federal Reserve Act is an election by an electoral
body consisting of the members of the boards of directors of the several
Federal .Reserve banks as grouped in the section*
iiespectfally,
J# P. Dreibelbis,
Assistant General Counsel*
I have given careful consideration to the above opinion
and concur in it completely*
•.Valter vVyattgy
General Couxreel*
R e p r o ( # * 1 r d f n the U nclassified
I D eclassified
H oldings of th & N a tio n a l A rchives
February W , 1936*
ti% Frederic I* Surt!*#,
Federal I'tsarr# Bank of le*$onf
Boston, ia.#sacb***«tt#*
B#*r Hr* 0mrtl»ii
Ths Board
of Qomffimm M i received information tr m one
of tha Jfafti&ttl reserve banks
oi the fe*okt St *
b#*rd of
-tfe* -
early 1» February, •tmaalimsl^ sleeted
_________________ , Fresidaitt *# the Fedtaml lt*«arv# Bank of
. ....I,.j.
..,,,:..,,,J;,Ju.l,,*-*• » »a*fe«r of ths Federal 0$«a Market OoMdt%««* #t
cetera.
However, according ifr the Ixiftamttoi* of the B&awl of
soar* the board of dtiNsetor# of the
fedtml re#«rve bank
referred to in the action taktia has not el«6tttd a
for the
tera beginning larch 1, !$$§*
It la the
of the Board of Htvemort that the
tloo taken in this matter is f>ra*atMtr« and the Board fea» requested
that tht directors of ths bank txt m
ailvlaed*
It appears si.## that * re#olmtlcm «li ippre’W d containlag
a recoramandation that both the
elected a* rep^iimtativa
and the person elected as alt«»at# b# Sii Washington at the time
<*f•nestings of tha FaiaraJ, Open tafiat Oettiitttt# and tftai the
alternate, if tha
advisory capacity*
is present, will aot
in m
The Board of $0v«niars has «*IX«4 attention
to the fact that the fadaral Open Market Camaittee as «®at#d
Reprod'iiOed from the U ncla ssified / D eclassified H o ld ttifs o f the N ational A rchives
frederie H. Curtiss *» f t )
by Congress consists solely #£ tkm iy*1»r:s
tfe* B©*i*d «>£ Cfcwarn&r#
***$; the five yepNMMHitfrtl*## #£ 9NtafW& reserve banks And that tfe*
m
only jfuiitt&oa of s&
$gr the statute 1# to
serve in til# absence of til#:f%fr*#$*rfcattve t m whoa he Is m
alternate*
therefore, the Board of Governors has expressed th# opinion that 1%
vaa not
tbgr
m
altars* te should attend m
.
participate ia * nee ting #£'t&© Federal §fe*l Market OMnltte* #2P©#pt
im the absence of the representative fo*- frito* 'he Is the alternate.*
the B©*rd »tl;l #$$r*#iatft it if f m niil Infos** the mmforn#
of your board of dirtptar* pfMfcptXjf of the con tan ts of this
Tery truly yours,
{&»#$•* Sorrlllt
$ # u r « ta iy *
F l B H !93t>
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Au
m
M r, J* H. C ase, C h airm an ,
F e d e r a l R eserv e Bank o f Mew f o r k ,
Mew Y o rk , Sew York*
'Dear Mr* C ase:
t h e B oard o f G o v ern o rs h ae r e c e iv e d information from one
o f t h e F e d e r a l r e s e r v e b an k s t o t h e e f f e c t t h a t t h e b o a rd o f d i r e c
tor© o f t h e b an k , a t a m e e tin g e a r l y l a F e b ru a ry , "u n an im o u sly
e le c te d
. P r e s i d e n t o f t h e F e d e r a l R e se rv e Bank o f
. a s & member o f th e F e d e r a l Open M ark et Com m ittee*
e t c e te ra .
However, a c c o r d in g t o t h e in f o r m a tio n o f t h e B oard o f
G o v ern o rs th e b o ard o f d i r e c t o r s o f t h e p a r t i c u l a r F e d e r a l r e s e r v e
bank r e f e r r e d t o i n t h e a c t i o n ta k e n h a s n o t e l e c t e d a P r e s i d e n t
f o r th e te rm b e g in n in g M arch 1 , 1936*
I t i s th e o p in io n o f th e B oard o f G o v ern o rs t h a t th e
a c t i o n ta k e n in t h i s m a tte r i s p re m a tu re an d t h e B oard h a s r e
q u e s te d t h a t th e d i r e c t o r s o f t h e b an k b e s o a d v is e d .
I t a p p e a rs a l s o t h a t a r e s o l u t i o n was a p p ro v e d c o n ta in
in g a recom m endation t h a t b o th th e p e r s o n e l e c t e d ass r e p r e s e n t a
t i v e and t h e p e rs o n e l e c t e d a© a l t e r n a t e b e l a IS aeh ln g tan at th e
tim e o f m e e tin g # o f t h e F e d e r a l Open M ark et Com m ittee an d t h a t
t h e a l t e r n a t e , i f th e p r i n c i p a l i s p r e s e n t , w i l l a c t m e re ly i n
an a d v is o r y c a p a c ity *
t h e B oard o f G overnor* h a s c a l l e d a t t e n
t i o n t o t h e f a c t t h a t t h e F e d e r a l Open M ark et Com m ittee a s c r e a te d
http://fraser.stlouisfed.org/
Federal
Reserve Bank of St. Louis
I
iifon
i t
ULU&
W ^ I j
V
HHp H allp
< l p p R B H Ip a B g a H B H IIH H B H Ia a R B H a a lH H H a B H M H IH a H H a H B B a a a H H il9 >
Reproduced from the Unclassified I Declassified Holdings of the National Archives
lr« J. B* Case - (£)
fcy Congress acmeists solely of the aeahers of th* Board of Ckrfernors
and the five representatives of Federal reserve banks sad that tho
only function of an alternate m
prescribed t@r tbs statute is to
serve ia the absence of the representative for vhosi be is aa alter
nate.
Therefore, the Board of Governors has expressed tho opinion
that it *as aot conteaplated by Congress that aa alternate should
attend or participate in a Meeting of the Federal Open Market Ocm~
aittee except ia tho absence of the representative for whoa ho is
the alternate*
the Board will appreciate it if jroi will infor* the ae»~
hors of your hoard of directors promptly of tho contents of this
letter*
foiy truly years,
(Signed) Chester
Chestsr Morrill,
Secretary.
CM y d
M o rm
)
.Reproduced from the U nclassified
I D eclassified H oldings of the N ational A rchives
f
February 19, U K S *
Ir* $U I** J m a M m * Chairman, "
Federal Reserve Bank of Philadelphia,
F h H a d o X p h i a * Pennsylvania.
Dear Hr* Austin*
Hie Boerd of
of
has .f*eso#lvod infoneatioa f*tm on*
tho Federal reiofvo bank* to til* affoot tfe&t tlw& boa**i of diret*
tore of the bank, at a Meeting
In
February, %itanl^«jil^
eleoted .,., ...... .... ... .» President #f the Federal tesarve Bank of
___________________ , as & future# of the J*o4oxml O j m h 'Market Oowaiitt#**
© t cetera.
However, a#OOtfdiii§ to tho information of the Board of
OoiroimoT# the board of directors of tho 'particular Fodoral reserve
bank referred 'to In tho action taken ha* not o&oeted a frealdo&t for
the t«S*w beginning March l t 1 9 W ,
It is the opinion of tha Board of Qdvor&ors that 'th#
action taken in this nattor 1# p o m t l m m i «nd the 8oaf*d has requested
that the di*,ect03?» of the bank bo so adviaed.
It m p p m m
also that a r e t o r t i o n m »
approved contain*
ing a reoowseadatlo** that botli t h e ■person eleoted a# riip?e#efjta»
tive and th# person elected a* alternate be in Washington at the
tine of meetings of the F e d o m l Open Market Committee and that
tho alternate, if the priltoifai ti present, will act merely in ■
an advisory capacity*
Board of Governors has called attention
R eproduced from the U nclassified / D ecla ssified H oldings of the N ational A rchives
- ( 2)
-«3% a* w
t.® the
th a t the Federal O p m H*rk#i Co«fil t t e e as
consists
of th* »«abers of th« Bo&pi of Ckrrernor*
and the f tu%
of fjfrteftl ramr*** banks ami th a t tha
only ftmetton of an
# « rr* In
m%m*
by
th e
**
i» to
abaanca of t a * rep ran eatatiT e i m whoa Jut i s m
f it« m fo r« f the Board t f
*&&&»
has a*pr«ss©d tha ooinion
that it was not oontanpimtwi by Con^rsa® tfc&t an «Xt#ra»ts ftiomli
attend or fsariielfmt* In
#f the Federal 0p«& Market
aittee except i n the absence of tha w $ e N M ^ ir f c lw fos?
he I*
the a lte r n a te ^
The Board irtXl mppr^ta-tls it i f you will infors tha saabers
o f yo XKt board of d i r e c t o r s
of the content a of this letter*
?# fy tim lf
CtHMrfca# i o r r i l l , ,
8w & r«taiy*
$X*y*f43*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
M r, H# F . S t r & t e r , S e c r e t a r y ,
F e d e r a l R e se rv e Bank o f C le v e la n d ,
C le v e la n d , Ohio*
D m t Mrf S tr & te r s
The B oard hag n o te d t h e in f o r m a tio n i n j o u r l e t t e r o f Feb
r u a r y ? t h a t t h e b o a rd o f d i r e c t o r s o f th e F e d e r a l R e s e rv e Bank o f
C le v e la n d wa t i t s m e e tin g to d a y , u n a n ia o u e ly e l e c t e d Geo, W* H o r r i e ,
P r e s i d e n t o f t h e F e d e r a l R e se rv e Bank o f P h i l a d e l p h i a , a s a a e a b e r
o f th e F e d e r a l Open M arket C o a u a itte e , t o r e p r e s e n t t h e F e d e r a l Re
s e r v e Banks o f P h i l a d e l p h i a and C le v e la n d , an d a l s o e l e c t e d M, J*
F l e a i n g , P r e s i d e n t o f t h e F e d e r a l R e se rv e Bank o f C le v e la n d , a l t e r
n ate* ’,
However, a c c o r d in g t o t h e in f o r m a tio n o f t h e B oard o f Gov
e rn o r® , th e b o a rd o f d i r e c t o r s o f t h e F e d e r a l R e s e rv e Bank o f P h i l a
d e l p h ia ha© n o t e l e c t e d a p r e s i d e n t f o r th e F e d e r a l R e se rv e Bank o f
P h ila d e lp h i a f o r t h e te n s b e g in n in g M arch 1*
I t i s t h e o p in io n o f t h e B oard o f G o v ern o rs t h a t th e
a c t i o n ta k e n by t h e d ir e c to r ® o f y o u r bank i s p re m a tu re and t h e
B oard d e s i r e s t h a t th e d ire c to rs * o f y o u r bank b e bo a d v ise d *
I n y o u r l e t t e r you r e f e r r e d a l e o t o a r e s o l u t i o n u n a a i a o u s ly ap p ro v ed ty y o u r b o ard o f d ir e c to r © c o n t a in in g a reco iaaen d a t i o n t o th e b o a rd s o f d ir e c to r ® o f th e F e d e r a l R e s e rv e Banks o f
P h i l a d e l p h i a and C le v e la n d t h a t t h e r e p r e s e n t a t i v e and a l t e r n a t e
ic*
^^i)
R eproduced from the U nclassified
I D eclassified H oldings of the N ational A rchives
Hr* H. y* gtr&tar
(t)
elected by tha« 1m in
tha
fe&eml
at tha time of tfe* »a«tlii#a of
Opan Haricot Cowtittaa and that th# altaws&ta* If
the principal i» preaeRt* will a*st merely ia an adriaory tapaoi'^r#
Th© £n4mml Open Market
solely of the
members
Coogreaa coaaiate
of the Board of OeTemora and tha fite rep
resentative mi 'the Federal
Of m
*a ^rented %
reserve
books and tha only function
alternate &a pr*ecrlb«d by the fttqglttt* 1®. to aerv* In the
abaence of tho representative Iter whom ha in m
*£%mm%#+
Therefor*, it ia tlia opinion of tha Board of U ® m m & m that it
'me not contemplated by Congress that an alternate ahotild attend
or participate ia. a naating of tha federal % e n Market (kmmlttm#
except in tha abewoee #f tha repreeeffitatiTe for who* ha i* ■tha
a lta im te .
Tha Board will *t|*pr®&iiit« it if you will inform tha
aaabera of your board of 4tre&l*@r& 'promptly of tha content* of
this latter.
Vary truly yours,
Cheater Morrill*
S e c r e ta r y *
CK yd
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 19, 1956*
Mr, Frederic A* Delano, Deputy Chairman,
Federal Reserve Bank of Richmond,
Richaond, Virginia,
Bear Mr* Delanoi
Tha Board of Governors has received information from one
of th© Federal reserve banka to the effect that the board of direc
tors of the bank, at a meeting early In February, "unanimously
elected
* President of the Federal Reserve Bank of
. as a member of the Federal Open Market Committee*
et cetera*
However, according to the Information of the Board of
Governors the board of directors of the particular Federal reserve
bank referred to In the action taken has not elected a President
for the terra beginning March 1, 1956*
It is the opinion of the Board of Governors that the
action taken in this matter is premature and the Board has re
quested that the directors of the bank be so advised.
It appears also that a resolution was approved contain
ing a recommendation that both the person elected as representa
tive and the verson elected as alternate be in Washington at the
time of meetings of the Federal Open Market Committee and that
the alternate, if the principal is present, will act merely in
an advisory capacity*
The Board of Governors has called atten
tion to the fact that the Federal Open Market Coamittee as created
P ^ firn rju re d f t ' m the U nclassified / 'D'eolBSsTfied H o ld in g s of th e N ational A rchives
|
Up*■
feeder!© A. Betaaso «* It)
\
I
j
j
£
by Congress consist* mlmly of .the mmfamm of th*
of Soveimorii
and th* five representatives of Federal reserve banks aad th »i til®
only fttnctioe #f aa
mu prescribed by the
It to
Mf*» In the absence of the representative for # 10* he ■I# m alter**
Hit#*
Therefore* the Board of OoveriiOf1#- has expressed the opinion
j
that it was not contemplated by Congress that «a alternate ihoald
j
£
attend a$» participate In a neeting of the Federal Open Market Coa-
j
i
I
aittee except &» the absence of the representative for who* he 1#
s
the alternate,
The Bomrd wilt i$pr©i&ate 1% if you nlXl i»fmm the a**~
j
j
her# of yoor boars! of 4fr*#tort prmtfbly #f the content# of thta
I
letter*
* « r y t u t l s f y sm rt#
te s te r io n ttl*
Secretary.
Ol ftgit
FE B : f
1336
Of
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e b ru a ry 1 9 , 1356*
Mr* W. H. Kettig, Deputy Chairman,
Federal Reserve Bank of Atlanta,
Atlanta,. Georgia*
Bear Mr* Ketiigi
The Board of Governors has received information from one
of the Federal reserve banks to the effect that the board of direc
tors of the bank, at a meeting early in February, "unanimously
elected
» President of the Federal Reserve Bank of
*
et cetera*
as a member of the Federal Open Market Commit
However, according to the information of the Board of
Governors the board of directors of the particular Federal reserve
bank referred to in the action taken has not elected a President
for the term beginning March 1, 1956.
It is the opinion of the Board of Governors that the
action taken in this jaatter is premature and the Board has re
quested that the directors of the bank be so advised*
It appears also that a resolution was approved contain
ing a recommendation that both the person elected as representa
tive and the person elected as alternate be in Washington at the
tiae of meetings of the Federal Open Market Committee and that
the alternate, if the principal is present, will act merely in
an advisory capacity.
The Board of Governors has called atten
tion to the fact that the Federal Open Market Committee as created
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. W, R. Kettig - (?)
by Congress consists solely* of the members of the Board of Governors
and the five representatives of Federal reserve banks and that the
only function of an alternate as prescribed by the statute is to
serve in the absence of the representative for who® he is an alter
nate,
Therefore, the Board of Governors has expressed the opinion
that it was not contemplated by Congress that an alternate should
attend or participate in a meeting of the Federal Open Market Com
mittee except in the absence of the representative for ishoa he is
the alternate*
The Board will appreciate it if you will infora the ia®®~
bers of your board of directors promptly 6f the contents of this
letter.
Very truly yours,
(Signed) Chester Morrill
Chester H&rrill,
Secretary*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3 33
F e b ru a ry 1 9 , 1936#
Mr, E* M, Stevens, Chairman,
Federal Besarve Bank of Chicago,
Chicago, Illinois*
Dear Mr, Stevenst
the Board of Governors has received Information from one
of the Federal reserve banks to the effect that the board of direc
tors of the bank, at a masting early in February, "unanimously
elected
, President of the Federal Reserve Bank of
..... , as a member of the Federal Open Market Committee*
©t cetera.
However, according to the information of the Board of
Governors the board of directors of the particular Federal reserve
bank referred to in the action taken has not elected a President for
the terra beginning March 1, 1956*
It is the opinion of the Board of Governors that the ac
tion taken in this matter Is premature and the Board has requested
that the directors of the bank be so advised.
It appears also that a resolution was approved contain
ing a recommendation that both the person elected as representa
tive and the person elected as alternate be in Washington at the
time of meetings of the Federal Open Market Committee and that
the alternate, if the principal is present, will act merely in an
advisory capacity.
The Board of Governors has called attention
to the fact that the Federal Open Market Committee as created
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. E* M» Storea# - (z)
lay Congress consists solely of the members of tho Board of Govoraors
and tho five representatives of Fodoral r©serve banks and. that tho
only function of an alternate as proscribed by tho statute is to
serve in tho absenco of tho representative for whom he is an alter*
nato*
Therefore, tho Board of Governors ha# expressed the opinion
that it was not contemplated by Congress that an alternate should
attend or participate in a mooting of tho Fodoral Open Market Com
mittee except in tho absence of tho representative for whom ho is
tho alternate*
Tho Board will appreciate it if you will inform tho membors of your board of directors promptly of tho contents of this
letter#
Very truly yours*
(Signed) Chester Morrill
Chester Morrill,
S e c r e ta r y *
CMfydtUT
Reproduced from the Unclassified I Declassified Holdings of the National Archives
J S'
February X9f 1956*
Mr* J* w4 T.ood, Chairman,
Federal Reserve Bank of St* Louis,
St* Louis, Missouri*
Dear Mr* Wood:
The Board of Governors has received information from on#
of the Federal reserve banks to the effect that the board of direc
tors of the bank, at a meeting early in February, “unanimously
elected
. President of the Federal Reserve Bank of
*
et cetera.
&e & aeraber of the Federal Open Market Commit
However, according to the information of the Board of
Governors the board of directors of tho particular Federal reserve
bank referred to In the action taken has not elected a President
for the terra b ginning March 1, 1956*
It is the opinion of the Board of Governors that the
action taken in this matter is premature and the Board has re
quested that the directors of the bank be so advised*
It appears also that a resolution was approved contain
ing a recommendation that both the person elected as representa
tive and the person elected as alternate be in Washington at the
time of meetings of the Federal Open Market Committee and that
the alternate, if the principal is present, will act merely in
an advisory capacity*
The Board of Governors has called atten
tion to the fact that the Federal Open Market Committee as created
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. J* S* Wood «• (2)
by Congress consists solely of tbe members of the Board of Ckjvernors
and the five representatives of Federal reserve banks and that th#
only function of an alternate as prescribed by the statute is to serve
in the absence of the representative for whom be is an alternate*
Therefore, the Board of Governors has expressed th© opinion that it was
not contemplated by Congress that an alterant# should attend or partici
pate in a meeting of the Federal Open Market Committee except in th#
absence of the representative for whom h# is the alternate*
The Board will appreciate it if you will inform the members
of your board of directors promptly of the contents of this letter*
Very truly yours,
Chester Morrill,
Secretary*
CMtydilf
from the Unclassified I Declassified Holdings of the National Archives
February 19, 19£6.
Mr* <T«
Peyton, Chairman,
Federal Reserve Bank of Minneapolis,
Minneapolis, Minnesota*
Dear Mr* Peytoni
The Board of Governor* hu received information from one
of the federal reserve banks to the effect that the board of direc
tors of the bank, at a meeting early in February, "unanimously
elected ............ President of the Federal Reserve .Bank of
.............. ,.* as a member of the Federal Open Market Commit tee*
et cetera*
However, according to the information of the Board of
Governors the board of directors of the particular Federal reserve
bank referred to in the action taken has not elected a President
for the term beginning March lt 1926,
It is the opinion of the Board of Governors that the
action taken in this matter is premature and the Board has re
quested that the directors of the bank be so advised*
It appears also that a resolution was approved containing a recommendation that both the person elected as representa
tive and the person elected as alternate be in Washington at the
time of meetings of the Federal Open Market Committee and that
the alternate, if the principal is present, will act merely in
an advisory capacity,
the Board of Governors has called atten
tion to the fact that tha Federal Open Market Committee as created
............................................................................................... .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Hr* J* S* Feyton - (Z)
by Congress consists solely of the members of the Board of Governors
and the five representatives of Federal reserve banks and that the
only” function of an alternate as prescribed by the statute is to
serve in the absence of the representative for whom he is an alter
nate#
Therefore, the Board of Governors has expressed the opinion
that It was not contemplated by Congress that an alternate should
attend or participate in a meeting of the Federal Open Market Co»-*
alttee except in the absence of the representative for whoa he is
the alternate#
The Board will appreciate it if you will inform the ®«m»
bers of your board of directors promptly of the contents of this
letter*
?ery truly yours,
i'gnedj Chester Morrill
Chester Morrill,
Secretary#
CMiyciilf.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February m ,
Hr. I* j* Thoaas, Chairman,
Federal Kftaerve Bank of Kansas City,
Kansas City, Missouri*
Dear Hr. Tho*aa:
Thu Board of Governors has received information froa
one of th© Fadaral reserve banks to tha effect that tha board of
directors of tha bank, at a seating early in February, "manlaou*3y elected
.
.........
at cetera.
President o f tha Fadaral Reserve Bank of
as a aaaber of tha Fadaral Opan Market Comdttaa*
Bowrar, according to tha iafoxmttoa of tha Board of
.^Ipfarnora tha board of directors of the particular Fadaral rasarf*
bank referred to In the action taken has not elected a President
for tha term beginning March 1, 1956.
It la the opinion of the Board of Governor© that the
action taken in this natter is preaature and tha Board .haa raqueeted that tha director# o f tha bank ba so advised*
It appears also that a resolution was approved contain
ing a reooaaend&tion that both tha parson elected as representa
tive and tha person elected aa alternate ba in Washington at the
tiae of Meetings of the Federal Open Market Comtlttee and that
the alternate, i f th© principal is present, will act merely in
an advisory capacity*
The Board of Governors has called atten
tion to the fact that the Fadaral Open Market Coaaittee as created
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Hr* J.
Thomas, Chairman * (.2)
fcy Congress consists solely of the members of the Board o f Governors
and the five representatives o f Federal reserve fetmJte and that the
only function of an alternate as prescribed fcy the statute is to
serve in the absence o f the representative for who* he is an alter
nate* therefore, the Board of Governors has expressed the opinion
that i t was not contemplated fcy Congress that an alternate should
attend or participate is a Meeting o f the federal Open Market €on~
aittee except in the absence of the representative for whoa he is
the alternate*
The Board w ill appreciate i t i f you wi l l inform the aa*~
hers of your hoard o f directors promptly o f the contents o f this
letter.
fesry truly yours*
(Signed) Chester Morrill
Chester M orrill,
Secrei&ry.
