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Minutes of actions taken by the Board of Governors of the 441, el' Reserve System on Thursday, August 26, 1948. The Board zet the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Szymczak, Chairman pro tem. Draper Vardnman Clayton Mr. Mr. Mr. Mr. Carpenter, Secretary Morrill, Special Adviser Thurston, Assistant to the Board Vest, General Counsel Mr. Q.. L'437mczak stated that he had asked that this meeting be hv to h re °Ilsider what, if any, action should be taken by the Board G si3ect to a. report on the Board of Governors prepared by eorge L. Bach for the committee on Independent Regulatory ' 1)1111111. . NorBs1°Ils Of the Hoover Commission. He said that copies of the kN:}11:14 been sent by Mr. Bowie, a member of the Committee, last ter 1014,a McCabe as Chairman of the Board and to Mr. Eccles with Of tr ansmittal dated August 17, 1948, and reading as fol- 1,14 °wen D. Young, Ex-Senator Robert M. thler;'e) Jr., and the writer have been named '4\re /1:cl:omission on Organization of the Execuealch of the Government as a Committee to l)reDar ' tOty 6e rePort for it on the Independent Regulac iesions. 13°rt. 011 , 4 cirder to provide a basis for its own re erallre— Committee has adopted the following probubA small staff is making a study of each thQ-L tia-elDendent Regulatory Commissions for , 1111ssio : 'lect' — to our Committee. These staff studies re()t the°k.,'IllonlYmtiht:evei.ews of their authors and not those 1.4_364 ( 8/26/48 -2Our.Committee is submitting these be"''.es to a few qualified people to obtain torlefit of their comments and criticisms in 01 a es ions sist . the Committee in reaching its own staff the order con- 3. From these staff studies, the comments on pare 'and other materials, our Committee will preits own report to the Commission. We are enclosing a copy of the staff report on : the toe 'ederal Reserve Board for your consideration. Let epeat that the report has not been considered by thero ' \ those0Mmittee and that the recommendations are solely of the author. yolir 'Clur Committee would greatly appreciate having Qoricicomments on this report and especially on its lillut11 , 41°Ils and recommendations. Because of the 13e 4 :'time for us to complete our report it will eessarY to ask you to send us your comments 1?ith, re,a- two weeks. While we realize this imposes a tioh -lirden, we will greatly appreciate your cooperatily These studies have not been published and are kre " 3r the use of our Committee. Accordingly, you ' a sked to treat the copy as confidential." h added that two copies of the report were received by hairta8 s office, one of which was sent to him in Maine and °ther N,e141t -tc)gether with an extra copy obtained from Mr. Bowie) 141,, in cir culation among the members of the Board who were "tzhihgtori on August 26, 1948, at the request of Chairman • It 1.418 understood that Mr. Eccles had expressed his 11111e rec ommendations contained in the report orally to e ttee • ' Mr. Sidney Mitchell, a member of the staff of the that these views were being written into a memoran- titially in the form in which Mr. Eccles had stated them to 1 -0 8/26/48 -314e4rs, Bowie and Mitchell. Mr. Szymczak stated that the question before the Board '4s whether, in view of the language of Mr. Bowie's letter to Chairman, the report could be considered as being before the Etra for comment and, if so, whether the Board should undertake t° e ent on the accuracy of the statements in the report or %ther it should confine its comments to the recommendations in the report. Mr. azcertait t° Szymczak said he called Mr. Bowie this morning to what his committee had in mind in sending the report Chairman and Mr. Eccles and Mr. Bowie responded that the co ittee would like to get whatever information it could from kN 1/14ividUa1 member of the Board and that he was interested in he there were any differences of opinion on the rec- e'%idations. Mr • t r b ti Szymczak inquired whether the members of the requested to study the report and make recommenda- to th Board or whether members of the Board would wish to kke 91. recommenda.tions and wait to express their views as a Board ' 1* 1(111 CO members until the matter came before the Congress 14eration. the discussion Mr. Clayton suggested that the Board ertaill the views of Chairman McCabe on the question , '126/118 ether the Bo„a the Chairmazi should undertake to express its views or whether expected to present his own views. Mr. Vardaman stated that if individual members of the Board to XPress s their individual views he would insist that the eI4s be presented also. The suggestion was made that, regardless of whether Mr. c°Mmittee expected comments from the Board or individual r4-er Of the Board, the Board should not forego the opportunity tec°111111ents on the recommendations contained in the report 're felt that that should be done. At the conclusion of the discus1-c)11, it was agreed unanimously that Mr. 