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Minutes for To: Members of the Board From: Office of the Secretary April 26, 1956. Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement set of with respect to any of the entries in this red to ns requi actio y polic of minutes in the record the al of 10 Feder on secti to be maintained pursuant Reserve Act. Should you have any question with regard d if you will to the minutes, it will be appreciate wise, if you Other e. Offic advise the Secretary's al in coliniti e pleas were present at the meeting, ve the minutes. appro you umn A below to indicate that n B in colum al initi e If you were not present, pleas es. the minut seen have below to indicate that you Chin. Martin Gov. Szymczak Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Minutes of actions taken by the Board of Governors of the Federal Reserve System on Thursday, April 26, 1956. The Board met in the Board Room at 9:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Balderston, Vice Chairman Szymczak Vardaman Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Assistant Secretary Kenyon, Assistant Secretary Thomas, Economic Adviser to the Board Leonard, Director, Division of Bank Operations Vest, General Counsel Young, Director, Division of Research and Statistics Johnson, Controller, and Director, Division of Personnel Administration Horbett, Associate Director, Division or Bank Operations Noyes, Adviser, Division of Research and Statistics Sprecher, Assistant Director, Division of Personnel Administration Cherry, Legislative Counsel Eckert, Chief, Banking Section, Division of Research and Statistics There had been circulated to the members of the Board a memofrom the Division of Personnel Administration dated April 20, 1956, recommending favorably on a request from the Federal Reserve Bank 22, 1956, of proposed increases of Cleveland for approval, effective April in the employees' salary structures applicable to the head office and the Cincinnati Branch. Under this proposal, which was made on the basis 839 -2- 4/26/56 of surveys conducted recently in the head office and branch cities of the Cleveland District, no change would be made in the salary structure for the Pittsburgh Branch at the present time. However, it was felt by the Bank that new contracts anticipated in the steel industry this summer might have some impact on wages in the Pittsburgh area; and, if a considerable upward movement in the market should result, the Bank expected to make another proposal later in the year with respect to the Pittsburgh Branch salary structure. The effect of the current request would be to have a single structure applicable to both branches, since the difference between the markets in those cities was found to be only about two per cent. Following comments by Mr. Sprecher, unanimous approval was given to a letter to Mr. Fulton, President of the Federal Reserve Bank of Cleveland, reading as follows: In accordance with the request outlined in your letter of April 13, 1956, the Board of Governors approves the following minimum and maximum salaries for the respective grades of the salary structures applicable to the Federal Reserve Bank of Cleveland and its Cincinnati Branch. It is understood that the structure applicable to the Pittsburgh Branch remains unchanged. This approval is effective April 22, 1956. Grade Cleveland Minimum Salary Maximum Salary 1 2 3 5 6 $2080 2314 2496 2704 3016 3250 $2704 2938 3276 3640 3952 4342 Cincinnati Minimum Salary Maximum Salary $2080 2158 2340 2522 2782 3042 $2574 2782 3120 3458 3718 3978 S40 -3- 4/26/56 Grade Cleveland Minimum Salary Maximum Salary Cincinnati Minimum Salary Maximum Salary 7 8 9 10 11 40510 3848 4108 4472 4810 44758 5096 5512 5876 6370 40328 3640 4030 4394 4732 $4420 4888 5278 5798 6292 12 5226 6942 5226 6942 13 14 15 16 5772 6422 7228 8086 7644 8606 9724 11050 5772 6422 7228 8086 7644 8606 9724 11050 The Board approves the payment of salaries to the employees other than officers within the limits specified for the grades in which the positions of the respective employees are classified. It is assumed that all employees whose salaries are below the minimums of their grades as a result of these structure adjustments will be brought within the appropriate range as soon as practicable and not later than August 1, 1956. The Board notes that salary adjustments resulting from these increased structures are not expected to exceed the funds provided in the 1956 budget of your Bank. Messrs. Johnson and Sprecher then withdrew from the meeting. Consideration was given to a memorandum from the Division of Bank Operations dated April 25, 1956, which had been circulated to the Members of the Board, reporting that net earnings after dividends of the Federal Reserve Banks for the first quarter of 1956 amounted to $98,162,845. The memorandum recommended that the Board establish the rates of interest Om Federal Reserve notes indicated in an attached computation in order that the Reserve Banks might pay to the Treasury approximately 90 per cent of their net earnings for the first quarter. 841 -4- 4/26/56 Following a brief discussion, the recommendation was approved unanimously, with the understanding that telegrams would be sent to the respective Federal Reserve Banks stating that the Board had established under authority of the fourth paragraph of section 16 of the Federal Reserve Act the rate of (see column 1) per cent per annum interest for the first three months of 1956 on (see column 2) daily average of outstanding Federal Reserve notes of the Bank in excess of gold certificates pledged with the Federal Reserve Agent as collateral, and that an interest payment of (see column 3) should be credited to the appropriate symbol of the Treasurer's General Account on April 27, 1956: (1) Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 1.75981 2.83819 1.89118 1.99475 1.59646 1.86970 2.28498 1.59144 1.92033 1.92098 2.95732 3.04627 (2) (3) 1,210,443,194 906,748,326 :$4,394,050.74 23,893,112.61 5,442,773.85 7,390,186.88 4,817,824.57 4,226,756.39 2,854,226,774 16,259,957.52 $1,001,499,549 3,376,624,261 1,154,353,690 1,485,998,664 823,414,438 3,267,061.24 424,812,542 2,033,863.14 78.3,298,293 3,751,444.72 453,633,702 3,344,661.42 1,254,149,959 9,525,030.82 There had been circulated to the members of the Board a draft ' c r proposed letter for the signature of Chairman