O f yd
LB /*? Ib36
.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
0
February 19, 1956.
Hr* C* C# Wal#h, Chairaan,
Federal Reserve Bank of Dallas,
Balias, Texas.
Dear Ur* Walsh;
the %ard of □©▼©mors has reaeived information
me
trm
of the Federal reserve banka to the effect that tha board of
directors of tha bank, at a meeting early in February, •unani
mously elected
of . .....
et cetera,
. . > President o f tha Federal Beserve Bank
. » as & member o f the Federal Open Market Committee"
However, according to the information o f the Board of
Governors tha hoard of directors of the particular Federal reserve
bunk referred to ia the action taken has not elected a President
for the ter* beginning March 1, IM M *
I t is the opinion o f the Board o f Governors that the
sotion taken in this matter is premature and the Board, has re
quested that the directors o f the bank be so advised.
I t appears also thet a resolution urns approved contain
ing a recommendation that both the person elected as repressatetive end the person elected as alternate be ia Washington at the
time of meetings of the Federal 'Open Market Committee and that
the alternate, i f the principal is present, w ill
an advisory capacity.
mt
merely in
The Board of (governors has called etteo-
tioo to the fact that the Federal Opsn Market Committee as created
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Hr* C* C. Walah - (* )
toy Congress consists solely o f the
member*
o f the Board of Governors
end the five representatives o f federal reserve hanks and that the
only function of an alternate as prescribed by the statute is to
aerve in the absence o f the representative for who* he is an alter
nate. Therefore, the Board o f Governors haa expressed the opinion
th&t i t «aa not conteaplated by Congreaa that mi alternate should
attend or participate ia a aeeting of the Federal Open Harket Co*rnittee except in the abaeoace o f the representative for wfco» he la
the alternate*
The Board w ill appreciate i t i f you w ill infor* the »eatbera o f your board o f director© promptly o f the content* of this
letter*
fery truly ycara#
Cheater H orrill,
Secretary*
CM yd
Reproduced from the Unclassified / Declassified Holdings of the National Archives
February 19f 1958*
Mr. Kalian I* Moore9 Deputy Chairaaa,
Federal Reserve Bank of Sam Fr&ncisco,
San Francisco, California*
Dear Hr* Moor®:
fha Board of Governors has received Inforaation froa one
of tha Federal reserve banks to tha affaot that the board o f dire©~
tora of tha bank, at a aeeting early in February, "unaniaously
elected
. President o f the Federal Reserve Bank of
*
et cetera*
as a aeaber of tha Federal Open Market Coaaittee*
However, according to the information of the Board of
Governors the board o f director! of the particular Federal reserve
bank referred to in the action taken haa not elected a President
for the tem beginning March 1, 1956*
I t la the opinion of the Board of Governors that the
action taken in this Matter la premature and the Board haa re
quested that the directors o f the bank be no advised.
I t appears also that a resolution was approved contain
ing a recoaaendation that both the person., elected aa representa
tive and the person elected as alternate be in Washington at the
tine of aeetinga of the Federal Open Market Coaaitte© and that
the alternate, i f the principal is
prmmt,
w ill act aarely in
an advisory capacity# the Board of Governors has callad atten
tion to the fact that the Federal Open Market Goaaittee as created
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. Walton 1* Moore * (I )
l5y Congress consists solely of the
mm
bora o f tho Board o f Governors
and the five represent® t i ves of Fodoral rooorvo banks and that tho
only function of an alternate as prescribed
servt*
in tho
* l w m m of the
by
the statute le to
representative for whon he is an alter
nate, Therefore, tho Board o f Governors
that i t waa not conteaplated
by
hm
expressed tho opinion
Co©gross that an alternate should
attend or participate in a neeting o f tho Federal
Qpm
Market Co*-
»itte e except in tho absence o f tho representative for who» ho Is
tho alternate.
The Board w ill appreciate i t i f you w ill infor* 1ihe softbora of your hoard of directors promptly o f tho content* of this
.letter*
Very truly youre,
Chester Morrill,
Secretary.
CM yd
m
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE BANK
OF DALLAS
February 15, 1936
CH A IR M A N O F TH E B O A R D
AND F E D E R A L R E S E R V E A G E N T
RECEIVED
FEDERAL R l P'-'RVE BOARD
....... ::,"T0!i
O
0
1936 FFB 17
Board of Governors of the
Federal Reserve System
shington, D# C.
Gentlemens
ATTENTIONS
PM I
Mr. Chester Morrill, Secretary
In accordance with the request contained in your
...__ _ letter of February 13, 1936, I have today forwarded to each
^^ ---------------------------- ------------------ ‘
f
member of our board of directors a copy of Chairman Eccles*
letter of February 13 to the Deputy Chairman of the Federal
Reserve Bank of Minneapolis, and copies of the enclosures re
ferred to therein relative to the representation of the Federal
reserve banks on the Federal Open Market Committee to be con
stituted after March 1, 1936*
I
am strongly in sympathy with the Board's views on
this subject, and so are all members of our board of directors,
as you doubtless observed from the resolution which they adopted
on this subject at our regular board meeting held on January 7,
1936.
Yours very truly,
Federal Reserve Agent
42
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
Ne
w
Yo
r k
February 14, 1936.
Dear Mr. Morrill:
We acknowledge with thanks the receipt of the Board’s letter
of February 15 enclosing a copy of Chairman Eccles’ letter of February
13 to Mr. Homer P. Clark, Deputy Chairman of the Federal Reserve Bank
of Minneapolis, together with a copy of the memorandum and a copy of
the letter referred to therein, on the subject of the Board’s views
with regard to the representation of the Federal reserve banks on
the Federal Open Market Committee to be constituted after March 1,
1936.
As authorized by the Board, we are bringing Chairman Eccles’
letter and its enclosures to the attention of our directors, copies of
the correspondence having been forwarded today to each of them.
Very truly yours,
J. H. CASE
Chairman.
Mr. Chester Morrill,
Secretary, Board of Governors of the
Federal Reserve System,
Washington, D. C.
R e f^O cM fromthe U n d a te d f Declassified Holdings of the National Archives
R e c a ll- ..
« ’/
Fe d e r a l R e s e h \ts B a n k
o f
C
'
©36 frn iy
' ' 7 • Aif
l e v e l a n d
u’O^fio
33i>, ’ -ft-?'
9
25
v/
February 14, 1936 . V
,j
•r
<s
Board o f Governors of the
Federal Reserve System,
Washington, D. C.
Gentlemens
In response to the request contained
in the Board’ s l e t t e r of February 13, we
—
.........
have today forwarded to each director of
this bank a copy of the correspondence re
garding the Federal Open Market Committee
to be constituted a f t e r March 1, 1936*
Very tr u ly yours,
Secretary*
a ;- ;
tw L
Reproduced from the Unclassified I Declassified Holdings of the National Archives
At
\
FEDERAL RESERVE BANK OF C HICAG O ^t
230
SOUTH
LA S A L L E
4 .- -
&
STREE'
3 3 3
February 14, 19S6
iFFICE O F T H E
CHAIRMAN OF T HE B O A R D AND
FEDERAL RESERVE AGENT
FFDCn
rIGARD
1956 FEB I'// Ml 9
Board of Governors
of the Federal Reserve System
Y«ashington, D. G.
|
1
| first to
tlemens
Mr. Brodcri
I have just received your letter of February 13, with
M-
M::
^
^■finclosures concerning the representative of the Federal Reserve
N?.
>$nks on the Federal Open Market Committee. I can advise you that
V ■ V-
Mr. C
at'‘a joint meeting of the Boards of Directors of the St. Louis and
•Vs: • V,
'-d
Mr, pi.-t.-i!
* r"
Mr,..
Pip*
ti: •
-..Chicago banks, held in Chicago on February 6, 1936, it was determined
v/T
-f.
.
y..that the member to be selected would be an officer of one of the
'Federal Reserve banks.
>,.•
However, I shall see to it that your letter and enclosures
are brought to the attention of all the di^ctors of our bank at once.
Very truly fo\
EMS HH
§hf>K.C
\
Reproduced from the Unclassified I Declassified Holdings of the National Archives
i
i
.1
$ :
ii
j
i
February 15, 1956.*
Hr. Frederic H. Curtiss, Chairman,
Federal Reserve Beak of Boston,
Boston, Massachusetts.
Dear Hr. Curtias$
Because of the interest which the Board feels
that the directors of your bank would have in learning
its views in regard to the representation of the Federal
reserve banks on the Federal Open Market Coaaittee to be
constituted after March
1 , 1956, the Board has authorised
me to send, you the inclosed copy *of f i d r iaa Eccles*.,.let-
I ‘^ f / 5 4
'
~
"
terjof this date to Mr. Homer P. Clark, Deputy Chairman
of the Federal Keserve Bank of Minneapolis, together with
X 4 W X ^3/36
a copy of the memorandum/ and a copy of the letter referred
to therein. 'It will be appreciated if you will bring
these inclosures to the attention of all the directors
of your bank at your earliest opportunity for their In
formation,
Very truly yours,
Chester Morrill,
Secretary.
Inclosures.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 15, 1956*
Mr* J* K. Case, Chaiman,
Federal leserve Bank o f Saw fork,
lew I@rley N®W lork#
Dear Hr* Case*
Because of the interest which the Board feels
that the directors of jour bank would have in learning
Its views in regard to the representation of the Federal
reserve banks on the Federal Open Market Conaittee to be
constituted after March 1* 1056, the Board has authorized
to sand you the inclosed copy o f Chairman Eccles1 let------—
— —
terJof this date to Mr. I qsmht ?* Clark, Deputy Chairman
m
of the Federal Reserve Bank of Minneapolis, together with
a copy of the neaorandun tend a copy of the letter referred
to herein#
I t w ill be appreciated i f you w ill bring
these in closures to the attention of a ll the directors of
your bank at your earliest opportunity for their informa
tion*
Very truly yours,
Chester Morrill,
Secretary.
/UK
Incloaur®*.
CM yd
F
t?tz=3
O )
d
Y
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February U 9 19S8.
Mr* E*
Austin* Oheirmft©*
Federal Reserve Bazik o f Philadelphia*
Philadelphia, Peanqylvauia.
Dear Mr* Austins
Because of tho iuterest which tha Board feels
that tha directors of your bank mould have in learning
its views in regard to tha representation of tho Federal
reserve banka on the Federal Open Market Cosedttee to he
constituted after March 1* 1916* the Board hae authorised
mi to tend you the inolosed copy o f Chairmen Boole** le t;®y/§/3&
"-------- — — — —
ter/ o f this date to Mr* loser f . Clark, Deputy Chairman
of the Federal Reserve Bank of Minneapolis* together with
a oopy of th e mcmorandun land a oopy o f the letter re
ferred to therein.
I t w ill be appreciated i f you e ill
bring these inelosure* to the attention o f a ll the direetors of your bank at your earliest opportunity for their
information.
Very truly yours*
Chester Morrill*
Secretary.
Xneloeures.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fobrutaiy 13, 1956
Iftp# B» S. Burk*, Jr.,
C\m\ 10011,
Federal Reoerve Bank of Cleveland,
Cleveland, Ohio*
Dear Hr* Burkei
Beeanoe o f the intereet which tho Board fools
that tho direoiora of your beak would have in looming
It* viewe in regard to tlso representation o f tho Federal
reserve banke on tho Fodoral Opon Market Coanittoo to bo
constituted after March l t 198S, tho Board has authorised
to Mod you tho inclosed copy o f Chairnan Eoolee1 le t*— — — — — ------ terj o f tfeis data to Hr* Honor f * Clark, Deputy Chairoan
m
o f tho Fodoral Eooorm Bank of Minneapolis, together with
f erred to therein*
I t w ill bo appreciated i f you w ill
bring thooo inoloouroa to tho attention of aH tho directori of your bank at your oarlioiit opportunity for their
information.
Very truly youije,
Chester Morrill,
Secretary#
Inoloouroa,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 15, 105$.
Nr* Frederic A* Delano, Deputy Chairaan,
F#deral R iiim Bank of Richmond,
Richmond, Virginia,
D*ar Hr# MU&qi
Because of tb# la threat which th# Board feels
that th# director® of your bank would bar# In learning
lie vl#w« in regard to th# representation o f th# Federal
r###nr# bank# on tb# F#deral Open Market Committee to b#
constituted after March 1, 1986, tb# Board has authorised
me to send you th# inclosed copy of Chairman Eccles* l#t~
tmltM
this data to Hr* Homer F« Clark, Deputy Chairman
of tb# Federal Reserve Bazik of Minneapolis* together with
a copy of tb# memorandum/and a copy o f tb# X#tt#r re
ferred to th#r#in.
I t w ill be appreciated I f you w in
taring tb### inclosur#s to th# attention o f a ll tb# direc
tors of your beak at your earliost opportunity for tb#lr
information*
f#ry truly yours,
Chester llo rrill,
Secretary.
Inolo#ur#s<
CM yd
C la J
B
) V
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Feim m x y 15, 1956.
Mr* I# 8* Eettig, Deputy Chairman,
Federal Raaarfe Bank of Atlanta,
Atlanta, Georgia,
Bear Mr* Kettigs
Because o f the interact which the Board feela
that tha director® o f your bank would have in learning
ita views in regard to the representation of tha Federal
reserve banka on the Federal Open Market Coaadttee to ba
cocatituted after March 1, 1936, tlie Board has authorised
m
to send you the inclosed oopy o f Chalrnan Eccles* lo t
ted o^^tils date to Mr* Boner F, Clark, Deputy Chairman
of the Federal Baaerre Bank of Minneapolis, together with
a eopy of the aanorandunf and a copy o f the letter referred
to therein*
I t w ill ba appreciated i f you w ill bring
these inclosures to tha attention o f a ll the directors
of your bank at your earliest opportunity for their in
formation*
?ery truly youre,
Cheater Morrill,
Secretary*
Incloaurea.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
a
Februaiy 15, 1956
Mr* I* M« Stevens, Chaims,
Federal Reserve Beak o f Chicago,
Chicago, Illin o is.
Dear Mr. Steveas:
Because o f the interest which the Board feels
that the directors of /our bank would have in learning
its views .in regard to the representation of the Federal
reserve banks on the Federal Open Market Co*«ittee to be
constituted after March 1, 1956, 'the Board has authorised
ee to send you the inclosed copy of Chairman Eccles1 let*
•#**jt / ;'y*»
ter iof this date to Mr, Hotter
?*
Clark,
D e p u ty
Chairman
of the Federal Eeserve Bank of Minneapolis# together with
a copy of the mamorandg§Aaad a copy o f the letter re
ferred to therein*
I t w ill be appreciated i f you w ill
bring these inclosures to the attention of a ll the direc
tors of your bunk at your earliest opportunity for their
information.
Very truly yours,
Chester Morrill,
Secrdtaiy*
Inclosures
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 18, 1956*
Mr* J. S. food, Chairman,
Federal Reserve .Bank of St* Louie,
St. Louie, Missouri*
Dear Mr* Hood;
Because of tlie interest which the Board feels
that the directors of your beak would have ia learning
its views in regard to the representation of the Federal
reserve banks on the Federal Open Market Committee to be
constituted after March 1, 1956, the Board has authorised
me to send you the inclosed copy of Chairman Eccles* let*
ter; of this date to Mr* Homer P* Clark, Deputy Chairman
of the Federal Reserve Bank,,of Minneapolis, together with
a copy of the memorandumand a copy of the letter referred to therein*
It w ill be appreciated i f you w ill
bring these ineloeuree to the attention of a ll the direc
tors of your bank at your earliest opportunity for their
information*
Very truly yours,
Chester Morrill,
Secretary*
Inclosures*
CM yd
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*5;;s ,;;s.
"
February IS, 19S6.
Mr. J. J, Thomas, Chairman,
Federal Reserve Bank of Kansas City,
Kansas City, Missouri.
Bear Mr* Thoaas:
Because of the interest whieh tha Board feels
that the directors of your bank would have la learning
its views in regard to the representation of the Federal
reserve banks on the Federal Open Market CoNalttee to be
constituted after March 19 1956, the Board has authorized
me to send you the inclosed copy of Ch&inaan Eccles* le tterjof this date to Mr* inner P* Clark, Deputy CJmiraaa
of the Federal Reserve Bank of Minneapolis, together with
a copy of the nenorandu»| and a oopy o f the letter re
ferred to therein.
I t w ill be appreciated i f you w ill
bring these inclosures to the attention of a ll the direc
tors of your bank at your earliest opportunity for their
inforaation*
Very truly youre,
Chester M orrill,
^355-Jl.
Inclosures.
CM yd
’A ’h t,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February IS, 1956
Mr, C. C* Walsh, Chairaan,
Fedsral Keserre Bank of Dallas,
Dallas, Texas*
Bear Mr* Walsh:
Because of the Interest which the Board feels
that the directors of your bank would have In learning
its views in regard to the representation o f the Federal
reserve banks on the Federal Open Market Cooalttee to be
constituted after March 1, 1936, the Board has authorized
m
to send you the inclosed copy of Chalrmn Socles * le tdate to Mr* Ho»er P* Clark, Deputy Chairaaa
of the Federal Reserve Bank of Minneapolis, together with
a copy of the ne*ora»du»Jand a copy of the letter re
ferred to therein.
It w ill be appreciated i f you w ill
bring these inolosures to the attention of a ll the direc
tors of your bank at your earliest opportunity for their
inforaation*
Very truly yours,
Chester Morrill
Secretary,
Incloeur**,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
February 15, 1956
Mr* Walton N. Moor*, Deputy Chairman,
Federal Reserve Bank of San Francisco,
San Francisco, California,
Dear Hr* Moore:
Because of the interest which the Board feels
that the directors of your bank would have in learning
its views in regard to the representation o f the Federal
reserve banks on the Federal Open Market Committee to be
constituted after March 1, 1956, the Board has authorised
m
to send you the inclosed copy of Chairman Eccles* let-
ter of this date to Mr* Homer P. Clark, Deputy Chairman
of the Federal Reserve Bank of Minneapolis, together with
& copy of the mc^randumjand a copy of the letter re
ferred to therein.
I t w ill be appreciated i f you w ill
bring these inclosures to the attention o f a ll the direc*
tore of your bank at your earliest opportunity for their
information*
Very truly yours,
Chester Morrill,
Secretary,
Inclosures*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
%
I
M
A
February 18, 1986,
Mr* Honer F# Clark, Deputy Chairman,
Federal Reserve Bank of Minneapolis
Minneapolis, Minnesota*
Beer
Hr* Clark:
III accordance with your requeet m&dm dur
ing qy conversation with you and Mr* Grangaard recently
In Vfaahington regarding the selection of repreaentativea
of tha fadaral reserve banks on tha Fadaral Opan Market
Coaeittee t© ba conatituted after March I, 1956, there
.la inclosed herewith a oopy o f a atei^raDdua tsaniainiag
the view® of tha Board o f Governors cm this aubjeot,
which the Board haa authorised ae to send to you* tbmrf
la al®o incloaed & oopy
m w of a letter lahich X'hawlftPceived fr «* one of tha Federal reserve banka stating
the views of its director©* It wiU ba appreciated i f
you w ill bring thaaa incloeuren to the attention, of a ll
tha directors of tha Fadaral Reaerve Bank of Minneapolii
at your earlieat opportunity for thair Information and
eonaideration*
Very truly youra,
M* S. Eccles,
UllftXZlMISa
Incloauraa*
fS
,• :
n
.i
n
tl
Reproduced from the Unclassified I Declassified Holdings of the National Archives
1 ^ 5 3 #3.2.
X-9492
REPRESENTATIVES OF THE FEDERAL RESERVE BANKS
UPON THE FEDERAL OPEN MARKET COMMITTEE
r
j ^
F69 1 3 1938
forded
The Board of Governors of the Federal Reserve System has
been asked by certain officers and directors of Federal Reserve banks
for an informal expression of its views as to whether under section
12A of the Federal Reserve Act (providing that the Federal Open Market
Committee "shall consist of the members of the Board of Governors of
the Federal Reserve System and five representatives of the Federal Re
serve banks, to be selected as hereinafter provided”) representatives
of the Federal Reserve banks may be selected outside of the executive
personnel of the Federal Reserve banks to serve on the Open Market
Committee.
A comprehensive review of the historical development of the
Committee and of all available sources reflecting the legislative
intent when the section was enacted and the purposes sought to be
achieved clearly demonstrates that Selection of representatives by
the Federal Reserve banks from the ranks of banking, industry or com
merce would constitute a flagrant violation of what Congress intended.
Realization of the importance and effect of open-market
operations upon the national credit structure resulted in a gradual
development of methods of control or coordination of activities cul
minating in the "Open Market Committee” created by section 12A of the
Fedefal Reserve Act as revised effective March 1, 1936. This develop
ment is best reflected by a chronological listing of the various com
mittees and bodies created for such purpose as follows:
1,
"Committee of Governors on Centralized Execu
tion of Purchases and Sales of Government Securities" This committee was composed of five governors of Federal
Reserve banks and functioned from May 1922 to April 7,
1923.
2.
"Open Market Investment Committee" - This
committee was created on April 7, 1923 as a result of
resolution passed l?y the Federal Resorve Board on
March 22, 1923 from which time open-rnarket operations
were not engaged in by the Federal Reserve banks ex
cept with the approval of the Federal Reserve Board.
It was composed of five governors of Federal Reserve
banks and functioned until March 31, 1930.
3.
"Open Market Policy Conference" - This com
mittee was created as the result of conferences by
Reproduced from the Unclassified I Declassified Holdings of the National Archives
/
-2-
representatives of
with the Board for
policies and plans
It was composed of
eral Reserve banks
of the Banking Act
X-9492
the 12 Federal Reserve banks .
the purpose of recommending
regarding open-market operations.
the twelve governors of the Fed
and functioned until the passage
of 1933.
4. ’’Federal Open Market Committee" - This
committee was created on June 16, 1933, by the
Banking Act of 1933 and was composed of the twelve
governors of the Federal Reserve banks.
5. ’’Federal Open Market Committee” - As
provided in section 12A of the Federal Reserve Act
as now in force, creating a committee consisting of
"The Board of Governors of the Federal Reserve
System and five representatives of the Federal Re
serve banks”.
At no time throughout the history of the Federal Reserve
System have open-market operations been conducted by other than
executive officials of the Federal Reserve banks, their actions being
subject to approval of the Federal Reserve Board, all such executives
as well as Board members being full-time officials who were required
by established practice or by law to discontinue all active partici
pation in outside business.
The issue as to whether representatives of private enter
prise should serve upon a public body created for the purpose of dis
charging such responsibilities in the public interest seems to have
been, met and settled in the original enactment of the Federal Reserve
Act when banker representation was forcefully argued and as force
fully denied both by Congress and by the President.
Senator Glass, in his authoritative book on the Federal Re
serve System, entitled "An Adventure in Constructive Finance”, de
scribed how a committee of bankers visited President Wilson and
sought to persuade him to agree to banker representation on the Fed
eral Reserve Board. Senator Glass wrote:
’’When thoy had ended their arguments Mr. Wilson,
turning more particularly to Forgan and Wade, said quietly:
tWill one of you gentlemen tell me in what civilized country
of the earth there are important government boards of control
Reproduced from the Unclassified I Declassified Holdings of the National Archives
—
i
”’on which private interests are represented?’ There was
painful silence for the longest single moment I ever spentj
and before it was broken Mr. Wilson further inquired:
’Which of you gentlemen thinks the railroads should se
lect members of the Interstate Commerce Commission?’