'zYmczak should call Mr. Bowie and readditional copies of the report SO that one could be furnished to each Member of the Board and that he would also call Chairman McCabe and inquire whether he felt the Board should com! tit on the report or whether, since 8-PPeared that he and Mr. Eccles had ee1 asked to comment on the report, he would prefer to have it handled on the 8'sis of their submitting individual rePorts. In this connection the opinion as e xpressed that it would be unfortunate two individual reports were submitted which did not agree on important points. T 'ardaman stated that he would like to suggest that Of the_ Staff meet with Mr. Bach and discuss the report C -5His suggestion was agreed to and it understood that Messrs. Morrill, Thurston, Riefler, Carpenter, and Young would meet with Mr. Bach for that purpose. waS o the 1q0 question of whether the report was now officially the 116, .biat Board for comments it was the consensus that it was thatit had been sent to Messrs. McCabe and Eccles in- S tn etarY's Note: Following the meeting Mr. Szymczak J1.- sd. with Mr. Bowie, who subsequently sent two ad0;'10nal copies of the report to Mr. Szymczak for use mr the members of the Board. During the conversation O Bowie said that he had in mind getting comments binItthe report from as many individuals as he could 11°t necessarily from the Board as such. In rese to Mr. Szymczak's inquiry as to whether the c fr--ents would have to be submitted within two weeks st°14'° the date of his letter to Mr. McCabe, Mr. Bowie • El'ed. that the committee would like to get the camas promptly as possible and that it would be o_slrable if they could be submitted at least by ePtember 8. He also told Mr. Szymczak that if there ag2 three or four members of the Board who were in O' - snient in their conclusions with respect to one porT°re of the recommendations contained in the retoi-,v,that opinion would be helpful but that it would aiff,ue helpful if each member of the Board had a ths;erent opinion. Mr. Szymczak stated to Mr. Bowie cl; (n it would be very helpful if Mr. Bach could come the next week to discuss the report with members of al , staff and Mr. Bowie responded that that would be -ranged. 7 1 Mr. Szymczak also talked with Chairman McCabe , 4, th taecertained that while the latter had in mind rall It might be better to make no comment on the and had not felt that the Board as such comment, he had asked that the report be ated among the members of the Board so that they ey would know about it. He had felt that it 8/26/48 -6Would be a mistake for the Board to comment ,c)11 the report unless it went over it very care 1111Y and made a thorough analysis of it. It e understood during the conversation with Chairman McCabe that Mr. Szymczak would dis?Ilse with Mr. Riefler on Monday, August 30, 1948, the question whether the Board should comment on the report and if so what the 118:t1jre of that comment might be. n .k1/1 Mr• Car Penter stated that in accordance with the action Ett the --Meeting of the Board on August 24, 1948, he had talked the alth Mr, Peyton about the salary of $8,000 per annum proposed l'ectors of the Federal Reserve Bank of Minneapolis for Groth Els Assistant Vice President assigned to the Helena Branch thEtt 141% Peyton's response had been substantially as follows: ltvery s trongly that the arrangement as it had been proposed tr the 13°41Nd.of v/oriteci %140 Governors was a very desirable solution that had after a long series of negotiations to find the man '4°11/4 be satisfactory to all concerned and who would be able lleceea Mr• Towle as Manager upon his retirement (Mr. Towle is 6° Y'ee'rs 0f age) l'Ette or $8,000 ellt, that .f 1 He also felt that the salary for Mr. Groth per annum was an essential part of that ar- the Board did not approve the salary it would e•Irlist Netivenese Which would seriously hamper if not destroy the Of the arrangement, that the action of the Board 1.4h1 e the morale of the officers of the Bank and Mr. Pey111 te'llcling with questioning them, and that it amounted to V26/48 -7the ,ikiagment of Mr. Peyton and the directors of the head office 411d. 