Martin to The Honorable Percival Brundage, Director, Bureau of the Budget, reading as follows: This letter is in response to yours of April 16, 1956, in which you state that, in order to expedite clearances of requests from Committees of Congress for reports on pending bills, the Bureau of the Budget is instituting a review of all pending legislative cases. Attached to your letter was 842 4/26/56 -5- a list of three bills (S. 2290, S. 2533, S. 2537) on which the views of the Board have not yet been received, and you request that these cases be reviewed and that reports be provided wherever possible. S. 2290 would authorize national banks to underwrite and deal in revenue securities issued by State and local governments. S. 2533 would require that the rate of interest payable by agencies of the Government on loans and advances from the Treasury be not less than the going rate of interest paid by the Treasury on its obligations of comparable maturities. S. 2537 would require any Federal agency engaged in lending or incomeproducing activities which are financed by money borrowed from the Treasury to surrender any interest-bearing obligations held by it to the Treasury for exchange for non-interestbearing obligations. It has been the practice of the Board of Governors for a number of years not to prepare a report on a bill unless it appeared that the bill would be given active consideration in the current session of Congress. The Board keeps in close touch with the status of all bills in which it has an interest so that whenever it appears that a bill on which the Board has a request will be taken up a report can be prepared promptly. As you know, routine requests are sent by some of the Committees of Congress for reports on bills which are never taken up by the Congressional Committees and a considerable amount of time is saved if reports are prepared only on the bills which are given active consideration. This arand the Board rangement has worked very well over the years would prefer to continue it. In the period since routine requests were received for reports on the three bills referred to in your letter, the Board has kept in touch with their status and it does not appear that they will be considered by the Senate Banking and Currency ComTherefore, in accordmittee at this session of the Congress. ance with the Board's established practice, it would prefer to defer the preparation of reports on the bills until there is some indication that they will come actively before the Committee. Following a discussion of the Board's present policy with regard to making reports on bills, from S43 -6- 4/26/56 which it developed that the members of the Board favored continuing the policy, the letter was approved unanimously. At this point Chairman Martin joined the meeting. At this Point, also, Mr. Cherry withdrew. Governor Robertson referred to the defense planning matter discussed by the Board on April 20, 1956, and stated his understanding of the actions agreed upon by the Board at that time. There being agreement with Governor Robertson's statement of the actions Which had been agreed upon, it was understood that appropriate steps would be taken in accordance therewith. At the request of the Board, Mr. Thomas presented a draft of memorandum which he had prepared regarding the papers on member bank reserve requirements submitted by the Economic Policy Commission of the American Bankers Association as the basis for discussion of the Commission's recommendations with the Board at a meeting to be held next Tuesday, May 1. Mr. Thomas's memorandum characterized the Commission's review and analysis of the problem as thorough and well prepared. After summarizing the Commission's proposal for changes in the present system of reserve requirements and stating that the proposed program appeared to be rational and feasible, the memorandum discussed a number of questions which might be raised with regard to the details of the proposal. 841 4/26/56 -7It was understood that copies of a revised draft of Mr. Thomas's memorandum would be distributed to the members of the Board for further study. Mr. Horbett then commented briefly on certain administrative Problems which might be involved under a program such as proposed by the Economic Policy Commission. At Governor Vardaman's suggestion, it was understood that Mr. Horbett's comments would be incorporated in the material to be sent to the members of the Board regarding this subject. There was agreement with a statement by Chairman Martin that the meeting on May 1 would be purely of an exploratory nature and that the Board would not express any definite opinions on the Commission's Proposal at that time. All of the members of the staff except Mr. Sherman then withdrew from the meeting and Mr. Johnson was called back to the room. There was a discussion of the following draft of letter to Mr. Maxwell Abbell, Chairman of the President's Committee on Government EmPloyment Policy, which had been circulated to the members of the Board: This is in reply to your Memorandum No. 6 dated January 20, 1956, requesting that a survey of Negro employees be made as of March 31, 1956. As you know, the Board of Governors does not maintain any records indicating the racial origin of its employees. However, in accordance with the instruction sheet attached to your memorandum, a survey of the employees of the Board of Governors has been completed, and the tabulation based on a visual check, as you suggested, is furnished herewith. 845 -8- 4/26/56 Because positions in the Board's organization are not subject to the Classification Act it is not possible to list the positions by GS grades, but the job titles shown wil3 indicate their nature. If there are any questions about the information contained in this report, please let us know. Following the discussion, the letter was approved unanimously. The meeting then adjourned. Secretary's Note: In accordance with the recommendation contained in a memorandum dated April 23, 1956, from Mr. Bethea, Director, Division of Administrative Services, Governor Balderston today approved on behalf of the Board additional leave without pay through December 31, 1956, for LaRue S. Stahler, Operator, Key Punch, in that Division, effective at the expiration of her present advance of leave without pay. Assistant Secretary
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