There could be no convincing reply to either question, so
the discussion turned to other points of the currency
bill; and, notwithstanding a desperate effort was made
in the Senate to give the banks minority representation
on the reserve board, the proposition did not prevail.”
At the time of revision of Section 12A by the Banking Act
of 1935, the issue was whether the primary initiative and responsi
bility for open-market operations should be fixed exclusively in the
Board of Governors of the Federal Reserve System as then being set up,
or left in a committee consisting exclusively of the then Governors
of the Federal Reserve Banks, or committed to a combination of both,
and at no stage in the development of the legislation was it contem
plated by any of those actively interested therein, irrespective of
differing viewpoints, that the responsibility should be shifted to
or shared with those outside of the official executives of the banks
and members of the Board.
The bill, as introduced and passed in the House (H.R. 7617),
definitely fixed such responsibility in the Federal Reserve Board.
In Congressman Steagall's report upon the bill the following was
stated:
"Under the present lav/, open-market policies
are formulated by the Federal Open Market Committee, which
consists of the governors of the 12 Federal Reserve
banks."
After explaining that the proposed bill would place the
primary responsibility in the Board, his report continued:
’’The participation of Federal Reserve banks
governors in the deliberations leading to the adoption of
open-market policies will be preserved. Open market
operations may be initiated either by the committee of
governors or by the Board, but the ultimate responsi
bility for making a final decision and the power for
adopting and carrying out national policies will be con
centrated in a national body, as they properly should be
in the public interest.”
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-4-
/
X-9492
The bill was amended in the Senate to provide for the
creation of a "Federal Open Market Committee" consisting of the mem
bers of the Board of Governors of the Federal Reserve System and five
representatives of the Federal Reserve banks to be selected annually,
but throughout the discussion it is evident that although the word
"representatives" was used in place of "Presidents", to which the
titles of "Governors" were changed by the Senate Committee, there was
no intention of altering the original meaning and purpose to confine
representation to members of the Board and executives of the banks.
During the consideration of the Banking Act of 1935 by the
Banking and Currency Committees in both the House and the Senate,
many distinguished bankers appeared before one or both of the Commit
tees and expressed a unanimity of opinion that Governors of the Fed
eral Reserve banks should be members of the Open Market Committee.
The very fact that they so testified is indicative of the fact that
the issue at stake in the pending legislation was whether or not re
sponsibility for this important function should be vested in the Gov
ernors of the Federal Reserve banks or in the Federal Reserve Board.
It appears that these witnesses never had in mind a selection of
representatives of Federal Reserve banks from other than Governors
or other executive officers of the Federal Reserve banks.
The recommendation of the special committee of the American
Bankers Association was "that the Open Market Committee shall consist
of the entire Federal Reserve Board, (reduced to five members), and
four Governors of the Federal Reserve banks, selected by the Governors
of the twelve Federal Reserve banks annually."
The recommendation of the Federal Advisory Council was that
"The Federal Open Market Coinmittee shall consist of the five members
of the Federal Reserve Board (reduced in membership) and four Gover
nors of the Federal Reserve banks."
The Commission on Banking Law and Practice of the Associa
tion of Reserve City Bankers in its "Summary of Arguments on Title
II of the Banking Act of 1935" clearly recognized that the only point
of difference was in whether the power to determine the open market
policy of the Federal Reserve System was to be in the Federal Reserve
Board or in a committee, as then constituted, of Governors of the
Federal Reserve banks.
The Committee on Banking Legislation of the Chamber of Com
merce of the United States, in an analysis and report filed with the
sub-committee of the Senate Committee on Banking and Currency, recoaimended "that open market policies should continue, as at present,
to be formulated by a committee representing the twelve Federal
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-5-
X-9492
Reserve banks." The Committee as then constituted was composed of
the twelve Governors of the Federal Reserve banks *
The legislative policy with respect to outside domination
or influence in the administration of the Federal Reserve Act is il
lustrated by section 10 of the Act, wherein it is provided that th#
members of the Board shall devote their entire time to its business
and that "No member of the Board of Governors of the Federal Reserve
System shall be an officer or director of any bank, banking institu
tion, trust company, or Federal Reserve bank or hold stock in any
bank, banking institution, or trust company#" It is hardly conceiv
able that Congress, in setting up an administrative body to control
and supervise credit, should zealously strive to insure that body's
immunity from outside banking influence and then assign an important
power over credit to a committee, five of whose 12 members could re
tain their private connections with outside business or banking.
It is self-evident that in order to render efficient serv
ice on the Open Market Committee a member must be in constant touch
with the operations of the Reserve banks and have a continuing know
ledge of the condition of the member banks, of the trends in loans
and deposits, of the fluctuations in interest rates and of the money
market and credit situation generally. Regardless of his ability, an
outsider, engrossed as he would be most of the time in his own affairs,
could not establish and maintain that interest and knowledge necessary
to discharge properly his duties as a member of the Committee. In
evitably his attitude would not in the very nature of the case be truly
representative of the Federal Reserve banks* It is only human nature
that a person engaged in an enterprise for profit would be primarily
concerned with the administration of that enterprise# Frequently, it
might become the duty of such member to move in the direction opposite
from that which would be advantageous to his private interests. Wheth
er or not members finding themselves in that position could subordi
nate their private interests to the general public interest which the
Open Market Committee is intehded to subserve, it would be unfair to
place any member of that Committee in the enbarrassing position of
being required to make such choices. Such a relation to the System
would tend seriously to impair the efficiency and prestige of the direc
tors and officers of the Reserve banks and produce at times confusion
and embarrassment.
Members of the Committee are in a sense the trustees of the
credit policy of the nation and, like trustees, they should not be in
the attitude of purchasing from or selling to themselves. Such trus
tees must be scrupulous to place themselves beyond reproach and above
suspicion. The prestige, and indeed the preservation of the Federal
Reserve System, depend upon it.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
i,™
533-3 i
TKgsnJ**-
~OARD OF GOVERNORS
OF THE
*
FE D E R A L RESERVE SYSTEM
Office
C o r r e s p o n d e n c e
To
Board, of Governors
From
^r* J^reibelbis
Date
February n , i &so
Subject:
^
__ ___ ___
Attached hereto is seven copies of a memorandum upon the
subject of representation of the Federal Reserve banks upon the
Federal Open iuarket Committee.
Respectfully submitted,
J. P. Dreibelbis,
Assistant General Counsel.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
REPRESENTATIVES OP THE FED13RAL RESERVE BAFKS
UPCIf THE FBD.1SRAL OPEN 1.1ARKET GOI'2 ITTEE
Some question 3ms arisen with respeot to t he composition of
personnel of the Federal Open llarket Coinmittee as created by section
12& of the Federal Reserve Act*
This section provides that the committee shall consist of
"The members of the Board of Governors of the Federal Reserve System
and five representatives of the Federal Reserve banks, to be selected
as hereinafter provided”* The immediate question is whether the five
or any of the five representatives of the Federal Reserve banks may be
selected outside of the official personnel of the Federal Reserve banks
selecting such representatives*
Section 12A does not in precise terms set out requirements
in this respect but a review of the historical development of the com
mittee and a review of such sources as are available reflecting the
legislative intent when the section was enacted and the purposes sought
to be achieved will clearly demonstrate that, irrespective of any am
biguity in the letter of the act, selection of representatives by the
Federal Reserve banks from the ranks of banking, industry or commerce
would constitute a flagrant violation of what Congress intended and
might v/ell be calculated to defeat its very purpose*
Realization of the importance and effect of open-market oper
ations upon the national credit structure commencing in 1920 and 1921
lias resulted in the gradual development of methods of control or coor
dination of activities and has finally culminated in the "Open Llarket
Cornirittee11 created by section 12A of the Federal Reserve Act as revised
effective March 1, 1936* This development is best reflected by a chron
ological listing of the various committees and bodies created for such
purpose as follows:
1. "Committee of Governors on Centralized Execution
of Purchases and Sales of Government Securities” - This com
mittee was composed of five governors of Federal Reserve banks
and functioned from May 1922 to April 7, 1923*
2* n0pen Market Investment Committee” - This com
mittee was created on April 7, 1923 as a result of resolxrfcion
passed by the Federal Reserve Board on IvSarch 22, 1923 from which
time open-market operations were not engaged in by the Federal
Reserve banks except with the approval of the Federal Reserve
Board. It as composed of five governors of Federal Reserve
banks and functioned until March 31, 1930*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
2
-
3* ’’Open Market policy Conference” - This committee
was created as the result of conferences by rep resentati'ves of
the 12 Federal Re servo banks with the Board for the purpose of
recommending policies and plans regarding open-market opera
tions* It was composed of the twelve governors of the Federal
Reserve banks and functioned until the passage of the Banking
Act of 1933*
4* ’’Federal Open Karket Committee” - This committee
was created on June 16, 1933 by the Banking Act of 1933 and
was composed of the twelve governors of the Federal Reserve
banks •
5* "Federal Open Karket Committee” - As provided in
section 12A of the Federal Reserve Act as now in force, pro
viding for a committee consisting of MThe Board of Governors
of the Federal Reserve System and five representatives of the
Federal Reserve banksn*
Thus, the Federal Reserve banks or the Federal Reserve banks
with the approval of the Federal Reserve Board, have formulated all pol
icies and directed all open-market operations since the necessity there
for arose* At no time have the committees been composed of others than
officials of Federal Reservo banks* Indeed,, the issue as to whether
private enterprise should be represented in a,,body created for the pur
pose of regulating and supervising such interests seems to have been
met and settled in the original enactment of the Federal Reserve Act
when banker representation was so forcefully argued and so forcefully
denied both by Congress and the President*
this interesting period in the history of the Federal Reserve
System is graphically related in the following passage from Senator
Glass1 book entitled "An Adventure in Constructive Finance":
“These great bankers, arbiters for years of the
country*s credits, were grouped about the President’s desk
in the Executive office adjoining the Cabinet room* I sat
outside the circle, having already voiced ray own dissent from
the President* s attitude* President v:ilson faced the group
across the desk; and as these men drove home what seemed to
me good reason after good reason for banker representation
on the central board, I actually experienced a sense of re
gret that I had a part in subjecting Sir* v/ilson to such an
ordeal# "Yhen they had ended their argument s Hr* Til son,
turning more particularly to Forgan and Wade, said quietly:
Repsdtfcedlrom the Undassifiefl t Declassified Hofdtagsofthe National Archives
-
3 -
'Will one of you gentlemen tell me in what civilized country
of the earth there are important government boards of con
trol on which private interests are represented?1 There was
painful silence for the longest single moment I ever spent;
and before it was broken Mr* Wilson further inquired: ’Which
of you gentlemen thinks the railroads should select members
of the Interstate Commerce Commission?1 There could be no
convincing reply to either question, so the discussion turned
to other points of the currency bill; and, notwithstanding a
desperate effort -was made in the Senate to give the banks mi
nority representation on the reserve board, the proposition
did not prevail •**
These facts were before Congress when section 12A was
enacted*
At the time of the revision of section 12A by the Banking
Act of 1935, the importance of open-market operations as an instrument of
credit control was conceded. Indeed, it was recognized as one of the
most, if not the most, important of such instruments* Likewise, it was
conceded that responsibility for the formulation and execution of such
policy should be coventrated in one body* All previous committees had
been composed of^orficers of the various Federal Reserve banks*
The
whole issue was whether that responsibility should be fixed in the
Board of Governors of the Federal Reserve System as then being set up
or in the Federal Reserve banks*
The bill, as introduced and passed in the House (H.R.7617),
definitely fixed such responsibility upon the Federal Beserve Board*
In Congressman SteagalPs report upon the bill the following was stated;
“Under the present law, open-market policies are
formulated by the Federal Open Market Committee, which con
sists of the governors of the 12 Federal Reserve banks* The
recommendations of the committee are subject to the approval
of the Federal Reserve Board, and the boards of directors of
each Federal Reserve bank retain the authority to refuse par
ticipation in the policy adopted. We have, therefore, an
arrangement by whioh there is a policy-making body of 12,
which has power to formulate policies, but not to put them
into effect. Y/e have the Federal Reserve Board, consisting
of 8 members, who have the avvfchority to approve or disapprove
of the recommendations of the committee; and we have 108 di
rectors of the Reserve banks, who have the final determination
as to whether the policy is to be carried out or not* It
would be difficult to conceive of an arrangement better cal
culated than this for diffusing responsibility and creating
an elaborate system of obstructions*
Repn^Ud^l fmrn me DiKMMM/DBOMBd HoWtagsofthe National Archives
-
4
-
**The amendment will cure this situation by placing
responsibility for national monetary and credit policies
squarely upon the Federal Reserve Board. It will eliminate
conflicts of jurisdiction and policy because the final de
cision as to all matters affecting national policies would
be vested in the Federal Reserve Board* The participation
of Federal Reserve bank governors in the deliberations lead
ing to the adoption of open-market policies will be preserved*
Open-market operations may be initiated either by the committee
of the governors or by the Board, but the ultimate responsibil
ity for making a final decision and the power for adopting and
carrying out national policies will be concentrated in a na
tional body, as they properly should be in the public interest *tt
The bill was amended in the Senate to provide for the creation
of a "Federal Open Market Committee** consisting of the members of the
Board of Governors of the Federal Reserve System and five representatives
of the Federal Reserve banks to be selected annually*
In conference the present section 12A was agreed to*
Thus it is clear that the provision for the selection of"five
representatives of the Federal Reserve banks® represented a compromise
between fixing responsibility in the Board and fixing responsibility in
the banks by fixing responsibility in a body composed of the Board and
representatives of the banks*
This is b o m e out by the following remarks of Senator Glass
made when the bill, as amended by the Banking and Currency Committee of
the Senate, was reported to the Senate::
"As I have said, in order to produce a bill, in
order to harmonize radical differences, concessions, even
yielding of convictions, had to be made, so it was finally
determined to constitute the open-market committee of the 7
members of the Federal Reserve Board and 5 representatives
of the Federal Reserve banks* The Federal Reserve banks,
which are the trustees of the reserve funds of all the mem
ber banks of the country, are graciously given this minority
representation upon the open-market committee*
**Some of us were opposed to any alteration of the
existing arrangement* Others thought that the representatives
of the banks, whose money is to be used, whose credit is to be
put in jeopardy, should have control of the committee and
should have the majority representation* But in order to re
concile bitter differences there was yielding, and we have now
proposed an open-market committee composed of all 7 members^
of the Federal Reserve Board and 5 representatives of the
regional reserve banks*tt
During the consideration of the Bonking Act of 1935 by the
Banking and Currency Committees in both the House and the Senate, many
distinguished bankers appeared before one or both of the Committees
and among them there seemed to be e unanimity of opinion that “Governors”
of the Federal Reserve banks should be members of the Open llarket Com
mittee* The very fact that they so testified is indicative of the fact
that the sole issue at stake in the pending legislation vfas whether or
not control of this important function should be vested in the “Governors11
of the- Federal Reserve banks or in the Federal Beserve Board* It &©es~
»©%• appear-1that these witnesses/fever had in mind a selection of repre
sentatives of Federal Reserve banks from other than “Governors” or others*
officers from the official personnel of the Federal Reserve banks*
The recommendation of the special committee of ijn.er5.can Bankers
Association was “that the Open ilarket Committee shall consist of the
entire Federal Reserve Board, (reduced to five members), and four Gov
ernors of the Federal Reserve banks, selected by the Governors of the
twelve Federal Reserve banks annually”•
The recommendation of the Federal Advisory Committee m s that
“The Federal Open Ilarket Committee shall consist of the fivo members of
the Federal Reserve Board (reduced in membership) and four Governors of
the Federal Reserve banks".
i'he Commission on Banking Law and Practice of tho Association
of Reserve City Bankers in its “Summary of Arguments on Title II of the
Banking Act of 1935“ clearly recognized that the only point of difference
•was in whether the power to determine the open market policy of the Fed
eral Reserve System was to be in the Federal Reserve Board or in a com
mittee, as then constituted, of Governors of the Federal Reserve banks*
The Committee on Banking Legislation of the Chamber of Commerce
of the United States, in an analysis and report filed with the sub-committee
of the Senate Committee on Banking and Currency, recommended “that open
market policies should continue, as at present, to be formulated by a
committee representing the twelve Federal Reserve banks”* The Committee
as then constituted was composed of the twelve Governors of the Federal
Reserve banks*
In this connection it may be well to point out that Congress in
providing that the committee should consist of “the members of the Board
of Governors of the Federal Reserve System and five representatives of
the Federal Reserve banks”, also provided that such representatives of
the banks should be elected, one by the boards of directors of the Feder
al Reserve Banks of Boston and Hew York, one by the boards of directors
of the Federal Reserve Banks of Philadelphia and Cleveland, one by the
boards of directors of the Federal Reserve Banks of Chicago and St*Louis,
R educed trom the Unclassffted / Declassified Holdings of the National Archives
-
6
-
one by the boards of directors of the Federal Reserve Banks or Richmond,
Atlanta and Dallas and one by the boards of directors of the Federal Re
serve Banks of Minneapolis, Kansas City and San Francisco* Obviously, it
was not the intention to concentrate the powers therein conferred in
other than a national body or to alter the responsibility to conduct
operations other than within the governing principles as laid down in
the act. The purpose was to meet the demands of those who thought that
responsibility for operations should be in the banks rather than in the
Board and to provide a method whereby the committee as a whole would be
able to present a composite picture of the needs of commerce and business
with respect to the general credit situation of the entire country* Con
sequently, the section should be interpreted as providing for the select
ion of five members of the committee from ^representatives of the Federal
Reserve banks **, that is to say, from the already designated representa
tives of the Federal Reserve banks so acting at the time of their election
to membership upon the committee* By the same reasoning that would per
mit Federal Reserve banks to select, as a member of the committee, a re
presentative not already a designated representative of the Federal Re
serve banks, they could elect representatives from points outside their
respective districts and conceivably each designated group of Federal
Reserve banks could select as a representative and as a member of the
committee a director and officer of a large city commercial bank and con
ceivably the committee could be composed of the seven members of the
Board of Governors of the Federal Reserve System and five officers or
directors of one large city bank#
The legislative policy with respect to outside domination or
influence in the administration of the Federal Reserve Act is illus
trated by section 10 of the Act, wherein it is provided that "No member
of the Board of Governors of the Federal Reserve System shall be an
officer or director of any bank, banking institution, trust company, or
Federal Reserve bank or hold stock in any bank, banking institution, or
trust company”• True, this section applies only to the members of the
Board of Governors, but it is hardly conceivable that Congress, in set
ting up an administrative body to control and supervise credit, should
so zealously provide for its freedom of action by and large and then
delegate perhaps the most important function to a committee, five-twelfths
of which could possibly represent private interests as opposed to the na
tional interest* Such a construction of section 12A would certainly be
strained in the light of the true intent of Congress and, as the same is
susceptible of a construction giving effect to the real intent, such
construction should be placed upon it#
Added to this is the very significant fact that section 12A
as revised by the Banking Aot of 1935 took away from the Federal Reserve
banks the power of declining to participate in open-market operations
recommended by the Committee* At the same time, however, it provided
for representatives of the banks to be upon the Committee* Clearly
Reprtiducecl from theUnelassifW f Declassified Holdings of the National Archives
- 7 -
Congress would not and did not undertake to provide for representation
of the Federal Reserve banks by making it possible for such representa
tion to come from sources wholly outside of the banks#
In addition, it is to be noted that in the only case, in con
nection with the Federal Reserve System where Congress has provided for
a body, the personnel of which is selected from sources outside of the
official personnel of Federal Reserve banks, to wit: the Federal Advisory
Council, it, at the same time has provided for the compensation and allow
ance of the Council members* In connection with the Federal Open Market
Committee, however, no provision whatever is made for the payment of com
pensation to or expenses of the members* Had Congress intended that
members could be selected from sources outside tlie official personnel of
the Federal Reserve banks, it no doubt would have made provision for pay
ment of compensation to and the expenses of such members*
Further, it is significant that Title II of the Banking Act of
1935 became effective August 23, 1935, except that section 203 provided
for the appointment of a Board of Governors of the Federal Reserve System
effective February 1, 1936, and sections 201 and 205 were enacted effect
ive March 1, 1936* Section 201 amends paragraph "Fifth” of section 4 of
the Federal Reserve Act so as to authorize a Federal Reserve bank nTo
appoint by its board of directors a president, vice-president, etc*"
Section 205 amends section 12A of the Federal Reserve Act and creates
the Federal Open Market Committee effective March 1, 1936* The fact that
these sections were enacted effective upon the same date would indicate
that the five representatives of the Federal Reserve banks were to be
selected from among the "Presidents” of the Federal Reserve banks*
Aside from the legal aspect of the situation, there is the
fact that there now exists a well-defined and long-established policy
outlined by the Board and concurred in by the banks recognizing and seek
ing to avoid the embarrassment resulting from affiliation with outside
business interests of officers and employees of Federal Reserve banks,
and even of directors when their status as directors might be considered
as being used to further their private interests*
In 1919 the Board addressed a letter to all governors of the
Federal Reserve banks saying, among other things, "While the Board does
not assume any jurisdiction over the business affiliates of any director
of a Federal Reserve bank except insofar as such connections may affect
his qualifications as prescribed in section 4 of the Federal Reserve
Act, it has always entertained the view that no director of officer of
a Federal Reserve bank should permit his connection with the bank to be
used in furthering his private business or the interest of any corpor
ation with which he may be associated*"
Reproduced from
t Declassified Holdings of the National Archives
-
8 -
In 1924 the Board directed a letter to the chairman of all
Federal Reserve banks, wherein it was stated, “There appears to be no
provision of lav/ which would prohibit an officer of a Federal Reserve
bank from forning an outside connection with a business concern of any
kind, but the Federal Reserve Board believes it will be as obvious to
the Federal Reserve banks as it is to itself that the good conduct and
reputation of the Federal Reserve System require that the officers of
the reserve banks shall give their entire time and attention to the af
fairs of the bank and not be identified with any outside business in
terests1*• The views expressed in this action were apparently concurred
in by the officers and directors of the Federal Reserve banks.
The duties of a member of the Open Market Committee in connec
tion with the formulating and fixing of open-market policies comes
peculiarly within the logic of the above letters outlining policy in
connection with Federal Reserve bank personnel and the reasons upon
which the aforesaid letters were based, which reasons were and are ap
parently concurred in by all of the Federal Reserve banks, apply with
even greater force to a member of the Open Market Committee.
From the outset open-market operations have been an important
function of the Reserve banks and within the last few years they have
become a major responsibility of the System. The new Committee has
been invested with broad powers and from its decisions and orders there
is no appeal. It follows, therefore, that to render efficient service
on the body a member should be in constant touch with the operations of
the Reserve banks and have a continuing knowledge of the condition of
the member banks, of the trends in loans and deposits, of the fluctua
tions in interest rates and of the money market and credit situation
generally. Regardless of his ability, an outsider, engrossed as he
would be most of the time in his own affairs, could not establish and
maintain that interest and knowledge necessary to properly discharge
his duties as a member of the Committee. Inevitably his attitude would
tend to become advisory rather than representative of the Federal Reserve
banks. It is only human nature that a person engaged in an enterprise
for profit would be primarily concerned with the administration of that
enterprise. Frequently, it might become the duty of such member to move
in the opposite direction from that which would be advantageous to his
own enterprise. Whether or not members finding themselves in that posi
tion could act without regard to their private affairs and in the public
interest, it would be unfair to such member to be placed in such position.