'of' the lielena Branch who had approved it. Mr. the toard tel) in Carpenter also said that he stated to Mr. Peyton that was satisfied with the arrangement and felt that it was the right direction but that it could not see, and had beerl given a satisfactory explanation as to why, a salary at 'th. rate Of $8,000 Was an essential part of the arrangement, and ht 14 any event, the matter could be reviewed in April of next corzlection with the annual review of salaries of other °1'rlers of the Ne Bank, at which time, if Mr. Groth had lived up to the cteA10h.s, an increase in his salary could be recommended by ofd irectors. kr. Peyton felt, . Mr • Carpenter said, that he would not iriedin asking Mr. Grath to wait that long for an increase 4'c4 841-6eY to $8,000 and he asked that the Board consider as a Iralse 4 salary at the rate of $7,000 per annum until January with an agreement on the part of the Board at this time °11qcler in late December or early January an increase to $8,000 14111-1x11, effective January 1, 1949. The Members of the Board were unanimously of the opinion A4:4"°41.c1 could not at this time commit itself to take favorti°4 °4 an increase at the end of the year. 1)0: While the pro- 1(1 -133r Mr. Peyton was carefully weighed, it was the consensus A t 4/48 Or -8the members present that there was nothing new in the situation whicb, would justify the Board in changing its original position as ttEttea the letter approved by the Board on August 20, 1948. Accordingly, it was voted unani111°11slY to request the Secretary to tell m-. Peyton by telephone of the Board's conclusion and to mail the letter approved on August 20, .1948. At this point Mr. Vest withd_rew and the action stated with l'e4) et to ea_ en of the matters hereinafter set forth was taken by the toarci: 14illtites J. actions taken by the Board of Governors of the 1 Reserve System on August 24-, 1948, were approved unanimously. 41,, 1411111tes of actions taken by the Board of Governors of the Reser_ 4t v System on August 25, 1948, were approved and the recorded therein were ratified unanimously. bite 14e111°I'anclum. dated August 24, 1948, from Mr. Young, Associate thatetc* (311 the Division of Research and Statistics, recommending reeirlation of Mr. Robert W. Bean, an economist in that t 11' be accepted to be effective, in accordance with his re, the close of business on August 25, 1948, and that a lump l'Iculd be made for annual leave remaining to his credit that Clete. Approved unanimously. 8/26/48 -9Letter to Mr. Volberg, Vice President of the Federal Rean Francisco, reading as follows: "14 1111' lett.accordance with the request contained in -,er of August 18, 1948, the Board approves 804. 8*PP°intment of LeRoy Larsen as an assistant exor the Federal Reserve Bank of San Francisco. Approved unanimously. Letter to Mr. John T. Tabor, The Seven-Up Company, 1316 o -evard, St. Louis 3, Missouri, reading as follows: 1, 48 "This is in answer to your letter of August 20, tla,ti ' e ill which you inquire, in effect, whether auto: 1,7flaing machines which cool as well as dispense sett d provi J-tiks would constitute listed articles under the )1-1s of Regulation W, as announced on August 20. 1141ts 'Juch machines, which are essentially vending 'nuld , not be considered 'refrigerators, mechan(in'-,. less bad than 12 cubic feet rated storage capacity /1St lng food freezers)' and therefore would not be ecl arti• cles under the provisions of the regulation." Approved unanimously. co 14°111°1'8'1411m dated August 26, 1948, from Mr. Hooff, Assistant el, r h th eccirnMending that there be published in the law department r ecle 1‘4111 Reserve Bulletin statements in the form attached to ttettoraz. 4114 'with respect to the following subjects: Legislation Consumer Credit and Bank Reserves State Bank Membership Amendment to Regulation H Consumer Instalment Credit Regulation W t ti -10Criminal Code Amendments to Federal Reserve Act Foreign Funds Control Treasury Department Release Approved unanimously. C27 13prov,,,, Secretary.
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