Such a relation to the System could well impair the efficiency and pres
tige of the directors and officers of the Reserve banks and produce at
times confusion and embarrassment.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-9 -
Members of the Committee are in a sense the trustees of the
credit policy of the nation and, like trustees, they should not be in
the attitude of purchasing from or selling to themselves*
Eext in importance to the actual sound and efficient conduct
of operations by the Open Market Committee in the public interest and
for the public welfare is the reputation of that body for so conducting
its affairs* The very existence of a private interest upon the part of
a member of the Committee, even conceding that such interest would not
influence his action, might affect the public interpretations of the
actions of the Committee* The detrimental effect resulting from such
a situation is apparent*
3
^ 1^ B'
p u ActL
1B
I * & I 199 A T IY S S
22iY E
O F THJS F K J H U L m
T H K Ffc»S 3U L
to n
B 4HKS
1
FEB
i
1936
O F $ ¥ SfJJUCET C C M f lT T K S
Sena question has arlean with r«epe«t to tho composition of
personal of tho Federal Open Market Cossiittee as created by eeotion
12A of tho Federal Reserve Act.
T h le
"T he
and
m e W rt
fiv e
s e c tio n
o f
th o
r e p rese n ta tiv e *
as
h e r e in a fte r
or
any
o f th e
so lo o te d
fiv e
euoh
o f th e
and
a
le g is la tiv e
to
be
124
r e v ie w
in
does
C o s n itte e
11
e ffe c tiv e
o lo g ic a l
p u rp o s e
le tte r
a
o f
fre e
th e
to
o f
la
th e
c re a te d
by
1,
and
w as
«
th e
has
passed
b y th e
th e
banks
fiv e
ra y
ha
F e d e ra l R e s e rv e b o n k *
o'.A
sst
o f
r e fle c tin g
end th e
in d u s tr y
v e ry
o f
o a o r a e n e ln t
o f m e th o d s
c u lm in a te d
fe d e ra l
d e v e lo p m e n t
is
c o a m ltte e s
sought
o f any
or
am
b y th e
o o a & ie r e e
in te n d e d
end
p u rp o s e #
and e f f e c t
o f th e
o o c *-
th o
p u rp e o o e
r e p r e s e n ta tiv e s
o f w h * t C o n g re s s
its
r e q u ir e m e n ts
ir r e s p e c tiv e
o f b a n k in g ,
fin a lly
T h is
& a le s
and
o f
fro m
M ay
o f G o v e rn o rs
o f G o v e rn n o n t
fiv e
o p e n -m a rk e t o p e r
in
1920
in
th o
or
"O pen
K© s e r v e A c t
c o o r-
M a rk e t
as
b e s t r e fle c te d
b o d ie s
1321
and
o f c o n tro l
r e v is e d
by a
c re a te d
"O pen M a rk e t
c re a te d
fo r
c h ro n
sush
o p e r a tio n s
b a s ic s e x c e p t w i t h
I t
yaA
fu n c tio n e d
wrwnis m '
n
com posed
jp
o f
u n til
S x e e w tlo n *
T h is
7,
A p r il
T ^ il*
1925
as
a
B o a rd
on
^ a ro h
w e re
th e
n o t engaged
M a rc h
g o v e rn o rs
22 ,
in
oon-
o f r e s o lu tio n
1325
fro m
b y th e
F e d e ra l
o f F e d e ra l
5 19 1930 *~ ~
banks
~
r e s u lt
a p p ro v a l o f th e
fiv e
eom »
o f F e d e r a l R e s e rv e
I w r e s t a e n t C o a r a i t t e e " «* T h i s
on A p r il
R e s e rv e
w as
ie
F e d e r a l K e e e rv e
s p e n -m a rk e t
on C e n tr a lis e d
s e c u r i t i e s 1* -
g o v e rn o r*
1922
B o a rd *
m
th a t,
s tru c tu re
ItA
” 0a r c m i t t e e
and
2*
w as
re a k s
v a r io u s
eonpeaed
m ltte e
f'l.
s e le c te d
fe llo w s «
an d fu n c tio n e d
IA<-Vv*-^
he
o f
S y s te s i
d e v e lo p m e n t o f t h e
e m o te d
im p o r ta n c e
s e c tio n
19M
o f
ftir o h e s e s
banks
to
w h e th e r
a v a ila b le
s e le c tio n
d s fo a t
th o
te rrs
a re
g r a d u a l d e v e lo p m e n t
a c tiv itie s
a itte e
c * h
a c t,
n a tio n a l c r e d it
a ro h
tin s
e o n s is t
R e s e rv e
o f th o
h is to r ic a l
fla g r a n t v io la tio n
1*
o f
p r e o lo o
d s a a n s tra te
th e
c a lc u la te d
lis tin g
as
in
o f th o
w as
c le a r ly
R e a lis a tio n
o f
not
s e c tio n
upon th o
d in a tio n
la
fe d e ra l
p e rs o n n e l
in te n t w hen th e
th o
has r e s u lte d
o ffic ia l
q u e s tio n
o f th o
as
c o n s titu te
a tio n s
ia s a s d ia te
s o u rc e s
s ig h t w e ll b e
s h a ll
F e d e r a l R e s e rv e
F e d e r a l R e s e rv e b u s k i,
Tho
r e v ie w
o f
F e d e r a l R e s e rv e b a s k s
w o u ld
o o w r a it te e
o f th o
suoh
a s h ie v e d w i l l
b ig u ity
th o
r e p r e s e n ta tiv e s *
re s p e o t b u t a
n ltte e
o f th o
r e p r e s e n ta tiv e
S e c tio n
th is
th a t
o f G o v e rn o r*
p r o v id e d * *
o u ts id e
o e lo o tin g
in
p r o v id e e
B o a rd
w h ic h
F e d e ra l
R e s e rv e
t
!
Reproduced from the Unclassified I Declassified Holdings of the National Archives
mhhhui ljariiinarr
- 2. •
5* *Open Market P olicy Conference* * T b it ooswilttoe
-was created ae tlse re s u lt of oonfereitoos by representatives o f
the 12 Federal Reoerve banks w ith the 8o«rd fo r the purpoee of
recom; ending p o licie s and plane iw ardln*. epea-w ket opera
tions* I t was composed o f the twelve governors o f the Federal
leeorvo banka and functioned u n til the ®*ssa£0 of the Banking
K T B 5 T
4* "Fodo***! Open Market C<aesitteen • th is eoeanittee
'was created on June 16, 1993 by the Bonking Act of li)55 and
was composed of the twelve fiAv^r.-ors o f the Federal Reserve
banks*
8* "Federal Open MerVet Committee* • 4c provided In
section 12A o f the Federal Reserve Act es now in faroe, pro
viding fo r a committee o sce istlflc « f "The Board of Governors
o f the Federal Reserve System and fiv e representatives o f the
Federal Reserve banks***
Thus, the Federal Reserve banka or the federal Keserve banks
w ith the approval o f the Federal Reoerve Board, have formulated a ll polio i» s and directed a ll open"*aerket operations sinee the neeceelty there
fo r arose* At no tisss lave the committees been composed o f others than
o ffic ia ls of Federal Reeerve baake# Indeed, the issue as to Whether
private enterprise should be represented in a boay ereatod fo r tha pur**
poee of regulating and supervising such intercoms scouts to have been
aet and se ttle d In tbs o rig in a l onaotmomt o f the Federal 8«eorvo Act
when banker representation was so fo rc e fu lly argued «@d »c- fo rc e fu lly
denied both by Congress and ths fires tdent*
This intereetin*: period in the h is to ry of tbs Federal Keeerve
System is graphically related ‘in the fe ll earing passage from, senator
Class* book e n title d "An Adventure In Constructive Finance**
"theee preat bankers, a rb ite rs fo r years o f t v*
country9s o re d its, were grouped about the PrssidenVa desk
in the Sascutlvs offlo e adjoining the Cabinet room* X sat
outcido the o iro le , having already vetoed my cam dissent frsm
the hresi io n t1* a ttitu d e * President 11 Ison faoed the group
aoroee the desk* and as these m i drove hssae what accused to
me good, reason a fte r food, reason fo r banker ronrooentatton
on tho central beard, I a ctu a lly experienced a sense o f re
grot th a t I bad a part in subjecting W* Wilson to ouoh an
ordeal* then they had ended th e ir arguments Mr* W ilson,
turning more p a rtic u la rly to Forg&n and Wede, said q u ie tly t
Reproduced from the Unclassified I Declassified Holdings of the National Archives
CH **£4M»
’Will om of you gentlemen toll vm Is what civilised country
of tho earth there are important fcovernaent boards of con
trol on Which private intereete arc repreeersted’?* There was
poinfal eilenoe for tho longor* single moment I over spenti
and boforo it was broken Wm Wilson further inquiro.ii fWhich
of you go ;itlot%on thinfcs th* railroads should ooleot tac&bers
of tho Interstate Co ';.jereo Cemission?' There could bo no
convincing reply to oithor question, so tho discussion turned
to other points of tho currency bill} and, notwl theta^din& a
desperate offort was taade in th* Senate to give tho banks
minority representation on the roserve board, the proposition
did not prevail*’1
These facte were before Song roes when seotion
12A was eranted.
At the time of the revision of scotton ISA by the Sanklsac Aot
of 193$9 the importance of open-nssarket operations *s an instrument of
eredit o ntrol was conceded* Indeed* it was recognised as one of the
most* if not the »ost, important ef such instruments* Likewise, it was
conceded that responsibility tor ths formulation an-1 exeeutim of sueh
polioy should be o neentrated in one body* &1X previous ccmmitteee had
been composed of ffleers of the various Federal H«eerve bonks* The
whole issue was whether that responsibility should be fixed in the
Board of Governors of the floral Keeenre System as then being set up
or in ths Federal Sseterv* banks*
ths bill, as introdueed and passed In the House (H*R* Til?),
definitely fined suoh responsibility upon ths Federal Beeerve io&rd,
In Gonermeeman iteagnll’s report upon tha bill tfee following was stated»
11
Under the fweeent law, epetMiarkct polio lee are
formulated by the Federal Open Market Committee, wtlch oonslsts of the Eovemors of the 12 Federal Reserve fimks<"',~Y>->e
reeo mendatiens of the ooi^dttsiiT*ara su^jeet to the "approval
ef the Federal Keeerve Board* and tha boards of directors of
eaeh Federal Reserve bank retain the authority to refuse par*
t lei at ion in the policy adopted* He have# therefore, an
arrangement by stoieh there is a poliey»meklng body of 12,
which hae pomer to femulate policies, but mot to put theia
into effect* We have the Federal Reserve Board, consisting
ef 8 members, who have the authority to approve or dieepprove
of the rocomasttdetlone of the committee! and «e have IDS dir
ectors ef the ieeerve banks, who have the final determination
as to itfhethor the policy ie to be carried out or not. It
would be difficult to conceive of an arrao^e^ent better cal
culated than this for diffusing responsibility and creating
an elaborate syetsm of obstructions*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
'£T ?
*Thm
w ill aura this situation by plaolnr
responsibility for national monatary and oradit pollsias fnaps
ly xtptm tha 3N4er*l % « m I w H t It will eliminate o nflleta
of jurls^iotion ajnd poiioy baaau&a tho final daolaicm aa to all
matters affooting national pollolee would bo rested in tho Fed**
oral Reearve Board* Tho participation of Federal fcoeerve bank
fo v o m oro in tho deliberations leading to tho adoption of opannarKrt polieiee will bo preserved* Cfcien-market operations aay
bo initiator either by tho eommittee of tho governors or by tho
Boar3, but tho ultleat* responsibility for ?SrTrc a final do*
oltlon and tho poaer for adopting and carrying out national
pollutes will bo eonsenferated in a national body, at they prop**
erly thou d bo In tho publio interest**
tho bill was amended in the Sonata to provide far tho creation
of a "Federal Open fttorket CoMlttoo 11 consisting of the e ber* of tho
Board of C’orernors of -tho Federal Eeeerve System mod f l w representatives
of tho Fadaral Reserve banka to bo seieeted annually*
In eonferenoe tho present section 124 was agreed to*
Time it lo oioar that tho provision for tha ao lootion of *five
reiJroseotatlvee of tho federal Uoaarwo bank** represented a ooysprcmise
betweca fining responsibility In tho 3of rd and fining responsibility in
tho bonks by fixing responsibility In a body composed of tho Board and
representatives of tha b3»ks«
this i« borne out by tho foil9«lne reemrka of Senator Glass
made whan tho bill, aa amended by the Banking and Gurreasy Committee of
tha Senate, was reported to tho Donato*
"Aa I have said* in order to produce a bill, in
order to hervsmisi radical dlfferensee, concessions, even
yielding of convictions, had to bo ®ade, ao it m
finally
determined to constitute tha opem-war^et committee of tha 7
mo bora of tho Fadaral toaarvw Board and 6 representatives
of tho Federal Meeerve banka* tha fadaral Kescrve banka,
which ara tha trustees of tho rasarv© funds of all tha naas»»
bar banks of tha country, ara graciously given this minority
raproaantatl’o upon tha cpca^ariret committee*
*&9m of m war# opposed to any alteration of tie
exiatiing arrangement* Othara thought that tha representatives
of tho banka* whoso money la to bo ueed, whose ora lit is to ba
put in jeopardy, should have control of tha oomedttao and
should hava tha majority representation* But In ordar to ra~
aonoila bitter difference* there waa yielding, aad wo bars near
Reproduced from the Unclassified I Declassified Holdings of the National Archives
propoeed an opet»»market ooaoniittee composed of *11 ? members
of tb* Federal ficeerve Board and 5 renresentat \ves of th#
regional w w m
beni e**
During the ec-nsltferetion of tha Banking Aot of 1955 by tha
Banking o m | Currency Sosw&tteee la both tha House and tha Senate, mony
distinguished bankers appeared before ons or both of the Ccwaltteea
and aaong them there seeded to be a unanimity of opinion that ^Governors*
of the Federal Reserve banka should be »aber* of the Open Mar; «t "'do»aittee* The very feet thet they eo testified le Indicative of the fact
that the eole Issue at stake la the pending legislation was whether or
not control of this important function should be vested in the *Covornor*»*
of ths Federal Reserve banks or In the Federal lieserve Board. It does
not appear that these witnesses ever had in aindl a se loot ion of repre
sentatives of Federal leoorve banks free other than "Oorornors" or other
of floors frea the offielal personnel of the federal Reserve banks*
Ths reeosasiendatlen of the special ooRgnittee of American Bankers
Association eas "that the Open Market Ccsssittee shall oinsist of the
entire Federal Ummrro Board, (reduced to flee members), and four Gov
ernors of the Federal Resere© banks, selected by the Governors of the
twelve federal Reserve beaks annually*.
The reoemaendation of the Federal Adels cry Coamittoe was that
*The federal Open Market Csmartttee shall consist of the five noabers of
ths Federal Reserve Board (reduced in membership) and four Governors of
ths federal Reserve banks**
The Ccamission on Baaking Law and freetioe of the Association
of Reserve City Bankers In its *St— mary of ArguEsents on Title II of the
Bonking Act of 1935* clearly recognised that ths only polrt of d ifferodes
eas In whether the power to determine the open ’market policy of the Fed
eral Reserve System was to be In ths Federal Reserve Board or in a e«eeaittee, as tJwn constituted, of Governors of ths Federal Heeorte ban*e*
Ths Ccmalttee on Banking legislation of the Chamber of Gsansree
of the Waited States, la an analysis and report filed with the sub-oosaaittee
of the Senate Committee on Banking and Currency, recomended "that open
market policies shou d continue, as at present, to he formulated by a
eoasittco representing the twelve Federal ieeerve banks** Ths CesH&ittee
as then constituted was ooopoeed of the twelve Governors of the federal
Reserve banks*
In this connection it nay be eell to point out that Courses In
providing; that ths eaaaittoe shou ld cone .
1st of *the aswibors of the Board
of Governors of ths Federal Reserve System and five representatives of
from the Unclassified I Declassified Holdings of the National Archives
the Federal 1eaorve benksw, also p r o f i t that each representatives of
the banks should be elected, one by the bo&rds of <
1Ireetors of the feder
al Bcaerte Banks of Boston and lew York, one by the boards of directors
of the Federal Reserve Banks of 'hiladeiphia end Cleveland, one by the
board* of directors of the Federal Reserve Sank* of Chicago end St* Louie,
one by the board* of directors of the /federal Reserve Banks of Richmond,
Atlanta and .Dallas and om by the boards of dlreetore of the Federal teserve Banks of Minneapolis, Kansas City and, San Frwneieco. Obviously, It
wasiut the intention to concentrate tha ponere theroin aonferred In
other then a national body or to alter the responsibility to conduct
operations other then within the governing principles as laid down in the
act* The purpose was to meet the demnds of those who thought that re
sponsibility for operations should be in the ban:a rather thea in the
Board and to provide a method whereby the ooHaittee as a whole would be
able to present a compoeite picture of the needs of ooiaeteroe and business
with respect to tha general eredit situation of the entire country* Con*
sequent iy, ths sootion should be Interpreted as providing for the select
ion of five weiabers of the Ofsaaittee from *rcpresentatIvee of the Federal
Reserve banks*, that is to aay, froa tha already designated representatives
of ths Federal ieeerve banks so acting at tha tine of their eleatlon to
membership upon the cooadttee* By the same reasoning thvt would permit
Federal lioeerve baaSrs to select, as a member of the coaaittee, a repre
sentative not already a designated representatIva of the Federal Beserve
banks, they could elect representatives froa points outside their res
pective districts and conceivably each dssipsatel pjroup of Federal Beserve
banks could select as a represent at iva end as a tsenber of the coaaittee a
director and officer of a large city ©o xercial bank, and conceivably the
oomittee cooid be coxaposed of the seven members of the Beard of Severnors
cf the Federal Beserve System and five offleers or directors of one lar^e
city bank*
the legislative policy with ns;«ot to outside domination or
influence in the adaiaiatration of ths Federal Reserve Act Is illustrated
by section 10 cf the Act, wherein it is provided that *Be --*Hber of the
Board cf Governors of the Federal Reserve System shall be an officer or
director of aay bank, banking institution, trust eoapaay, or Federal Re
serve bank or held stock in any bank, banking institution, or trust com
pany** true, this section applies only to tha asisbcrs cf tha Board cf
taverners# but it is hardly conceivable that Congress, in setting up an
administrative body to control and supervise credit, should sc stalously
provide for its freedom of action by and large end then delegate perhaps
the meet important function to a committee, five**twelfths af which could
possibly repreaent private interacts as cppaaed to the national interest*
Such a constriction of section ISA would certainly be strained in tha
light cf the true intent cf Cengrees and, as ths mem Is eueecptlble of a
construction giving effect to the real intent, such construction should
be plaaed upon it*
.m
i----------------------------------------- --------Reproduced from the Unclassified I Declassified Holdings of the National Archives
Added to thia Is th* vary significant faat tlmt eeetloa IIS&
M r w l w d by the Mtifig Aat of 1^15 took away fro® tin redoral S e i m t
banks tho power of declining to participate in opa«Ma«fcet operations
reaossssendod by tho Goss&ittee. At tho eara ti?ac, *o«wwr# it provided
for representatives of tho banks to bo upon tho Committee* Clearly
Ccmgreee would sot ond did not undertake to provide for representation
of the Federal Kaearve ban>s by naking it poos lblo for sueh representa
tion to a<**e free* sources wholly outside of th® banks*
la addition* it la to bo noted that in tho snly case, ia connooti<m with tbo Federal Heeerve Systs b , where Congress haa prowided for
• body, tho personnel of which, lo selected froa sources outside of tha
official personnel of Federal fteaerve banks, to wit« tbo fadaral Advisory
Council, it, at the same tlas has prowldod for tha eo&penaatlan and allow
ance of tho Council aembara* Im eamnectlsm with tha Fadaral Open Market
Committee, however, no provision whatever ia aada for tha
of OO&I#*
pensation to or expanses of ths members* lad Congress lntsnded tlmt
aes&srs could ba solootod irtm aouroes outside tba offialal personnel of
tha Federal Heserve banks, it so doubt woald hsnre made provision for nsy»
swmt of ooD.paaaat.lon to said the expenses of sueh aethers*
further, it is significant that fitlo IX of tho Banking Act of
1956 boaaria effective August 23, 1936, axaopt that section SOS provided
for tha appointsftsnt of a Board of Governors of tha Fadaral Reserve Syeteic
offestive February 1, IdSd, aad sections 201 and 205 wara enaatad effectiva Marsh I, l£$4* fceetioa 201 waends paragraph •Fifth* af section 4 of
tha Fadaral Meaerve Aet aa aa to authorise a Fadaral Hoaarva bank *To
appoint by ita board of diraatora a president, vVco-president, ate**
Saatlon 20S agenda saatlom ItA of tha Fadaral leases* Aot and oraataa
tha Fadaral Open -Market Ccsaslttoo affective March l9 1936* the faat tlmt
thaaa cacti one wera enacted offaat iva upaa tha aare data would lndleate
that tha fiva representatives of tha federal Reserve banka ware to ba
aeiaated from ax&ong tha "Frea tdants" of tha Fadaral K ©serve banks*
Aside froa tha legal aspect of tba situation, there is the
faat that there mow exists a welWdefined and lor^-es tab Iishsd policy
outlined by the Beard and concurred in by the banka recognising and seek*
lag to avoid tha a&barraaaraent resulting froa affiliation with outs Ida
business interests af offloors and aaployaaa of Federal koaarva banka,
and avan of diraatora whan their atatua aa diraatora night be a one idered
as being uaed to further their private Interests*
Im 1919 the Board adbrassed a lattar to a il governors of the
Fadaral SUaerve banks saving, among other things, "While the Board doea
aat assume any jurisdiction over the business affiliates of any director
of a Federal Reserve bank except Insofar aa suah connections aay affect
his qualifications as prescribed In section 4 of the Federal Roeervo
Reproduced from the Unclassified I Declassified Holdings of the National Archives
.
Aot, it M o alway© ©ntortai«©d th© view thot a© d rootor or ©ffloor of
o FodoroX leoorro bank should pormit hi© oo»n©otla« with tho bnaSt to bo
ut©od In fvrtfeoriivc hi© jwivat© bnatno©* or tho 1 ’
tero«t of oagr corpora
tion with, whioh ho any bo aoooolatod**
la 1914 tho 8*0*4 dirootod o letter to I#*© ©fcnirwan of oil,
Foderol Eooonr© beak©, wiseroin It w»© <*tatod» *T:n©re afpoar© to bo bo
prcnrloloa of low whloh would prohibit on offloor of o FOdoral Io*orv©
bonk from forming on out©id© ©tuaootioa with. o bueirio©# oonoom of any
kind, but tho Federal tooorwo Board beliooo© it will bo oo obvicmo to
th® federal iooorvo bank© oo it lo to it»olf tlmt th© good mmidmt and
refutation of tlse federal fteooro© &y*:t«*a roq^lro thot th© offloor* of
tho rosorro bonk* ©hell giro tb©ir ontir© ttas© oaA attention to the of*
fair® of the bonk aad not bo idoatlfiod with any out#Id© buoinooo im*
torooto" * The view© ©xpr©«*©d in thi© notion ©ore apparently oonourrod
■in by %ho- offtoor© ond director© of th* fodorol SoWMWI bonfeo#
Tho d'jtieo of o nmbmr of tho Clpon HwHfeot f— nittoo is oonaootioa with tbs formulating and fla&af of opon norkot poliotoo oo?a©*
oooul'lerly within tho login of tho ahow letters outlining pelley in
oonaootiOB with Federal Booorvo banfc p*r«oun©l mid tho reason© «pmi
whloh tho oforosold lottors wore baaed, whioh ro^oono wore and are ap
parently ©©noyrroii in by mil of tho fodoral Honor*© baako, apply with
©eon grwatoor for©© to a mmlmr of the 0$*»a Marlrwt Cet»itto©*
frm , tlm outset opon*8mrfeot operation© fmum boon an Ssaportant
function of tho looorvo bonk© and within tho laet f©w yonro th©y hove
booosi© a ^jor roopcRt«iblllty of tho feyvtaau Th© now Oomittoe 'ho©
boon imrootod with broad powor* uid fron it® dooiaion* aed order* th©r©
i© no appeal* It follow©, therefor©* that to render efficient aervloe
m th© body a taember ©hould b© im constant touch with tho operation* of
th© Re®orv© b«nk* and- have a ©ontInning knoarlodgo of tho condition of
tho nanfeor bank©, of th© trend* in loan© and dope©it©, of th© fluctua
tion in Istoroot rate# and of tho money norlent and oroiit ©itnntion
poaorailiy* H©gardleo© of hi© ability, an oofcoldor, ©ngrwoood a© h©
would b© mo«t of tho Msao in hi* ?ora affair©, oould mat »©tabii#h and
maintain that l©A«r«ot ©tid 3rr}©wl©%© aoo©*©ar^^ to properly iioohnrf©
hi© duties a© a laossber of tho Cam ltte©» Xaovitably hi© attltudo wornId
tond to beaom adri©ory rather than ropro«or<tatIt© of th© ?©d»ral too*rr©
baaJk©* It i© only hmtn notnro that a f»or©«t ©mn^od In ©a enterprise
for profit wonld bo primarily oonoorts»d with, tho odminiotration of tlmt
e*st©rpri»©# froqonlly, it night booosi© tho d«ty of ©nob rao^b«r to novo
in, tho opposite dlrootion fr«s that whloh would bo advnsitng©on© to hi©
■own ©ntorprioo# Whether or not nombr © findinf, th^noolvo© im tteat po«i*
tion oonld aot without rorard to thoir frtoofto affair* and in tho pnbli©
interoet, it would bo unfair to ©aoh ®efsb©r to bo ploood in ©nob po«itioE.*
■H —
—
—
—
—
—
I—
— ^— — — — 111
Reproduced from the Unclassified I Declassified Holdings of the National Archives
$-
Bmtik * relation to th# Sy*t#«& #ould well Inpftir tho m ftM m m p «il
prmmtl$m of th# dlrootor# sat offi#er§ of th# l###rv# bsisfc# otsd prods*##
At tt #* mnfuMi-m wad #rcb#sTS*#KWRt«
MttBbor* of tli* Casmitt## m r * i n & ft#)iO<» the tr rt#o* of %l*
cr#dit policy of th* nation SlfeS* llko truot##e» %h#y *muM not bo in
tfe# «Hilad» of p>jr#!m#istg from or gulling to th#ir*#lr#o.
tact in iinportsn## to tfc# actual sound and #ffiolont #onduwt
of op#r*tio?i» by th* Op#n Movtewt tim m ittom in tho public irst#reot mud
for th# public w#lf*r# 1# t.f» reputation of tmt body for #© conducting
it# *ff#lr#» Tb# r#ry #xUt#a## of #. privet# i&t#r#ot upon tho port of
# comber of th# Ccttns&tt##*. even •os##dt*£ that ouch interest would sot
influ#no# U* #0*1021* sight mffoot th# public lnt#r?»r#t#ticK&« of tfc#
octio'o of th# Cosmltt##* Th# detrimental offoot r#«ultinc frcrai ouch
a iltaation 1# apparent#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL OPES MARKET COMMITTEE
(From Jan. 1 to Feb. 29, 1936)
^ °
r ,r
P E ®
'v
*
1
1 9 3 6
*
*
Ft II, Curtiss / f?AX?<yyraGeorge L. Harrison
Boston
*
M. J, Fleming
Cleveland
*
*
Oscar Newton
G. J. Schaller
*
Wsu McC. M artin
Atlanta
Chicago
(H. P. Preston, alternate)
St. Louis
Minneapolis
Kansas City (minutes)
Dallas (minutes)
* W. B. Geery
* G. H. Hamilton
* B. A. McKinney
New loyk
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXCERPT FROM LETTER OF FEDERAL RESERVE BANK OF KANSAS CITY
DATED Feb 7, 1956, re minutes of meeting of Board held on
February 6.
A'‘-:
feb - 7
£
1930
"Governor Hamilton informed the directors that in accordance
with the rules adopted to govern the election of a member and an
alternate member of the Federal Open Market Committee by the Boards
of Directors of the Federal Reserve Banks of San Francisco, Minne
apolis, and Kansas City, he, as judge of the election, had called
a conference of representatives of the three Boards of Directors to
be held in Denver on February 15, this action being necessary in
view of the failure of the three banks to elect a member and an
alternate member of the Federal Open Market Committee by February 1 *
,fThe directors selected as their representatives to attend the
meeting to be held in Denver, the committee previously appointed to con
fer with the Boards of directors of the other two banks on matters re
lating to the selection of representatives on the Open Market Committee.
The Committee appointed consists of Deputy Chairman Brown, Director
Bemardin, and Director Mullaney.”
i
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Re“pY6"dff(?e(i"fr6m th6“UnclassifieF/‘D'6Siasksified Holdings of the National Archives
CO P Y
February
6.
Mr* J. N. Peyton, Chairman,
Federal Reserve Bank of Minneapolis,
Minneapolis, Minnesota
"P--. >. ^ ,
Dear Mr. Peyton:
Reference is made to your letter of January 21 reporting the
action of the Board of Directors of your bank on certain subjects at
its meeting on January 21, 1936*
You will be advised at an early date in regard to the Board*s
action on salaries fixed by your Board of Directors for officers of
your bank, and in the meantime the Board will interpose no objection
to payment of salaries to officers of the bank at the rates previously
approved by the Board and in effect on December 31, 1935*
j
i
!
/
It is noted that Directors Clark, Grangaard and 0*Connell have
s
been appointed as a eommittee to meet at Denver with Directors repreI
senting the Kansas City bank and the San Francisco bank for the purpose
of considering recommendations to be made to the several Boards regarding the selection of a member and alternate member of the Open Market
\
Committee; that Directors Clark and Grangaard have been appointed a
committee to visit Washington sometime after February 1 to discuss with
the Board of Governors of the Federal Reserve System general policies
of the bank; and that the Board of Directors are not in favor of a
uniform day for holding directors1 meetings throughout the System,
v
h'-W'i-
Very truly yours,
(Signed) Cheater Morrill
Chester Morrill,
Secretary.
\
\
j
I
t
/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Copy
FEDERAL RESERVE BANK OF KANSAS CITY
January 27, 1956
Board of Governors of the
Federal Reserve System
Washington, D. C.
Gentlemen:
A regular meeting of the Board of Directors of this bank was held on
Saturday, January 25, the meeting having been postponed from January 25 by unan
imous consent of the directors. The meeting was attended by all of the direc
tors and by Counsel Leedy, Governor Hamilton, Deputy Governor Worthington, and
by Mr. W. T. Kemper, Member of the Federal Advisory Council.
In addition to the regular routine business of the meeting, the direc
tors took action as follows:
The various rates of discount and purchase in effect at this bank were
established without change for the ensuing period, subject to the approval of the
Board of Governors of the Federal Reserve System.
The directors accepted with approval a report of the committee of direc
tors appointed to confer with representatives of the Boards of Directors of the
Federal Reserve Banks of San Francisco and Minneapolis on matters having to do
with the selection by the three Boards of Directors of a member and alternate mem
ber of the Open Market Committee. This report reviewed the proceedings of a
meeting of representatives of the three banks held in Omaha on Januaiy 6, and
recommended the adoption by this board of a set of rules which had been tenta
tively agreed upon at the Omaha meeting as suitable to govern elections of mem
bers and alternate members of the Open Market Committee by the Boards of Direc
tors of the three banks.
The rules recommended by the committee were formally adopted by our
board, and inasmuch a® such rules provide that the Board of Directors of each
bank shall designate its choice for a member of the Open Market Committee and
its choice for an alternate member of such committee prior to February 1 of each
year, and certify such action to a judge of election named by the rules as the
Governor of the Federal Reserve Bank of Kansas City, the directors named their
choices for the respective positions and directed that such choices be certified
to the judge of election, as provided in the election rules.
Under such rules, if the Boards of Directors of at least two of the
three banks select the same individual as member or as alternate member of the
Open Market Committee, the judge of election shall declare such individual
elected and shall certify such election to the Board of Governors of the Federal
Reserve System. The rules provide that if by February 1 no person has received
at least two votes for the position of member of the committee or if no person
has received at least two votes for the position of alternate member, then the
AML X - q y / O
.
& U *L
-
<4 'C&U-j A,
3 >/. / / tfO
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
judge of election shall call representatives of the Boards of Directors of the
three banks together at Denver on a date to to agreed upon by such representa
tives for a conference for the purpose of arriving at an agreement with regard
to persons to fill these offices. In this connection, we have been informed
that the Board of Directors of the Federal Reserve Bank of Minneapolis has
adopted the recommended rules of election, subject to adoption by the Boards
of Directors of the other two banks. We have not learned of any actinn taken
on this matter by the Board of Directors of the San Francisco bank.
Very truly yours,
/s/ W. M. McAdams
Secretary
Reproduced from the Unclassified' / Declassified Holdings of the National Archives
r F E D E R A L R ES ER V E BOARD F l l E
CO PY
FEDERAL RESERVE BANK
OF MINNEAPOLIS
'P)
^ v
January 21st, 1956*
Mr* Chester Morrill, Secretary,
Board of Governors of the
Federal Reserve System,
Washington, D. C*
Dear Mr. Morrill,
At the regular meeting of our Board of Directors held
today, the budget for the first half of 1956, which will be forwarded to
you in due course, was approved by the Directors.
The Directors approved the payment of the prior service
liability under the Retirement System, over a period of five years from
January 1, 1935, and in so doing approved the readjustment of the books
of the bank, retroactively to December 51, 1955, in order to accomplish
this result, with the provision that a reserve in the amount of the bank!s
prior service liability on January 1, 1956, be set up in accordance with
the Board*s letter of January 15th.
Mr. W. B. Geery was elected Governor, Harry Yaeger was
elected Deputy Governor and Harry I. Ziemer was elected Deputy Governor
and Cashier, for the period expiring February 29, 1936, and, subject to
the approval of the Board, their salaries remain unchanged. All other
officers and legal counsel of the Federal Reserve Bank of Minneapolis
and of the Helena Branch were elected for the year 1956 at the same sal
aries, excepting only that, subject to the approval of the Board, the
following salary adjustments were passed:
Mr.
Mr.
Mr.
Mr.
H.
A.
W.
0.
C.
R.
E.
R.
Core, Assistant Cashier was raised from $5500 to
Larson,
*
*
n
m
• $5500 to
Peterson, *
«
«
«
* $4500 to
Preston, *
•
«
«
*t I4500 to
$5800
$5600
$5000
$5000
and I shall be pleased to have you communicate to me the Board’s action
with regard to these salaries at your convenience. The increases in
those salaries above noted will not offset the decrease in officers*
salaries due to the elimination of Assistant Cashier Rast.
The Directors passed a motion appointing Directors Clark,
/ Grangaard and 0*Connell as a committee to meet with Directors represent/ ing the Kansas City bank and Directors representing the San Francisco
[ bank at Denver on a date which was to be arranged by the Chairman of the
I Board, for the purpose of further considering recommendations which may
V be made to the several Boards by the representatives of the several banks
' for member and alternate member of the Open Market Committee.
<5 TCUU i n 2 7 m - c . / > * * * £ -
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. Chester Morrill,
(2)
January 21, 1936,
The Board appointed a committee consisting of Messrs. Clark
and Grangaard to visit Washington some time after February 1st to discuss
with the Board of Governors of the Federal Reserve System general policies
of the bank from point of view of the Directors.
The letter of the Board dated December 27, 1955, X-9407,
asking the opinion of our Board as to the desirability of arranging with
the several Federal Reserve Banks for uniformity in holding meetings of
the Boards of Directors of the twelve Federal Reserve Banks on the same
date, was read to the Directors. Our Board takes the point of view that
several of the directors come from very long distances and it is very de
sirable that our directors* meetings be held on Monday so traveling time
may be absorbed over Saturday and Sunday, and for this reason, as well as
other pertinent reasons which were brought out at the meeting, our Board
would not be in favor of any uniform day for holding directors* meetings
throughout the System.
Very truly yours,
(Signed) J. H. Peyton
CHAIRMAN OF THE BOARD
JNP:B
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R ^ O T t r a « 1 t f e ‘ l3n'Ciat§ffWi/ T O r ^ ifife d iMDldings of the National Archives
1
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,
^
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F e d e r a l R e s e r v e B a i ^ k o f Sai^ F r a k ^ c i ^ ^ ) ^
Ia
O
f f ic e
*
~K
o f
C h a irm a n o f t h e
B o ard
Fe d e r a l R e
Ag
ser ve
January 10, 1936
ent
/
Dear Mr, Eccles:
i/
I
Ir
E.
i.
X
i\U
Receipt is acknowledged of j-om latter of January 2, enclosing
copy of reply to a letter received from Mr, Stevens, Chairman of the Fed
eral Reserve Bank of Chicago, quoting a resolution adopted by a clearing
house association recommending that the Federal Reserve Banks of St,
Louis and Chicago select as their member of the Open Market Committee a
man of wide experience in business and financial affairs who is not an
officer of either bank.
At a meeting of our Board yesterday, your letter was read and \
discussed at considerable length. Our Board is in unanimous accord with \
the principles as expressed in this letter and are definitely of the
\
opinion that such a proposal, as made by the clearing house association,
I
is fraught with great danger to the System. We feel that no banker not
j
officially connected with one of the Federal reserve banks could accept
I
such a position without serious embarrassment to himself and the System. J
Members of the Open Market Committee, wielding the great power
of that office, should be required to divest themselves of all interests
in any organizations directly affected by the operations of the Commit
tee, as the members of the Board of Governors are required to do in con
nection with their offices. From a careful study of the history of Sec
tion 12a of the Federal Reserve Act, as amended, it is indicated to us
very clearly that the applicable provision in the Act obviously intended
to provide that representatives of the Federal reserve banks should be
persons officially connected with those banks and therefore, in fact,
able to represent them.
In the opinion of our Board, it would be a mistake of major im
portance if representatives outside of the System are selected by the
Federal reserve banks as members of the Open Market Committee.
WALTON N. MOORE
Deputy Chairman
Mr. M. S. Eccles,
Chairman,
Board of Governors of Federal Reserve System,
Washington, D. C.
Re^W^d^ffom'th'e'U'nclasSifiga'V'D^clafsified Holdings of the National Archives
sv
FEDERAL RESERVE BANK OF CHICAGO
230
SOUTH
L_A S A L L E
2
STREET
January 10, 1936
OFFICE O F T H E
C H A I R M A N O F T H E BOAFjD A N D
FEDERAL RESERVE AGENT
Marriner S. Eccles
hairman, Board of Governors
of the Federal Reserve System
Washington, D. C.
Dear Mr, Eccles;
r-.
/
Referring again to your letter of January 2, 1956, relative
to the question of the selection of a member of the Federal Open Market
Committee, I today presented your letter to the board of directors of
this bank at its annual meeting. Our board recognizes the importance
of this whole matter involving a representative from two Federal Reserve
banks on the Open Market Committee, and the procedure to be followed
in connection with the appointment of such a member. Inasmuch as we
will have another meeting of our board later this month, it was deemed
wise to take the matter under consideration in the interim, and bring
it up again at that time for further determination. Inasmuch as the
new member of the Open Market Committee does not take office until
March 1, and we will have two more meetings of our full board in the
interim, it is considered that it is not essential that we take hasty
action at this time.
I shall be glad to advise you just as soon as there is anything
definite to report.
EMS HH
(I
I'ss\X ■■yy-Jr"
fit.
ReprddffcSatrom the Unclassifted /'Declassified Holdings of the National Archives
\Jx \
Fe d e r a l Re s e r
Ba n k
ve
/
o f
Atlanta
O F F I C E OF
C h a ir m a n of t h e Bo a r d .
Fe d e r a l R e s e r v e A g e n t .
January 11t 193&*
Hr* H. S. Socles, Chairman,
Board of Governors of the
Federal Reserve System,
Washington, D. C.
rcn c
Hr. Socles:
QtJM l H.:-
At the regular January meeting of the Board of Directors
Mr. f,;::
H r. h>.
y
Hr. V:.
Hr. SH r.
Mr,
Mr. r.:
Hr. C:
■Hr. : .
Hr. i •Mr.
Hr.
/ { this
yonr cenaanleation of January 2,
1936 (X-ftlO), addressed to
[/
me, m s read, as was also the copy of your letter of the same date
v/
y/
(X-9^l0-a) addressed to Hr. E* M. Stevens, Chairman of the Federal He serve
of Chicago*
Our directors were in entire accord with the views and
suggestions of the Board of Governors of the Federal Reserve System, as
Hr.
Hr.
set out in your letter to Hr. Stevens*
P163S3 s:
-
*nd relurn
I was authorized, as Deputy Chairman of this hank, to ap~
#
Ml ^ T ^ f v
^
point one or more as a committee to meet with similar committees appointed,
respectively, hy the Federal Reserve Banks of Richmond and Dallas, with
authority to formulate a procedure for the selection of a representative
on the Federal Open Harket Committee and to submit such suggested proce
dure, with recommendations in respect thereof, for consideration of the
full Board of Directors of the Atlanta hank*
Yery truly yours,
Or
I
t
f. 1.
M*
KSTOIS,
Deputy Chairmn of ths Board.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FKDEtlAL ltESKHVE BAJVH.
o f
C
l e v e l a n d
January 14., 1936.
Mr. M. S. E c c l e s , Chairman,
Board of Governors of the
Federal Reserve System,
Washington, D. C.
Dear Mr. Eccles:
Your letter of January 2. 1936, X-9410,addressed to
Mr. E. S. Burke, Jr., Acting Chairman, and enclosing a letter
eh was sent to the Chairman of the Federal Reserve Bank of
hicago in connection with the selection of a representative
serve on the Federal Open Market Committee after March 1$
, was brought to the attention of, and carefully considered
our Board of Directors, at its meeting on January 10, 193€«r
The suggestion of the Board of Governors of the Federal
Reserve System with respect to an appropriate method of selecting a representative on the Federal Open Market Committee, was
very favorably received by our Board, which took appropriate ac/ t£®n providing for the appointment of a committee of three
^ d i r e c t o r s from this bank, consisting of Mr. Chess Lamberton,
v Mr. B. R. Conner and Mr. John Galvin, to confer with a similar
committee from the Federal Reserve Bank of Philadelphia, to arrive
at an understanding as to the selection of a representative for
both banks on the Federal Open Market Committee.
The action of our Board has been communicated to the
Federal Reserve Bank of Philadelphia and it is hoped that
arrangements for an early meeting of the two committees can be
co mp l e t e d .
Our Board concurs in the view of the Board of Governors
that it was the intention of the Congress that the members of the
Federal Open Market Committee representing the Federal Reserve
banks should be the President of one of the banks in the group,
and believes the President of one of the other banks should be
selected as an alternate.
Our Board is very strongly of the opinion that whoever
is chosen as the representative of the Federal Reserve Banks of
Philadelphia and Cleveland must be governed by the interests of
and represent impartially, both banks.
It is understood that the Board of Governors has no
duty or responsibility with respect to the selection of a repre
sentative, however, our Board requested that its views, and th#
action taken, be communicated to the Board of Governors.
a
t 10 1C* I
Yours very truly,
A
S .m
Secretary
RepToda'Ceci'from the'U nclassifi'e'd*/ D ecla ssified H o ld in g s o f th e N a tional A rch ive s
hi nv
f \ Ii
w ^ 5
\
—
.
i J J
F E D E R A L R EfSER V E BANK
OF
DALLAS
C.C.W ALSH
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT
Mr# M. S . E c c l e s , C hairm an
, ..... B o a rd o f G o v e r n o r s o f t h e F e d e r a l R e s e r v e S y ste m
‘
" t in g to n , D* C.
r ,
C
j
JaiLUary 9 , 1936
"
____ _
D ea r M r. E c c l e s :
R e f e r e n c e i s made t o y o u r l e t t e r X -9 4 1 0 o f J a n u a r y 2 ,
1 9 3 6 , e n c lo s in g a cop y o f you r l e t t e r
o f t h e same d a t e t o C h a ir
man S t e v e n s o f t h e F e d e r a l R e s e r v e Bank o f C h ic a g o i n c o n n e c t io n
w i t h t h e s e l e c t i o n o f m em bers t o
' / /
y
s e r v e on t h e F e d e r a l Open M arket
C om m ittee a f t e r M arch 1 , 1 9 3 6 ,
The l e t t e r an d e n c l o s u r e w e r e p r e s e n t e d and c a r e f u l l y c o n
s i d e r e d a t t h e r e g u l a r m e e t in g o f o u r b o a r d o f d i r e c t o r s h e l d T u e s -
a:.-:
m rci-irn j
'
d a y , J a n u a r y 7 , 1 9 3 6 , t h e m in u t e s o f w h ic h a r e now b e i n g p r e p a r e d
>
«
and w i l l b e s e n t t h e B oard w i t h i n t h e n e x t d a y o r tw o#
The v i e w s o f t h e B oard o f G o v ern o rs o f t h e F e d e r a l Re
s e r v e S y s te m , a s e x p r e s s e d i n y o u r l e t t e r t o C hairm an S t e v e n s , a r e
fu lly
c o n c u r r e d i n b y ou r b o a r d o f d i r e c t o r s , and t h e r e i s
q u o te d
b e lo w , f o r y o u r i n f o r m a t i o n , t h e a c t i o n t a k e n b y ou r b o a r d :
" T h ere w as p r e s e n t e d l e t t e r X -9 4 1 0 o f J a n u a r y 2 ,
1 9 3 6 , from t h e B oard o f G o v ern o rs o f t h e F e d e r a l Re
s e r v e S y s te m on t h e s u b j e c t o f s e l e c t i o n o f m em bers
o f t h e F e d e r a l Open M ark et C om m ittee t o s e r v e a f t e r
M arch 1 , 1 9 3 6 .
" A f t e r d i s c u s s i o n , t h e f o l l o w i n g m o t io n b y D i
r e c t o r H o o k s, s e c o n d e d b y D i r e c t o r M id d le t o n , c a r r i e d :
>
^
|
|
*
^ <
y
^
l
i
1'
’T h a t t h i s b o a r d o f d i r e c t o r s i s i n f u l l a c c o r d
w i t h t h e v ie w s e x p r e s s e d i n C hairm an E c c l e s 1 l e t t e r o f
J a n u a r y 2 , 1 9 3 6 , t o C hairm an S t e v e n s o f t h e F e d e r a l R e s e r v e Bank o f C h ic a g o , a s t o t h e p r o c e d u r e t o b e f o l lo w e d w i t h r e s p e c t t o t h e s e l e c t i o n o f t h e r e p r e s e n t a ^
t i v e s t o s e r v e on t h e F e d e r a l Open M arket C om m ittee;
R ep rod uced from th e U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
*That t h e C hairm an o f t h e B oard b e a u t h o r i z e d and d i
r e c t e d t o com m u n icate w i t h t h e F e d e r a l R e s e r v e B anks o f
R ichm ond and A t l a n t a w i t h t h e v i e w o f h a v in g r e p r e s e n t a
t i v e s o f th e t h r e e b oard s o f d ir e c t o r s m eet a t a c e n t r a l
p o i n t j and t h a t t h e C hairm an o f t h i s b an k b e f u r t h e r
a u t h o r i z e d , a f t e r a s c e r t a i n i n g t h e number o f d i r e c t o r s
a g r e e d u p on t o r e p r e s e n t e a c h o f t h e b a n k s , t o a p p o in t a
c o m m itte e o f d i r e c t o r s o f t h a t num ber fr o m t h i s b o a r d ;
s u c h c o m m itte e t o h a v e f u l l pow er t o a c t f o r t h i s b ank a t
t h e m e e t in g w hen h e l d * * 11
P u rsu an t t o t h e a c t io n o f our b oard o f d ir e c t o r s , I h ave t a k
en up w i t h t h e F e d e r a l R e s e r v e B anks o f R ichm ond and A t l a n t a t h e m a t t e r
o f a r r a n g in g a j o i n t c o n f e r e n c e o f d i r e c t o r s t o
t i v e on t h e F e d e r a l Open M arket C o m m ittee .
s e le c t th e r e p r e se n ta
When I h a v e a s c e r t a i n e d t h e
num ber o f d i r e c t o r s s e l e c t e d b y t h o s e b a n k s , I w i l l a p p o in t a s i m i l a r
num ber fro m o u r b o a r d and w i l l ,
o f c o u r s e , a d v is e you th e r e s u l t o f t h i s
c o n fe r e n c e *
Y o u rs v e r y t r u l y ,
C hairm an o f t h e B oard
nsa
R ep rod uced from th e U ncla ssified
F
JN O .
I D ecla ssified H o ld in g s o f th e N a tional A rchives
e d e r a l
LI. C A L K I N S ,
R
e s e r v e
B
a n k
o f
Sa
n
F
r a h c i s c o
governor
January 9 , 1 9 3 6 .
AIRMAIL
The H o n o r a b le M. S . E c c l e s ,
C h airm an , B oard o f G o v e r n o r s o f
t h e F e d e r a l R e s e r v e S y s te m ,
W a s h in g to n , D . C.
D ear S i r :
A t t h e m e e tin g o f t h e B oard o f D i r e c t o r s o f t h i s bank
h e l d t o d a y , t h e s e l e c t i o n o f a member o f t h e F e d e r a l Open M arket
C o m m ittee w as d i s c u s s e d , and t h e members o f t h e B oard u n a n im o u s ly
e x p r e s s e d e n t i r e a g reem en t w ith th e r e a s o n in g s e t f o r t h i n you r
c o g e n t l e t t e r X -9 4 1 0 * d a t e d J a n u a r y 2, r e g a r d in g m em b ersh ip o f
t h e F e d e r a l O p e n M a r k e t C o m m itte e .
/
I t seem s t o th em p r e p o s t e r o u s t h a t a n y b a n k e r , in v e s t m e n t
b a n k e r , s t o c k b r o k e r , s h o u ld h a v e an o p p o r t u n i t y t o s i t on t h a t
C o m m itte e , w it h i n c i d e n t a l a d v a n ta g e g a in e d fro m k n o w le d g e o b t a in e d
th e r e •
I t i s a l s o t h e i r v ie w t h a t i t i s p r e p o s t e r o u s t h a t s u e h
mem ber, o r m em bers, s h o u ld h a v e t h e p o t e n t i a l pow er t o com p el a l l
F e d e r a l R e s e r v e B ank s t o b u y o r s e l l i n t h e op en m a r k e t r e g a r d l e s s
o f w h e th e r t h e y c o u ld s a f e l y do s o , o r n o t .
s
As a minimum r e q u ir e m e n t , members o f t h a t C om m ittee s h o u ld
( a s members o f t h e B oard o f G o v e r n o r s a r e r e q u i r e d t o ) d i v e s t them
s e l v e s o f c o n n e c t io n w i t h , o r i n t e r e s t i n , a n y o r g a n i z a t i o n d i r e c t l y
a f f e c t e d b y t h e o p e r a t i o n s o f t h e F e d e r a l Open M arket C o m m ittee .
The fr a m e r s o f t h e a p p l i c a b l e p r o v i s i o n i n t h e A c t o b v io u s
l y i n t e n d e d t o p r o v id e t h a t r e p r e s e n t a t i v e s o f t h e F e d e r a l R e s e r v e
B anks s h o u ld b e i n f a c t r e p r e s e n t a t i v e s o f t h o s e b a n k s .
I t i s a l s o t h e o p in io n o f t h i s B oard o f D i r e c t o r s t h a t , i f
t h e s i t u a t i o n c a n n o t b e o t h e r w i s e r e m e d ie d , t h e A c t s h o u ld be b r i e f l y
am ended f o r t h w i t h .
Y o u rs v e r y t r u l y ,
m
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
E x c e r p t from t h e m in u t e s o f t h e m e e t in g o f t h e B oard o f D i r e c t o r s o f
t h e F e d e r a l R e s e r v e Bank o f D a l l a s , h e l d on J a n u a r y 7 , 1 9 3 6 .
JAN - 7
T h e re w as p
r e s e■1n----t e ■'■d■"...
l eii t• t'>■—
e--r..... ft-X
-94L 01w■ nrurofrtr'f-----J ajrim
nmuy,^
a r y 2 , 1itirx
9 u3ttu
6rnfw,r from
x
iifittnan-raniinin 1
njiijui,,,,..11 mll'n lftl* lt,*
ii-iW
Iin*....
rM
t h e B oard o f G o v ern o rs o f t h e F e d e r a l R e s e r v e S y stem on t h e s u b j e c t
o f s e l e c t i o n o f members o f t h e F e d e r a l Open M ark et C om m ittee t o s e r v e
a f t e r M arch 1 , 1 9 3 6 ,
A f t e r d i s c u s s i o n , t h e f o l l o w i n g m o tio n by D i r e c t o r H o o k s,
se c o n d e d b y D i r e c t o r M id d le t o n , c a r r i e d :
" T h at t h i s b o a r d o f d i r e c t o r s i s i n f u l l a c c o r d w it h
t h e v ie w s e x p r e s s e d i n C hairm an E c c l e s 1 l e t t e r o f
J a n u a r y 2 , 1 9 3 6 , t o Chairm an S t e v e n s o f t h e F e d e r a l
R e s e r v e Bank o f C h ic a g o , a s t o t h e p r o c e d u r e t o b e f o l
lo w e d w it h r e s p e c t t o t h e s e l e c t i o n o f t h e r e p r e s e n t a t i v e s
t o s e r v e on t h e F e d e r a l Open M ark et C o m m ittee;
"T h at t h e C hairm an o f t h e B oard b e a u t h o r i z e d and d i r e c t e d
t o com m u n icate w i t h t h e F e d e r a l R e s e r v e B anks o f R ichm ond
an d A t l a n t a w it h t h e v ie w o f h a v in g r e p r e s e n t a t i v e s o f
th e th r e e b oard s o f d ir e c t o r s m eet a t a c e n t r a l p o in t;
and t h a t t h e C hairm an o f t h i s bank b e f u r t h e r a u t h o r i z e d ,
a f t e r a s c e r t a i n i n g t h e num ber o f d i r e c t o r s a g r e e d upon t o
r e p r e s e n t e a c h o f t h e b a n k s , t o a p p o i n t a c o m m itte e o f
d i r e c t o r s o f t h a t num ber from t h i s b o a r d ; su c h c o m m itte e
t o h a v e f u l l p ow er t o a c t f o r t h i s b ank a t t h e m e e t in g when
h e ld .”
193€
u
R ep rod uced from th e U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
* A'
Fe d e r a l R e s e r v e B a n k
o f
N e w
Y o r k
rc:
.J a n u a r y 6 , 1956■
D e a r G o v ern o r E c c l e s :
I w is h t o a c k n o w le d g e r e c e i p t o f y o u r l e t t e r
(X -9 4 1 0 ) o f J a n u a r y 2 , 1 9 5 6 , e n c l o s i n g a co p y o f a l e t t e r ,
b e a r in g t h e same d a t e , a d d r e s s e d b y y o u t o Mr. S t e v e n s ,
$r.
C h airm an , F e d e r a l R e s e r v e Bank o f C h ic a g o , c o n c e r n in g t h e
-
inii
m em b ersh ip and m eth od o f a p p o in tm e n t o f t h e members o f t h e
/ /
-J
F e d e r a l Open M ark et C om m ittee a s i t
a f t e r M arch 1 , 1 9 3 6 .
is
to b e c o n s titu te d
T h is l e t t e r w i l l b e b r o u g h t t o t h e
a t t e n t i o n o f ou r B o a rd o f D i r e c t o r s a t i t s
F a ith fu lly y o u r s,
H on. M a r r in e r S . E c c l e s ,
C h airm an , B oard o f G o v ern o rs o f t h e
F e d e r a l R e s e r v e S y s te m ,
W a sh in g to n , D .C .
n e x t m e e tin g .
m
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
^
'
/ A / / ’r l/f''
J A -' W ' * ’ '
FEDERAL RESERVE BANK OF CHICAGO
2 3 0 SOUTH LA SALLE STREET
OF THE
THE BOARD AND
ERVE AGENT
J/
January 4 , 1956
j H on, l a r r i n e r
S . E c c le s
jS h a irm a n , B oard o f G o v e r n o r s
y / o f t h e F e d e r a l R e s e r v e S y ste m
W a s h in g to n , D. C.
jr
D ea r Mr. E c c l e s :
I h a v e b e f o r e me y o u- ...r. >m
li---e t t e r ' fo f J "iH
a'rnTi'fffiT
uWanr-ia#
r y 2, 1 9 3 6 , w i t h r e f e r e n c e
t o t h e q u e s t i o n o f o u r member o f t h e F e d e r a l Open M arket C om m ittee t o
s e r v e a f t e r M arch 1 , 1 9 3 6 .
You w i l l r e c a l l t h a t i n ray l e t t e r o f D ecem b er 1 6 , I
se n t you a
co p y o f t h e r e s o l u t i o n w h ic h h ad b e e n s e n t t o u s b y t h e C le a r in g H ouse
A s s o c i a t i o n o f S t . L o u is w i t h o u t comment on my p a r t e x c e p t i n g t h a t we
had a d v is e d t h e C l e a r in g H ouse t h a t t h e m a t t e r w ou ld b e p r e s e n t e d t o o u r
board o f d ir e c t o r s .
You w i l l t h e r e f o r e u n d e r s t a n d t h a t t h e i r s u g g e s t i o n
w as n o t t h e r e b y c o n c u r r e d i n by t h i s o f f i c e .
I am v e i y g l a d t o h a v e t h e e x p r e s s i o n o f t h e B o a r d ’ s o p in io n
on t h i s m a t t e r and can a s s u r e y o u t h a t i t w i l l h a v e t h e c a r e f u l c o n s i d e r a
t io n o f our board o f d ir e c t o r s .
A f t e r c o n f e r r i n g w it h o u r b o a r d , I s h a l l
b e g la d t o a d v i s e y o u o f an y v ie w s w h ic h i t
V ery t r u l
EMS HH
h a s .o n t h i s s u b j e c t .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
FEDERAL R E SE R V E BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD
X -9 4 1 0
Jan uary 2 , 1936
D ear S i r
R e c e n t l y I r e c e i v e d from Mr* S t e v e n s , C h a ir
man o f t h e F e d e r a l R e s e r v e Bank o f C h ic a g o > a l e t t e r ^
q u o t in g a r e s o l u t i o n a d o p te d b y a c l e a r i n g h o u s e a s s o
c i a t i o n recom m en d in g t h a t t h e F e d e r a l R e s e r v e B anks o f
S t . L o u is and C h ic a g o s e l e c t a s t h e i r member o f t h e
Open M arket C om m ittee a man o f w id e e x p e r ie n c e i n b u s i
n e s s and f i n a n c i a l a f f a i r s who i s n o t a n o f f i c e r o f
e it h e r bank.
The l e t t e r w as c o n s i d e r e d a t a m e e t in g o f th e
B oard t o d a y and I am i n c l o s i n g , f o r t h e i n f o r m a t i o n o f
t h e b o a rd o f d i r e c t o r s o f y o u r b a n k , a co p y o f my r e p l y
w h ic h w as a p p r o v e d by t h e B o a r d .
V ery t r u l y y o u r s ,
C hairm an
TO CHAIRMEN OF ALL F* R. BANKS EXCEPT CHICAGO
R e p rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N ational A rch ive s
GOPI
X~9410~a
January 2 , 1 9 3 6 .
Mr. E . M. S t e v e n s , C h airm an ,
F e d e r a l R e s e r v e Bank o f C h ic a g o ,
C h ic a g o , I l l i n o i s .
D ear Mr. S t e v e n s t
Y our l e t t e r o f D ecem ber 16 i n w h ic h y o u q u o t e d a r e s o l u t i o n o f
a c l e a r i n g h o u s e a s s o c i a t i o n recom m en d in g t h a t t h e F e d e r a l R e s e r v e
B anks o f S t . L o u is and C h ic a g o s e l e c t a s t h e i r member o f t h e Open
M arket C o m m ittee a man o f w id e e x p e r ie n c e i n b u s i n e s s an d f i n a n c i a l
a f f a i r s who i s n o t an o f f i c e r o f e i t h e r bank w as b r o u g h t t o t h e a t
t e n t i o n o f t h e members o f t h e B o a rd .
I n t h i s c o n n e c t io n s e v e r a l i n
fo r m a l i n q u i r i e s w h ic h h a v e come t o t h e a t t e n t i o n o f t h e members o f
t h e B oard o f G o v e r n o r s i n d i c a t e d t h a t t h e r e w as d o u b t a t some o f t h e
F e d e r a l r e s e r v e b a n k s a s t o w h at c o u r s e s h o u ld b e f o l l o w e d w i t h r e
s p e c t t o t h e s e l e c t i o n o f t h e i r r e p r e s e n t a t i v e s t o s e r v e a f t e r March
1 , .1936, a s members o f t h e F e d e r a l Open M ark et C o m m itte e .
The la w i s
s i l e n t a s t o t h e p r o c e d u r e w h ic h s h a l l b e f o l
lo w e d by t h e b o a r d s o f d i r e c t o r s i n t h e s e l e c t i o n
o f su ch r e p r e s e n ta
t i v e s and i t d o e s n o t p l a c e upon t h e B oard o f G o v e r n o r s o f t h e F e d e r a l
R e s e r v e S y ste m an y d u ty o r r e s p o n s i b i l i t y w i t h r e s p e c t t o t h e d e t e r
m in a t io n o f su c h p r o c e d u r e .
t h e B oard f e e l s
H ow ever, s i n c e t h e q u e s t i o n h a s a r i s e n
t h a t i t may b e o f some a s s i s t a n c e t o t h e d i r e c t o r s
o f t h e F e d e r a l r e s e r v e b a n k s b y g i v i n g them i t s
v ie w s and s u g g e s t i o n s
r e g a r d in g t h e s e m a t t e r s .
W ith o u t r e v ie w i n g i n d e t a i l t h e h i s t o r y o f t h e l e g i s l a t i o n ,
it
is
c l e a r t h a t th r o u g h o u t t h e d i s c u s s i o n s t h e p e r s o n s whom t h e
R ep rod uced from the U ncla ssified
I D ecla ssified H o ldings o f the N a tional A rchives
-2 -
X -9 4 1 0 -a
p r o p o n e n t s o f r e p r e s e n t a t i o n o f t h e F e d e r a l r e s e r v e b a n k s on t h e Open
M arket C om m ittee h ad i n m ind w ere th e G o v e r n o r s o f t h e F e d e r a l r e s e r v e
b a n k s , a s shown f o r ex a m p le by t h e r e c o m m e n d a tio n s, o f t h e A m erican
B a n k e r s ’ A s s o c i a t i o n , t h e R e s e r v e C it y B a n k e r s ’ A s s o c i a t i o n , an d t h e
F e d e r a l A d v is o r y C o u n c i l.
When, i n a d d i t i o n t o t h i s ,
th e f a c t i s
ta k e n i n t o c o n s i d e r a t i o n t h a t t h e amendment to o k away from t h e F e d e r a l
r e s e r v e b a n k s t h e p ow er o f d e c l i n i n g t o p a r t i c i p a t e i n op en m a rk et
o p e r a t i o n s recom m ended b y t h e F e d e r a l Open M ark et C om m ittee an d i n
s t e a d made th e d e c i s i o n s o f t h e c o m m itte e b in d i n g u pon t h e b a n k s , i t
b eco m es e s p e c i a l l y s i g n i f i c a n t t h a t th e members o f t h e c o m m itte e t o b e
s e l e c t e d b y t h e b a n k s a r e r e f e r r e d t o i n t h e am endm ent a s " r e p r e s e n t a
t i v e s o f th e F e d e r a l r e s e r v e b a n k s ” .
it
is
The B oard t h e r e f o r e b e l i e v e s t h a t
c l e a r t h a t t h e C o n g r e ss i n t e n d e d t h a t t h e s e members s h o u ld b e
p e r s o n s i n p o s i t i o n t o p r e s e n t a d e q u a t e ly t h e v ie w s o f t h e F e d e r a l
r e s e r v e b an k s and t o s p e a k a u t h o r i t a t i v e l y f o r th em .
A s id e from t h e s e c o n s i d e r a t i o n s i t i s
e v i d e n t t h a t an y p e r
s o n h a v in g o t h e r w i s e s a t i s f a c t o r y i n d i v i d u a l q u a l i f i c a t i o n s who m ig h t
b e s e l e c t e d from o u t s i d e t h e o f f i c i a l p e r s o n n e l o f t h e F e d e r a l r e s e r v e
b a n k s w o u ld a lm o s t c e r t a i n l y h a v e o r r e p r e s e n t i n t e r e s t s o f a b u s i n e s s
o r i n v e s t m e n t c h a r a c t e r w h ic h m ig h t a f f e c t h i s a c t i o n a s a member o f
t h e c o m m itte e .
E ven th o u g h n o t i n f l u e n c e d by h i s p e r s o n a l i n t e r e s t s ,
t h e i r e x i s t e n c e m ig h t a f f e c t t h e p u b l i c i n t e r p r e t a t i o n o f t h e a c t i o n s
o f t h e F e d e r a l Open M ark et C om m ittee i n w h ich h e p a r t i c i p a t e d .
More
o v e r , h e c o u ld n o t b e i n t i m a t e l y a c q u a in t e d w it h t h e a f f a i r s o f t h e
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
-5 -
X -9 4 1 0 -a
member b a n k s and t h e F e d e r a l r e s e r v e b a n k s , th e f i n a n c i a l p o l i c i e s o f
t h e G o v ern m en t, and o t h e r p h a s e s o f m o n eta ry m a t t e r s t o t h e e x t e n t
t h a t w o u ld b e d e s i r a b l e and a s f u l l y a s w o u ld b e p o s s i b l e i n t h e c a s e
o f r e p r e s e n t a t i v e s who s e r v e d o n ly t h e F e d e r a l r e s e r v e b a n k s .
A lth o u g h
h e w o u ld h a v e a v o t e , h i s c o n t r i b u t i o n t o t h e d e l i b e r a t i o n s o f t h e
c o m m itte e w o u ld b e more l i k e l y
t h a t o f a c o n s u lt a n t or a d v is e r c a l l e d
i n a t t h e m e e t in g s th a n t h a t o f a t r u e sp okesm an f o r t h e F e d e r a l r e
se r v e b an k s.
It is
a p p a ren t t h a t th e s i t u a t i o n a l s o p r e s e n t s th e q u e s tio n
o f an a p p r o p r ia t e m eth od by w h ich th e d i r e c t o r s o f t h e b a n k s may c o n
t a c t e a c h o t h e r and d e te r m in e t h e i r s e l e c t i o n s i n a m u t u a lly s a t i s
f a c t o r y m anner and i t
see m s t o t h e B oard t h a t t h i s m ig h t b e a c c o m p lis h e d
by p r e l i m i n a r y m e e t in g s b e tw e e n c o m m itte e s o f d i r e c t o r s o f t h e b a n k s
who c o u ld b e a u t h o r i z e d t o f o r m u la t e p r o c e d u r e and make r e c o m m e n d a tio n s
f o r t h e c o n s i d e r a t i o n o f t h e f u l l b o a rd o f d i r e c t o r s o f e a c h F e d e r a l
r e s e r v e bank c o n c e r n e d .
The B oard w i l l b e g l a d t o b e a d v is e d a s t o t h e v ie w s o f t h e
d i r e c t o r s o f y o u r bank r e g a r d in g t h e s e s u g g e s t i o n s .
V ery t r u l y y o u r s ,
( S ig n e d )
M.
S.
E c c le s
M. S . E c c l e s ,
C h a irm a n .
R ep rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f the N a tio n a l A rchives
II
!
|
January
2 , 1936.
Chairman
I
X-9410
©•er Sir*
Recently
t recetwd
from
Stevene, Chairman
H r*
of the federal, % * m r m Bank of Chicago, * letter quot
ing & resolution adopted bgr * clearing houM association
rurraienfling that the Federal Reeerw Banka of St, Louie
end Chlosgo select as their member
Coaaitta* a
ass
the Open Harfcet
o f
of vide experience ia business and financial
affaire who ie not an officer of either bank.
The lett*r wae considered at
a
nesting
o f
the
Board today and X an inclosing* for the inforaatioo of the
b o a rd
o f
directors
o f
y©«r
bank,
a
copy o f
which wae approved by the Board*
?«ry truly yours*
It* 6 * S o to ies^
Chairman.
TO CHORHES OF ALL F. E* BAiiKS EXCEPT CHICAGO*
«y reply
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
^
^ I&
Qm&rmm
Mr* 1* X* Stevens, Chairman,
fmdmrmX Reaerve Bank of Chicago,
Chicago, Illinois.
Deer Ilk1* Sttvrnit
four letter of December 16 in which you quoted a resolution
of
that tha Fader*! Reeerws
Banka of @t# Louia and Chicago select aa their nenfeor of the Open Mar
ket Coaalttee a awwn- of wide experience in bualaass an** fimuicial affaire
who i» not an officer of aitliar bank waa brought to the attention of
the ■wmnHyya of ytia Board#
which have m m
In ♦nlH# connection
i&fornal inquirlae
to tha attention of the aeabero of the Board of Governors
indicated that there waa doubt at son* of the Federal reaerve banka aa
to what couma should ba followed with reapect to tha selection of their
representative* to serve after Starch 1, 1956, aa aeabers of the Federal
Open Haifcet Coaalttee.
the lav la silent aa to the procedure which ahaII ba followed
by the boards of directors In the selection of such representatives
and it doas not place upon tba Board of Governors of the Fadaral Ba*
aerre
or responsibility with respeet to tha determina
tion of auch procedure*
Boerd feela that it
m y
However, since tba question has arisen tha
bo of ao«a assistance to tha directors of tba
Fadaral reserve banks by giving than Its views and suggestions regard*
lug tbaaa natters*
Sithout reviewing in detail the history of the legislation, It
la clear that throughout the discussions the parsons whoa the proponents
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
of representation of tha Federal reserve bunks on the Upon M&rket Co*»
aittee had In mind war* the Governors of the Federal reserve bank*, mi
shown for **aaple by the recoaaendatlons of the Aaerloan Banker** Assoeia*
lion, the Beserve City Banker** Aaeoci&tlon, and the Federal Advi*ory
Council*
When, in addition t© thi*f t be feet la taken into considera
tion that th* aaendaeat took away froa the Federal rs*erf»- bank* the
poepr of declining to participate in open aarket operation* recommended
by the Federal Open Market. Coaaittee and tffrfttesd a*«ie the deoieian* of
the coaaittee binding upon the bank*# i t beeea*s especially significant
that the aeaber* of th* coaaittee to be **l*et*d by the bank* are referred
to in the *»*nda*at as *repreaentati*es of the Federal reaerve bank***
The Board therefore believe* that it i* eXear that the Congress intended
that th**e a n t e s *houid be per*on* in position to present adequately
the wises of the Federal reeerve bank* and to speak authoritatively for
then*
Aside froa these considerations it is evident that any person
having otherwise satisfactory individual qualification* who eight he
*«leeted fro* outside the official personnel of the Federal reserve
bank* would alaoat eertainly have or repareaent interests of a business
or investment character which *%ht affect his action as a aeaber of the
coaaittee*
Bven though not influenced by his personal Interests# their
existence eight affect the public interpretation of the actions of the
Federal Open Market Coaaittee in which he participated*
Moreover, he
©ould not be intiaately acquainted with the ftffalr* of the aeaber banks
and the Federal reserve banks# the financial policies of the Government,
and other phases of monetary mtters to the extent that would be desirable
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N ational A rchives
and as fully as would bo possiblo In tbo ease of reparo»©at&tliro» who
served only tho Fodoral rosorvo bank*.
Although bo would have a vote*
bio contribution to tbo deliberation* of tho comlttoo would bo sore
likoly that of a con*ultant or adviser called in at tbo Mooting* than
that of a truo *pokosiiaa for tho Fodoral rosorve banks*
It lo apparent that tbo oituatlon also proeent* tbo quostion
of an approprlato eotbod by which tbo director* of tbo bank* e&y con
tact each otber and dotoraiae tboir eoleetlono in a outually aaii©factory aannor and it aeoaus to tbo Board that tbio eight be aoooapliahod
by prellsinary aoeting* betweon coanlttee* of direetors of the banka
who oould be authorised to femulate procedure and make rocownond&tloiui
for tbo consideration of tbo full board of director* of oaeb Fodoral
reserve bank oonoornod*
Tha Board will be glad to bo advised as to tho views of the
directors of your bank regarding tbese suggestions#
Very truly your*,
K« &m Bodes,
0 h a lr s * tt#
R e p rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N ational A rchives
Ctialmstt
m
t
m
*r. I* I. Steweoa, Chalrnsn*
Federal Reaerw* Bank o f Chicago*
Chle&gd} Illinois.
9!LfeteS»4Mb tftwk
M i r HIP#
IflHft da—IMtMlie1 >
lo w
letter
o f
Deoenber
16
In .
which
you
a
resolution
©f a y ? h A »— tiny*!*t-ifli rerm— irmHTig that tht fcdtnd Tiewei>n
R«nit« of St.* I*****!# anf Chicago select as thtlr aenber of
Open
Icat. Coanlttee a w m of wide esperleone is business and financial affairs
who Is aot as offieer of either bank was brought to tha attention of
tha neabwrs of the Board*
which have ©owe
to
la
th is
%ha attention
o f
eonaeeiiaa sewral infora&l inquiries
the aeabers of the Board of Goitraora
Indicated that there was doubt at soae of the Federal reserve banka aa
to what course should be followed with respect to tha selection of their
representatives
to
serve after March lf
1986*
aa aeabers of tha Federal
Open liarket Coanlttee*
Tha lav la silent aa to tha procedure which shall be followed
by tha boards of directors
ia
tha selection of such representatives
&nd it does not place upon tha Board of Governors of tha Fadaral Ra~
serve fljgraftwi any duty or responsibility with respect to the determinal
tlon of such procedure.
However, since the question baa arisen tha
Board faala that it m y ba of aoaaa assistance to tlia directors
o f
tha
Fadaral reserve banka by giving thea its views and suggestions regard
ing these natters*
Without reviewing la detail tha history of tha legislation* It
Is clear that throughout tha discussions tha parsons whoa the proponents
r
'/>*/?(>
C D )W
0
L
ZD
R ep rod uced from the U ncla ssified
I D ecla ssified H o ldings o f the N ational A rchives
o f r e p r e s e n t a t i o n o f t h e F e d e r a l r e s e r v e b a n k s on t h e Ooen M arket Com
m i t t e e had i n m ind w e re t h e G o v e r n o r s o f th e F e d e r a l r e s e r v e b a n k s , a s
shown f o r e x a m p le b y t h e re c o m m e n d a tio n s o f t h e A m erican B a n k e r s 1 A s s o c i a
t i o n , t h e R e s e r v e C i t y Banker®* A s s o c i a t i o n , and t h e F e d e r a l A d v is o r y
C o r n e ll,
When, i n a d d i t i o n
to t h i s , t h e f a c t i s 'taken i n t o c o n s i d e r a
t i o n t h a t t h e amendment t o o k aw ay from t h e F e d e r a l r e s e r v e b a n k s t h e
pow er o f d e c l i n i n g t o p a r t i c i p a t e i n op en m a r k e t o p e r a t i o n s recom m ended
b y t h e F e d e r a l Open M arket C om m ittee a n d i n s t e a d made t h e d e c i s i o n ® o f
t h e c o m m itte e b in d in g upon t h e b a n k s , i t b eco m es e s p e c i a l l y s i g n i f i c a n t
that- t h e mem bers o f t h e c o m m itte e t o b e s e l e c t e d b y t h e b a n k s a r e r e f e r r e d
t o i n t h e am endm ent a a " r e p r e s e n t a t i v e o f t h e F e d e r a l r e s e r v e b a n k s * .
The B oard t h e r e f o r e b e l i e v e s t h a t i t i s
c l e a r t h a t th e C o n g r e s s in t e n d e d
t h a t t h e s e m em bers s h o u ld b e p e r s o n s i n p o s i t i o n
to p r e s e n t a d e q u a te ly
t h e v i e w s o f t h e F e d e r a l r e s e r v e b a n k s smd t o sp e a k a u t h o r i t a t i v e l y f o r
th e /a .
A s id e from t h e s e c o n s i d e r a t i o n s i t
i s e v id e n t th a t any p erson
h a v in g o t h e r w i s e s a t i s f a c t o r y i n d i v i d u a l q u a l i f i c a t i o n s 'who -m ight b e
s e l e c t e d fr o ® o u t s i d e th o o f f i c i a l -p e r so n n e l o f t h e F e d e r a l r e s e r v e
b a n k s Ksould a lm o s t c e r t a i n l y h a v e o r r e p r e s e n t i n t e r e s t s o f a b u s i n e s s
o r I n v e s t m e n t c h a r a c t e r w h ic h m ig h t a f f e c t h i s a c t i o n a s a member o f t h e
c o m m itte e .
Even th o u g h n o t i n f l u e n c e d b y h i s p e r s o n a l i n t e r e s t s , t h e i r
e x i s t e n c e m ig h t a f f e c t th o p u b l i c i n t e r p r e t a t i o n o f -tho a c t i o n s o f th e
F e d e r a l Open M arket C o s n a iite e i n w h ich h e p a r t i c i p a t e d *
M oreover, he
c o u ld n o t b e i n t i m a t e l y a c q u a in t e d w it h t h e a f f a i r s o f t h e member b a n k s
and t h e F e d e r a l r e s e r v e b a n k s , t h e f i n a n c i a l p o l i c i e s o f t h e G o v ern m en t,
and o t h e r p h a s e s o f m o n e ta r y m a tter® t o t h e e x t e n t t h a t w o u ld b e d e s i r a b l e
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
an d a s f u l l y a s w o u ld b e p o s s i b l e l a th© c a s e o f r e p r e s e n t a t i v e who
s e r v e d o n l y t h e F e d e r a l r e s e r v e b a n k s#
h i s c o n tr ib u tio n
A lth o u g h h e w o u ld h a v e a v o t e ,
t o t h e d e l i b e r a t i o n s o f t h e c o r e s ! t t e e w o u ld b e m ore
l i k e l y t h a t o f a c o n s u l t a n t o r a d v i s e r cmlltd i n a t th e m e e t i n g s th a n
t h a t o f a t r u e sp ok esm an f o r t h e F e d e r a l r e s e r v e b an k s*
I t i s ap p a ren t th a t th e s i t u a t io n a ls o p r e s e n ts th e q u e s tio n
of m
a p p r o p r ia t e m eth od b y w h ic h t h e d i r e e t o r s o f t h e b a n k s may co n
t a c t e a c h o t h e r and d e te r r a in e t h e i r s e l e c t i o n s ‘i n a m u t u a lly s a t i s
f a c t o r y a a n n e r and i t
s e e a s t o t h e B oard t h a t t h i s m ig h t b e a c c o m p lis h e d
b y p r e l i m i n a r y m e e t in g s b e tw e e n c o m r a itte e s o f d i r e c t o r s o f t h e b a n k s
who c o u ld b e a u t h o r i s e d t o f o r m u la t e p r o c e d u r e and make r e c o m m e n d a tio n s
f o r t h e c o n s i d e r a t i o n o f t h e f u l l b o a rd o f d i r e c t o r s o f e a c h F e d e r a l
r e s e r v e b an k c o n c e r n e d .
The B oard w i l l b e g l a d t o b e a d v i s e d a s t o t h e v ie w s o f t h e
d i r e c t o r s o f y o u r b an k r e g a r d in g t h e s e s u g g e s t i o n s *
V e ry t r u l y y o u r s ,
If* S . E c c l e s ,
C h airm an .
CM/acw
R e p rod uced from the U ncla ssified
I D e cla ssified H o ld in g s o f the N atio n a l A rch ive s
3
FED ER A L R ESER VE BO ARD
WASHINGTON
D ecem ber 3 0 , 1 9 3 5 .
Mr. E c c l e s :
T he a t t a c h e d d r a f t o f a l e t t e r t o
M r. S t e v e n s i s s u b m it t e d f o r y o u r c o n s i d
e r a tio n in reg a rd to th e p rocedu re fo r
s e l e c t i n g r e p r e s e n t a t iv e s o f th e F e d e r a l
r e s e r v e b an k s on t h e new o p en m a r k e t com
m itte e .
I f y o u a p p r o v e o r a f t e r m ak in g
su ch changes a s you d e s ir e th e l e t t e r w i l l
t h e n b e c i r c u l a t e d t o t h e o t h e r B o a rd mem
b ers.
I t w o u ld b e e x p e c t e d t h a t a co p y o f
t h i s l e t t e r w o u ld b e s e n t t o e a c h o f t h e
o th e r F e d e r a l r e s e r v e banks f o r t h e i r in
fo r m a tio n .
S e c r e ta r y .
CM yd
R ep rod uced from the U ncla ssified
I D ecla ssified H o ldings o f the N ational A rchives
FEDERAL RESERVE BOARD
W A S H IN G T O N
a d d r e s s offi ci al c o r r e s p o n d e n c e t o
THE FEDERAL RESERVE BOARD
Mr. E . M. S t e v e n s , C h airm an ,
F e d e r a l R e s e r v e Bank o f C h ic a g o ,
C h ic a g o , I l l i n o i s .
D ear Mr. S t e v e n s :
Y our l e t t e r
o f D ecem ber 16 w i t h w h ic h y o u i n c l o s e d a cop y
o f a r e s o l u t i o n o f a c l e a r i n g h o u s e a s s o c i a t i o n recom m en d in g t h a t
t h e F e d e r a l R e s e r v e B an k s o f S t . L o u is and C h ica g o s e l e c t a s t h e i r
member o f t h e Open M ark et C om m ittee a man o f w id e e x p e r i e n c e i n
b u s i n e s s and f i n a n c i a l a f f a i r s who i s n o t an o f f i c e r o f e i t h e r bank
was b r o u g h t t o t h e a t t e n t i o n o f t h e m em bers o f t h e B o a r d .
In t h i s
c o n n e c t io n s e v e r a l i n f o r m a l i n q u i r i e s w h ic h h a v e come t o t h e a t t e n
t i o n o f t h e m em bers o f t h e B oard o f G o v e r n o r s i n d i c a t e d t h a t t h e r e
w as d o u b t a t som e o f t h e F e d e r a l r e s e r v e b a n k s a s t o Yfhat c o u r s e
s h o u ld b e f o l l o w e d w it h r e s p e c t t o t h e s e l e c t i o n o f t h e i r r e p r e s e n t a
t i v e s t o s e r v e a f t e r March 1 , 1 9 5 6 , a s m em bers o f t h e F e d e r a l Open
M arket C o m m itte e .
T he la w i s
s i l e n t a s t o t h e p r o c e d u r e w h ic h s h a l l b e f o l
lo w e d t y t h e b o a r d s o f d i r e c t o r s i n t h e s e l e c t i o n o f s u c h r e p r e s e n t a
t i v e s and i t
d o e s n o t p l a c e u p on t h e B oard o f G o v e r n o r s o f t h e F ed
e r a l R e s e r v e S y s te m any d u t y o r r e s p o n s i b i l i t y w i t h r e s p e c t t o t h e
d e t e r m in a t i o n o f su c h p r o c e d u r e .
H ow ever, s i n c e t h e q u e s t i o n h a s
a r i s e n t h e B o a rd f e e l s t h a t i t may b e o f som e a s s i s t a n c e t o t h e d i
r e c t o r s o f t h e F e d e r a l r e s e r v e b a n k s b y g i v i n g th em i t s v i e w s and
s u g g e s t i o n s r e g a r d in g t h e s e m a t t e r s .
R ep rod uced from the U ncla ssified / D ecla ssified H o ldings o f the N ational A rchives
Mr. E . M. S t e v e n s -
(2 )
W ith o u t r e v i e w i n g i n d e t a i l t h e h i s t o r y o f t h e l e g i s l a
tio n , i t
is
c l e a r t h a t th r o u g h o u t t h e d i s c u s s i o n s t h e p e r s o n s whom
t h e p r o p o n e n t s o f r e p r e s e n t a t i o n o f t h e F e d e r a l r e s e r v e b a n k s on
t h e Open M arket C om m ittee h ad i n m ind w e re t h e G o v e r n o r s o f t h e Fed
e r a l r e s e r v e b a n k s , a s s h o r n f o r ex a m p le b y t h e r e c o m m e n d a tio n s o f
t h e A m erica n B a n k e r s ’ A s s o c i a t i o n , t h e R e s e r v e C it y B a n k e r s 1 A s s o c i a
t i o n , and t h e F e d e r a l A d v is o r y C o u n c il.
th e fa c t i s
When, i n a d d i t i o n t o t h i s ,
ta k e n i n t o c o n s i d e r a t i o n t h a t t h e amendment t o o k away
from t h e F e d e r a l r e s e r v e b a n k s t h e p ow er o f d e c l i n i n g t o p a r t i c i p a t e
i n o p en m a r k e t o p e r a t i o n s recom m ended b y t h e F e d e r a l Open M arket
C o m m ittee and i n s t e a d made t h e d e c i s i o n s o f t h e c o m m itte e b in d in g
upon t h e b a n k s , i t b eco m es e s p e c i a l l y s i g n i f i c a n t t h a t t h e members
o f t h e c o m m itte e t o b e s e l e c t e d by t h e b a n k s a r e r e f e r r e d t o i n
t h e am endm ent a s ’’r e p r e s e n t a t i v e s o f t h e F e d e r a l r e s e r v e b a n k s " .
The B oard t h e r e f o r e b e l i e v e s t h a t i t
is
c l e a r t h a t t h e C o n g ress in
t e n d e d t h a t t h e s e m em bers s h o u ld b e p e r s o n s i n p o s i t i o n t o p r e s e n t
a d e q u a t e l y t h e v ie w s o f t h e F e d e r a l r e s e r v e b an k s and t o
s p e a k au
t h o r i t a t i v e l y f o r th e m .
A s id e from t h e s e c o n s i d e r a t i o n s i t
is
e v i d e n t t h a t any
p e r s o n h a v in g o t h e r w i s e s a t i s f a c t o r y i n d i v i d u a l q u a l i f i c a t i o n s who
m ig h t b e s e l e c t e d from o u t s i d e t h e o f f i c i a l p e r s o n n e l o f t h e F ed
e r a l r e s e r v e b an k s w o u ld a lm o s t c e r t a i n l y h a v e o r r e p r e s e n t i n t e r
ests
o f a b u s i n e s s o r in v e s t m e n t c h a r a c t e r w h ich m ig h t a f f e c t h i s
sag
R e p rod uced from th e u n cla ssifie d
I D ecla ssified H o ld in g s o f th e N atio n a l A rch ive s
Mr. E . M. S t e v e n s -
(3 )
a c t i o n a s a member o f t h e c o m m itte e .
E ven thojagh n o t i n f l u e n c e d
by h is p e r s o n a l i n t e r e s t s , t h e i r e x is t e n c e
a f f e c t th e p u b lic
i n t e r p r e t a t i o n o f t h e a c t i o n s o f t h e F e d e r a l Open M ark et C om m ittee
i n w h ic h h e p a r t i c i p a t e d .
M o r e o v e r , h e c o u ld n o t b e i n t i m a t e l y
a c q u a in t e d w i t h t h e a f f a i r s o f t h e member b a n k s an d t h e F e d e r a l
r e s e r v e b a n k s , t h e f i n a n c i a l p o l i c i e s o f t h e G o v e r n m e n t, and o t h e r
p h a s e s o f m o n e ta r y m a t t e r s t o t h e e x t e n t t h a t w o u ld b e d e s i r a b l e
and a s f u l l y a s w o u ld b e p o s s i b l e i n t h e c a s e o f r e p r e s e n t a t i v e s
who s e r v e d o n ly t h e F e d e r a l r e s e r v e b a n k s .
A lth o u g h h e w ou ld h a v e
a v o t e , h i s c o n t r i b u t i o n t o t h e d e l i b e r a t i o n s o f t h e c o m m itte e
w o u ld b e m ore l i k e l y t h a t o f a c o n s u l t a n t o r a d v i s e r c a l l e d i n a t
t h e m e e t in g s t h a n t h a t o f a t r u e sp ok esm an f o r t h e F e d e r a l r e s e r v e
b an k s.
Wrbh t h e s e c o n s i d e r a t i o n s i n m ind and o t h e r s t h a t may b e
R ep rod uced from the U ncla ssified
I D e cla ssified H o ld in g s o f th e N a tional A rchives
M r. E . M. S t e v e n s -
(4 )
p o s it io n he w i l l occup y he w i l l be i n p o s it io n t o b e c o n f i d e n t i a l ^ , ,
in fo r m e d c u r r e n t l y o f t h e f a c t s t h a t w i l l e n t e r i n t o t h e d e l i b e r a
t i o n s and d e c i s i o n s o f t h e c o m m it t e e .
' "
I n m a k in g ^he s e l e c t i o n , c o n s i d e r a t i o n m ig h t a l s o b e g i v e n
.j5*
t o t h e a d v i s a b i l i t y o f t h e a d o p t i p a ' o f a p r o c e d u r e w h ereb y i n t h e
c a s e o f tw o F e d e r a l r e s e r y ^ S a n k s t h e ' P r ^ i d e n t o f e a c h b an k m ig h t
‘“xs e r v e a s a member # V e iy o t h e r y e a r , t h e P r e s i d e n t ' l l 1 t h e o t h e r b ank
^
*<***
s e r v in g a s „ M e a l t e r n a t e .
'^
%>
In th e ca se o f th r e e F ed eral r e se r v e
b a ^ k s^ th e r e p r e s e n t a t i o n c o u ld b e r o t a t e d among t h e t h r e e b a n k s .
It is
ap paren t th a t th e s it u a t io n a ls o p r e se n ts th e q u es
t i o n o f an a p p r o p r ia t e m eth od b y w h ic h t h e d i r e c t o r s o f t h e b a n k s
may c o n t a c t e a c h o t h e r and d e t e r m in e t h e i r s e l e c t i o n s i n a m u t u a lly
s a t i s f a c t o r y m anner and i t
see m s t o t h e B o a rd t h a t t h i s m ig h t b e
a c c o m p lis h e d b y p r e l i m i n a r y m e e t in g s b e tw e e n c o m m itte e s o f d i r e c
t o r s o f t h e b a n k s who c o u ld b e a u t h o r i z e d t o
f o r m u la t e p r o c e d u r e
and maJce r e c o m m e n d a tio n s f o r t h e c o n s i d e r a t i o n o f t h e f u l l b o a r d
o f d i r e c t o r s o f e a c h F e d e r a l r e s e r v e b an k c o n c e r n e d .
T he B o a rd w i l l b e g l a d t o b e a d v i s e d a s t o t h e v i e w s o f
t h e d i r e c t o r s o f y o u r b ank r e g a r d in g t h e s e s u g g e s t i o n s .
V ery t r u l y y o u r s ,
Chester Morrill,
Secretaiy.
k
AS-
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
X -9 4 1 0 - a
J a n u a r y 2 , 1936*
Mr. £ • II* S t e v e n s , C h a irm a n ,
F e d e r a l R e s e r v e Ba.nk o f C h ic a g o ,
C h ic a g o , I l l i n o i s *
D ear Mr* S t e v e n s :
l o u r l e t t e r o f D ecem ber 1 6 w i t h w h ic h y o u i n c l o s e d a cop y
o f a r e s o l u t i o n o f a c l e a r i n g h o u se a s s o c i a t i o n recom m en d in g t h a t
t h e F e d e r a l R e s e r v e B a n k s o f S t* L o u is and C h ic a g o s e l e c t a s t h e i r
member o f t h e Open M ark et C om m ittee & man o f w id e e x p e r i e n c e in
b u s i n e s s and f i n a n c i a l a f f a i r s who l a n o t an o f f i c e r o f e i t h e r b a sk
wag b r o u g h t t o t h e a t t e n t i o n o f t h e m em bers o f t h e B o a r d .
In t h i s
c o n n e c t io n s e v e r a l i n f o r m a l i n q u i r i e s w h ic h h a v e come t o t h s a t t e n
t i o n o f t h e m em bers o f t h e B oard o f G o v e r n o r s i n d i c a t e d t h a t t h e r e
was d o u b t a t som e o f t h e F e d e r a l r e s e r v e b a n k s a s t o w h at c o u r s e
s h o u ld b e f o l l o w e d w it h r e s p e c t t o t h e s e l e c t i o n o f t h s i r r e p r e s e n t a
t i v e s t o s e r v e a f t e r March 1 , 1 9 3 6 , a© m em bers o f t h e F e d e r a l Open
M arket C o m m itte e .
T h e la w i s
s i l e n t a e t o t h e p r o c e d u r e w h ich s h a l l b e f o l
lo w e d try* t h e b o a r d s o f d ir e c t o r ©
t i v e s and i t
in th e s e l e c t i o n
o f su ch r e p r e s e n ta
d o e s n o t p l a c e u p o n t h e B oard o f G o v e r n o r s o f t h s F ed
e r a l R e s e r v e S y s te m an y d u ty o r r e s p o n s i b i l i t y w it h r e s p e c t t o t h s
d e t e r m in a t io n o f su c h p r o c e d u r e .
H ow ever, s i n c e t h e q u e s t i o n h a s
a r i s e n t h e B o a rd f e e l s t h a t i t may b e o f som e a s s i s t a n c e t o t h e d i
r e c t o r s o f t h e F e d e r a l r e s e r v e b a n k s b y g i v i n g th em i t s v i e w s an d
s u g g e s t i o n s r e g a r d in g t h e s e m a t t e r s .
r
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
Mr* E* M, S t e v e n s -
{£ }
W ith o u t r e v i e w i n g i n d e t a i l th® h i s t o r y o f t h e l e g i s l a
tio n , i t
is
c l e a r t h a t t h r o u g h o u t t h e d i s c u s s i o n s t h e p e r s o n s who»
t h e p r o p o n e n t s o f r e p r e s e n t a t i o n o f t h e F e d e r a l r e s e r v e b a n k s on
t h e Open M ark et Goms&tte© h ad i n a i n d w e r e t h e G o v e r n o r s o f t h e Fed
e r a l r e s e r v e b a n k s , a s show n f o r e x a m p le b y t h e r e c o m m e n d a tio n s o f
t h e A m erica n B a n k e r s 1 A s s o c i a t i o n , t h e R e s e r v e C i t y B a n k e r s 1 A e s o c i a t l o n , and t h e F e d e r a l A d v is o r y C o u n c il*
W hen, .in a d d i t i o n t o t h i s ,
t h e f a c t i s ta k e n i n t o c o n s i d e r a t i o n t h a t t h e amendment t o o k aw&y
fr o ® t h e F e d e r a l r e s e r v e b a n k s t h e p ow er o f d e c l i n i n g t o p a r t i c i p a t e
i n o p en m a r k e t o p e r a t io n ® reco a m en d ed b y t h e F e d e r a l Open M arket
C o m m ittee and i n s t e a d made t h e d e c i s i o n s o f t h e c o m m itte e b in d in g
upon t h e b a n k s , i t b eco m es e s p e c i a l l y s i g n i f i c a n t t h a t t h e member©
o f t h e c o w a i t t e e t o b e s e l e c t e d by t h e b a n k s a r e r e f e r r e d t o i n
t h e am endm ent m
# r e p r e © e n t& t iv e s o f t h e F e d e r a l r e s e r v e b a n k s " .
T he B oard t h e r e f o r e b e l i e v e s t h a t i t
is
c l e a r t h a t t h e C o n g r e ss i n
te n d e d t h a t t h e s e m em bers s h o u ld b e p e r s o n s i n p o s i t i o n
a d e q u a t e l y t h e v ie w s o f t h e F e d e r a l r e s e r v e b a n k s and t o
to p resen t
s p e a k au
t h o r i t a t i v e l y f o r th e m .
A s id e from t h e s e c o n s id e r a t io n ® i t i s e v i d e n t t h a t an y
p e r s o n h a v in g o t h e r w i s e s a t i s f a c t o r y i n d i v i d u a l q u a l i f i c a t i o n s who
m ig h t b e s e l e c t e d from o u t s i d e t h e o f f i c i a l p e r s o n n e l o f t h e Fed
e r a l r e s e r v e b a n k s m ould a lm o s t c e r t a i n l y h a v e o r r e p r e s e n t i n t e r
e sts
of
a b u s i n e s s o r i n v e s t m e n t c h a r a c t e r w h ich m ig h t a f f e c t h i s
Reproduced from the Unclassified I Declassified Holdings of the National Archives
'/•/X
Hr* I . i * Stevens « (5 )
action a s a member of the committee*
by
Even though not in flu enced
hie personal interests, their e x ig e n c e m m a t affect the public
interpretation o f the actions of the Federal Open Market Committee
in which he participated.
Moreover, he could not be in tim ately
acquainted with the affaire of the member bank® and the fe d e r a l
re se rv e
phases
banks, the fin a n c ia l p o lic ie s o f the Government, and other
of monetary matters to the extent that would be desirable
and ae fully as would be possible In the case of r epr e s©nt&tives
who served only the Federal reserve banks, .Although he would have
a vote, h ie co n tribu tion to the deliberations o f the committee
would
be more likely that of a consultant or adviser called in a t
the meetings than that o f a true spokesman fo r the F ed eral reserve
banks*
Wi
it e ra tio n s i n m ind and oth ers that may b e -
com© apparen
r study o f t h e matter i t i s
i t w i l l be e
be P resid en t o f a F ederal re s «fv © bank i s
the lo g i c a l person fo r M lifc ^ o n by the board. o f d ire c to rs as the
o f h i s d i s t r i c t and the views o f h is d ir e c t o r s .
His i»te r*$ t$ ^
w ill- *>« those o f the fe d e r a l re se rv e @yst*M, and by v ir tu e o f the
he U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
H r , X» § *
S W tw t*
*
(4 }
>#ltle» bo will oeeugy l*o will bo in poeition to b*
©iirraatly of tli# faota that *111 antar lato^MSldalibara-
o«*o of in© Fadar&l rpotfrr^baaka tha Fratldaat of aaoh ba»k Bight
I t
la apparent that tha situation alao
tlaa of an appropriate aathod by nfelch tlia dlraotora of tit btalt
m^T ooetact oaoh othor and datarolaa tholr i«l»«tlon»
In
& mutually
aatlaf&ctory m m m m t m i It aaaoa to tha Board that thl* night ba
aooaapllahad by ^alJ*iiiary aaatings batwaan ooaftlttaaa
tor# of tho
«ho
o f
o f
tha fall board
oaeti fodoral roaorva bank conearnad.
tha Board will bo glad
to
bo adviaad a*
to
tho dlraotora af your- bank
fary truly youre,
UMNwHT SOFrXJuLf
Sacrat&ry*
Cl yd
dirao-
ba autborlaad to fonulata prooadura
nalte# fnoii— an<i»it.>m> for tlw oonaldaar&tloii
of dlrastora
o f
the riawa
o f
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rch ive s
i'o rm .N o . 131
FEDERAL RESERVE
BOARD
O
f f i c e
C
o r r e s p o n d e n c e
T o____
G o v ern o r E c c l e s .
F r n m
Mr. Szym czak
D ate
D ecem ber 1 7 , 1 9 5 5 .__
Subject:
16—852
I sp o k e t o G o v ern o r G eery o f t h e M in n e a p o lis b a n k , t o G overn or H a m ilto n
o f t h e K ansas C i t y b a n k , and t o G o v ern o r C a lk in s o f t h e San F r a n c i s c o bank
w it h r e f e r e n c e t o t h e m eth od t h e y a r e t o a d o p t i n t h e c h o i c e o f a r e p r e s e n t a
t i v e o f t h o s e t h r e e b a n k s on t h e Open M ark et C o m m itte e .
A fte r c o n s id e r a b le
d i s c u s s i o n w it h e a c h , I s u g g e s t e d t h a t p e r h a p s a c h o i c e o f t h r e e d i r e c t o r s ,
t o b e a p p o in t e d b y e a c h b o a r d , m ig h t m e et a t a c e n t r a l p o i n t - su c h a s
D en v er - and d i s c u s s f u l l y
t h e m ethod o f a p p o in tm e n t and h a v e su ch m ethod
a p p r o v ed by t h e i r b o a r d s a t t h e i r f o l l o w i n g m e e t i n g s .
T hey seem ed t o a g r e e
t o t h i s p r o p o s a l , and a d v is e d me t h a t t h e y w ould c o n t a c t e a c h o t h e r a t o n c e
u p o n some su ch b a s i s .
I a l s o sp o k e t o G o v ern o r M cK inney o f D a l l a s and t o G overn or N ew ton o f
A t l a n t a a b o u t t h e c h o i c e o f a r e p r e s e n t a t i v e f o r t h e D a l l a s , A t l a n t a and
Richm ond b a n k s , and made t h e same s u g g e s t i o n t o th e m .
T hey p r o m ise d t o
d i s c u s s th e m a t te r w it h e a c h o t h e r and w it h G o v ern o r S e a y o f t h e R ichm ond
bank some tim e d u r in g t h e i r s t a y i n W a sh in g to n f o r t h e Open M arket C om m ittee
m e e t in g on t h e 1 7 t h .
P .S .
F o r y o u r i n f o r m a t i o n , C hairm an P e y t o n o f t h e M in n e a p o lis bank show ed a
p r e f e r e n c e f o r San F r a n c i s c o t o b e r e p r e s e n t e d on th e Open M arket Com
m i t t e e , w h i l e G o v ern o r H a m ilto n o f K an sas C i t y show ed p r e f e r e n c e f o r a
b a n k er o u t s i d e t h e F e d e r a l r e s e r v e b an k s - p r e f e r a b l y from M in n e a p o lis .
G o v ern or N ew ton o f A t l a n t a sh ow ed p r e f e r e n c e f o r G overn or M cK inney o f
th e D a lla s bank.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ldings o f the N a tional A rchives
FEDERAL RESERVE BANK OF CHICAGO
230
S O U T H
LA
S A L L E
S T R E E T
D ecem ber 1 6 , 1
OFFICE OF THE
CHAIRMAN OF THE BOARD AND
FEDERAL RESERVE AGENT
H on. M a r r in e r S . E c c l e s
C h airm an , B oard o f G o v ern o rs
o f t h e F e d e r a l R e s e r v e S y ste m
W a s h in g to n , D . C.
D ear Mr. E c c l e s :
F o r y o u r i n f o r m a t io n , I am q u o t in g from a l e t t e r r e c e i v e d
to d a y from t h e S t . L o u is C l e a r in g H ouse A s s o c i a t i o n :
WHEREAS,
a member o f t h e
j o i n t a c t io n o f
and t h e F e d e r a l
The B a n k in g A c t o f 1 9 5 5 p r o v i d e s t h a t
Open M ark et C om m ittee b e s e l e c t e d b y
t h e F e d e r a l R e s e r v e Bank o f C h ic a g o
R e s e r v e Bank o f S t . L o u is and
’’VillEREAS, The f i n a n c i a l i n t e r e s t s o f a l l t h e
p e o p le w i l l b e b e s t s e r v e d i f t h e m em b ersh ip o f t h e
Open M ark et C om m ittee i s com posed o f a b l e men from
b u s i n e s s a s w e l l a s b a n k in g , t h e r e f o r e
"BE IT RESOLVED, The S t . L o u is C l e a r in g H ouse A s s o
c i a t i o n recom m ends t o t h e F e d e r a l R e s e r v e Bank o f C h ic a g o
and t h e F e d e r a l R e s e r v e Bank o f S t . L o u is t h a t t h e y s e l e c t
a s t h e i r member o f t h e Open M arket C om m ittee a man o f
w id e e x p e r ie n c e i n b u s i n e s s and f i n a n c i a l a f f a i r s who i s
n o t an o f f i c e r o f e i t h e r b a n k .”
I h a v e r e p l i e d t o t h i s l e t t e r m e r e ly s t a t i n g t h a t t h e i r
r e s o l u t i o n w o u ld b e p r e s e n t e d f o r t h j ^ f e n s i d e r a t i o n o f o u r b o a r d o f
d i r e c t o r s i n due c o u r s e .
w m m m s m m m m m m m m m s s m m m m m m rn m
' ^ ^ p a i M f r B m h W r i & M t g a ’f W M S t l t l ' o l d i F i g ^ o f th e N a tional A rchives*
^
Fe
W
W
d e r a l
R
e s e r v e
B
^
a n k
OF
S
t
. L
o u i s
D ecem ber 1 6 , 1 9 3 5 .
M r. Win, McC. M a r t in ,
c / o B oard o f G o v ern o rs o f
t h e F e d e r a l R e s e r v e S y s te m ,
W a s h in g to n , D . C.
D ear G overn or M a r tin :
I e n c lo s e cop y o f a l e t t e r r e c e iv e d
t h i s m o r n in g a d d r e s s e d t o y o u . A s i m i l a r l e t t e r
w as r e c e i v e d b y Mr. W ood, who p la n s t o b r in g i t
t o t h e a t t e n t i o n o f ou r B oard a t t h e m e e t in g
W ed n esd ay.
Y ou rs s i n c e r e l y ,
0Af . 'A tteb ery /,
D e p u ty G o v e r n o r .
P, A,>.
w m m m s m m m m m m m m m s s m m m m m m rn m
'^ ^ p a iM f r B m h W r i& M t g a ’fW M S tltl'o ld iF ig ^ o f the National Archives-
Fe d e r a l R e s e r v e Ba n k
OF
S t. L o u i s
December 1 6 , 1 9 3 5 .
Mr, Win, McC. M a rtin ,
c /o Board o f Governors o f
th e F e d e ra l R eserve System ,
W ashington, D. C.
Dear Governor M artin :
I e n clo se copy o f a l e t t e r r e c e iv e d
t h i s morning addressed to you . A s im ila r l e t t e r
was re c e iv e d by Mr. Wood, who p lan s t o b rin g i t
to th e a t te n t i o n o f our Board a t th e m eeting
Wednesday.
Yours s i n c e r e l y ,
0 A f . 'Attebery/,
Deputy G overnor.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ST. LOUIS CLEARING HOUSE ASSOCIATION
S t . L o u is , Mo.
Dec. 1 3 , 1 9 3 5 .
Mr. Wm. McC. M a rtin , G overnor,
F ed eral R eserve Bank,
St* L o u is , Mo.
Dear Mr. McC. M artins
The members o f t h i s A s s o c ia tio n , a t a r e c e n t
m e e tin g , adopted th e fo llo w in g re s o lu tio n s
WHEREAS, The Banking A ct o f 1935 p ro v id es
t h a t a member o f th e Open Market Committee be s e le c te d
by j o i n t a c ti o n o f th e F ed e ra l R eserve Bank o f Chicago
and th e F e d e ra l R eserve Bank o f S t . Lou is and
WHEREAS, The f in a n c ia l i n t e r e s t s o f a l l th e
people w i l l be b e s t served i f th e membership o f th e
Open Market Committee i s composed o f a b le men from
b u sin e ss as w ell as banking, th e r e f o r e
BE IT RESOLVED, The S t . L ou is C learin g
House A s s o c ia tio n recommends to th e F e d e ra l Reserve
Bank o f Chicago and th e F ed e ra l R eserve Bank o f
S t . Louis t h a t th ey s e l e c t as t h e i r member o f th e
Open Market Committee a man o f wide e x p e rie n ce
in b u sin ess and f in a n c ia l a f f a i r s who i s n o t an
o f f i c e r o f e i t h e r bank.
Yours v e ry t r u l y ,
(Signed) R. R. T i l l a y , Manager.
COPY
Reproduced from the Unclassified I Declassified Holdings of the National Archives
S t . L o u is C le a r in g Ho u s e A s s o c ia t io n
, y\
ST. L O U IS, M O .
O FFICE OF THE
MANAGER
FOR C1RCUI
Dec. 1 3 , 1935
Mr..
Mr, Milter..
Mr ."'Geo. J . S c h a l le r , Governor
F e d e ra l Reserve Bank
C h icago, 1 1 1 .
\ht. jam']::- . K . . ,
M;
i'hOtTOfc
Dear Mr. S c h a l le r :
P to *
-mb
The members of t h i s A s s o c ia tio n , a t a r e c e n t m eetin g,
’M. CMC*
and Mttga &
Mr Carpenter
adopted the fo llo w in g r e s o l u t i o n :
A
,
i /' <
f/
WHEREAS, The Banking A ct o f 1935 p ro v id e s t h a t
a member o f th e Open Market Committee be s e le c t e d by
j o in t a c ti o n o f th e F e d e ra l R eserve Bank o f Chicago
and the F e d e ra l Reserve Bank o f S t . L ou is and
WHEREAS, The f i n a n c i a l i n t e r e s t s o f a l l th e
people w il l be b e s t served i f th e membership o f the
Open Market Committee i s comijosed o f ab le men from
b u sin ess a s w ell a s banking, th e r e f o r e
BE IT RESOLVED, The S t . L o u is C le a rin g House As-,
a o c ia tio n recommends t o th e F e d e ra l R eserve Bank of
Chicago and th e F ed e ra l R eserve Bank o f S t . L ou is th a t
they s e l e c t a s t h e i r member of th e Open Market' Committee
a man o f wide e x p e rie n ce in b u sin ess and f i n a n c ia l a f
f a i r s who i s n o t an o f f i c e r o f e i th e r batk#
Yours very t r u l y ,
(7.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o rm . N o . 131
Office Cofrespquuei^e
FEDERAL RESERVE
BOARD
Feb ru ary 8 , 1955,
Subject:
3 S J
v£L.
>■*
^Advice has been re c e iv e d o f th e s e l e c t i o n by th e board s
o f d i r e c t o r s o f th e r e s p e c ti v e F e d e r a l r e s e r v e banks o f th e f o l
lowing members o f th e F e d e ra l Open Market Committee f o r th e y e a r
J1 9 3 5 i
D is tric t
Mr. Hamlin.
Mr. Miller.
Mr. Jimes ..
No. 1
Mr. Thomas
Mr. Szymczak
Mr.
Mr.
No. 2
Name and T i t l e
R . A. Young, Governor
♦Deputy Governor
G. L . H a rris o n , Governor
-•
Mr. Morn!!,
No. 5
-
Mr. Beihea...
Mr. Carper
/
No. 4
Mr. Noell.
Mr.
Mr.
Mr.
G. W. N o r r i s , Governor
*Deputy Governor
M. J . Flem in g , Governor
No. 5
G. J . S eay , Governor
^ S en ior Deputy Governor
6
O scar Newton, Governor
Mr.
No.
’lease no*o — etoex
nd rebrii *a
,r.
—
No. 7
•-' /
No.
8
G. J . S c h a l l e r , Governor
*H . P . P r e s to n , Deputy Governor
W. McC. M a rtin , Governor
No. 9
W. B . G eery, Governor
No. 10
G. H. H am ilton, Governor
No. 11
B . A. McKinney, Governor
No. 12
* A lte r n a te
J . U. *C alk in s, Governor
^ S en ior Deputy Governor
16— 852
4■
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*
*
*
*
*
R. A. Young
Boston
New York
G. H. H arriso n
P h ila d e lp h i
Governor o r a deputy gove
C leveland
Ii. fmrciibr
Richmond
G. J . Seay
( s e n io r deputy governor in h is absence)
A tla n ta
O scar Newton
George J . S c h a lle r
Chicago
*
*
*
*
Wm. McG. M artin
G. H. Hamilton
W. B . Geery
B . A. McKinney
S t* L ou is
Kansas C ity :
M inneapolis
D allas
m
Reproduced from the Unclassified I Declassified Holdings of the National Archives
4%nu Nor 181
X
'' ■"
HDffice, Corresp„riuei.
FEDERAL RESERVE
BOARD
RESERVE BOARD FILE
r )a te
S u b je c t:...
Reserv e Board
f
^ r i l 27, 1934.
— 1$—**2— / -------- y ---------
M o r r ill
w
W
*
a p0
r.zn
rcR
.....
Qov. B!?.ok
Advice has now been re c e iv e d o f th e s e l e c t i o n by th e boards
M
r, H
rn-i . j - , ..................
©£•d i r e c t o r s o f th e r e s p e c ti v e F e d e r a l r e s e r v e banks o f th e f o llo w Mr. Jam ': 3
• ing members o f th e F e d e r a l Open Market C o m n i t t e e f o r t h e y e a r 1 9 5 4 ;
I5r. Thon
Mr, Szyrv
Nhrr-Wrr'T’-
Mr f-’i
,
Mr. r'c
x/ / 7
Mr. Beti ;--. v / ✓
D is tric t
No.
1.
No.
2.
Name and T i t l e
E . A. Young, Governor
■^Deputy Governor
Mr. Ca
Mr. S:r
V
Mi.
.
Mr. No
Co .;
No. 3 .
M
h-W
yatr-- - •
PIC3S3 note
.•
artd jeturn io
Mfr-GaipgsUer
No. 4 .
No. 5 .
No.
6.
G. L . H a rris o n , Governor
G. W. N o r r is , Governor
^A cting Governor
E . R. F a n c h e r, Governor
G. J . S eay, Governor
*Departy Governor
W. S . Jo h n s, A ctin g Governor
No. 7 .
G. J . S c h a l l e r , Governor
8.
W. McC. M artin , Governor
No.
No. 9 .
W. B . Geery* Governor
No.
10 .
G. H. H am ilton, Governor
No.
11 .
B . A. McKinney, Governor
No.
12.
*
A lte rn a te •
J . U. C a lk in s , Governor
^ S en ior Deputy Governor
**"' 16— 86Tm“ m*'
Reproduced from the Unclassified / Declassified Holdings of the National Archives
orresiynae*_ce
a l Resarre Board
FEDERAL RESERVE
BOARD
,.p r il 27 p 1954,
Subject:.
M o r r ill
Advice has now bean received o f the s e le c tio n by the board*
o f d ire c to rs o f th e re s p e c tiv e F ed eral reserve banks o f the fo llo w
ing members o f the F ed eral Open M arket Committee fo r th e year 1954$
D is tric t
Haae and T lU a
No* 1*
R . A . Y otng, Governor
♦Deputy Governor
G. I*. H a rris o n , Governor
HO. 2*
G* W. N o rris | Governor
♦Acting Governor
Ho. 5 .
Ho. 4 .
1 . R.
G. J . Seay, Governor
♦Deputy Governor
No. 5 .
Ho.
Fancher# Governor
W. S . Johns, A cting Governor
6.
No, 7 .
G. J* S c h a lle r, Governor
No.
W. McC, Martin, Governor
8»
No, 9*
W. B . G eery, Governor
Ho.
10 .
G# H. H & iailton, Governor
Ho.
11
.
B. A. McKinney, Governor
No. 12*
J . 0 . C a lk in s , Governor
♦Senior Deputy Governor
♦ A lte rn a te .
E N U R E D IN
MtNUTES ON
SRC/acw
may
2 -1934
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE
n a eu c e
B0ARD
Pate lU rch 2 5 . 1 9 5 4 .
Subject:.
e po
A s e a rc h o f our f i l e s i n d i c a t e s t h a t th e fo llo w in g F e d e r a l r e s e r v e
banks have n o t ad v ised th e Board a s t o t h e i r r e s p e c ti v e s e le c t io n s o f members
o f th e F e d e ra l Open Market Committee f o r th e y e a r 1 9 5 4 :
v--
-
.-.— i .. ....... ....... ■■■■■ii™
F e d e r a l R eserve Bank
if?
P h i l a d e lp h ia ^ ^
S t . L o u is ' ^
?
Richmond ^ \
M inneapolis "
GTCTCsgo ?
.
Kansas C i t y 9
San F r a n c is c o ^
S h a ll I p rep are a l e t t e r t o each o f th e bank*s shown above r e q u e s t
ing th e d e s ire d in fo rm atio n ?
16— 85 2
@FedFRASER