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o.
•••
I.(t)t)
A
meeting of the Board of Governors of the Federal Reserve Sys-
tealwas held
in Washington on Friday, December 1, 1944, at 10:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Ir.
Eccles, Chairman
Ransom, Vice Chairman
Szymczak
McKee
Draper
Evans
Mr. Morrill, Secretary
Mr. Carpenter, Assistant Secretary
Mr. Hammond, Assistant Secretary
Mr. Clayton, Assistant to the Chairman
Mr. Thurston, Special Assistant to the
Chairman
Mr. Goldenweiser, Director of the Division of Research and Statistics
Mr. Paulger, Director of the Division
of Examinations
Mr. Dreibelbis, General Attorney
Mr. Leonard, Director of the Division
of Personnel Administration
Mr. Vest, Assistant General Attorney
Mr. Thomas, Assistant Director of the
Division of Research and Statistics
Mr. Gardner, Chief, International Section, Division of Research and Statistics
There were presented telegrams to Messrs. Treiber, McCreedy, and
e' S• ecretaries of the Federal Reserve Banks of New York, Philadelphia,
cleveland,
respectively, Mr. Dillard, Vice President of the Federal
gatik e B• atik of Chicago, Mr. Stewart, Secretary of the Federal Reserve
ICarla or St. 141-l1s, Mr. Caldwell, Chairman of the Federal Reserve Bank of
ettY
'14r. Gilbert, President of the Federal Reserve Bank of Dallas,
441 2 ar• hart, Vice President of the Federal Reserve Bank of San
e()I
tatine that the Board approved the establishment without
1
12/1/44
—2—
char/6e by the Federal
Reserve Banks of St. Louis and San Francisco on
troy
,
'
"1 er 28, the
Federal Reserve Banks of New York, Philadelphia,
Cleve).
and, Chicago, and
Kansas City on November 30, 1944, and the Fed—
eral
serve Bank of Dallas today, of the rates of discount and pur—
chase —
ln
their existing schedules.
Approved unanimously.
There were
distributed among the members of the Board copies
("r a dof
memorandum prepared in connection with the recent acquisi—
ti°11 of the c
ontrolling stock interest of the Pan American Trust Company
O
NeW
qated
arid
York, New
York, by the central bank of -%fexico.
that
Messrs. Rounds, First Vice President, Knoke, Vice President,
Tiebout,
lielvYork,
Mr. Szymczak
Assistant General Counsel, of the Federal Reserve Bank of
came to
Washington this week and participated in drafting a
1414'11811th-1ra which
had been prepared for use as a basis of discussion of
'411at if any,
action should be taken through the State Department or
(Itilellwi8e with
respect to the matter. The memorandum suggested, for the
re4804s
set
forth therein, that the matter be discussed with the State
41)azttlent to
dete •ne whether the Department would concur in represen—
ta40
118
being made
to the Bank
Mexico.
of
After a discussion, Mr. Draper moved
that the matter be referred to Messrs.
Szymczak and McKee with the understanding
that they would be authorized to present
the matter to the State Department in such
manner as appeared to them to be desirable,
that arrangements would be made to have a
representative of the Federal Reserve Bank
of New York attend such conference as might
1'765
12/1/44
-3be held with the State Department, and
that such changes as Messrs. Szymezak
and McKee would approve might be made
in the memorandum.
Mr. Draper's motion was put by the
chair and carried unanimously.
During the consideration of the above matter, Chairman Eccles
atatft.
t.Lthat last
week he talked over the telephone with Under Secretary
(4the
Treasury Bell
with respect to the adequacy of the provision in
MieSecond
War Powers Act authorizing the purchase by the Federal Reaerve 8anke
of Government securities directly from the Treasury, that
ckring the
conversation he informed Mr. Bell of the purchase by the
cettral bank
of Mexico of stock of the Pan American Trust Company, and
that th..
Bell agreed
that there should be legislation giving the Board
°t
Governors power
to require that foreign central banks and governments,
or' the
a
gencies or instrumentalit
ies thereof, carry all of their balin this
country with the Federal Reserve Banks. Mr. Bell also
etpre8aeci the
Opinion during the conversation that the purchase by the
NItral
bank of
tlexico of the stock of the member bank was unwise and
IllaPPropriate and
should not be permitted.
the
f
Chairman Eccles also said that Mr. Bell took the position that
411Litati
°n on the authority contained in the Second War Powers Act
,
ti,ea( ect Purchases by the Federal Reserve Banks of Government securiric3141 the Treasury should be removed, but that any suggested amend0
the
Second War Powers Act in its present form might result in
Its t .
alling to be
renewed at this session of Congress, and that, therefore,
4° ellch at,
-ggestions should be made.
12/v44
—4.Following the
discussion at the meeting of the Board on October
17, 1944, of
the suggestion made by Mr. McKee that the Board consider
t413°1icY to be pursued in the future with respect to the reappoint—
rilent of
Class C directors and the designation of Chairmen of Federal
lerlie Banks,
the Personnel Committee prepared a memorandum under date
q0ctober 26
141°114
(1)
19442 submitting drafts of legislative amendments which
authorize the separation of the offices of Chairman and Fed—
et.41 Reserve
Agent, and (2) limit the terms of Class A, B, and C
(11-rectors.
Copies of the memorandum had been sent to each member of the
kzrd
and c
ontained the suggestion that any member of the Board who had
1
,13r1D1'°13°8a s regarding (a) Board policy with respect to limitations of
Of Class
C directors or rotation in the office of Chairman, or
(b) 841encirilents
eld:lea
regarding separation of the offices of Chairman and Fed—
Reserve Agent
and limitation on the terms of Class A, B, and C
SUbniit
nlatter'at
them in written form for discussion of the whole
meeting of the full Board.
Copies of a memorandum prepared
:
1 14. Dra'Per under date of November 3, 1944, in accordance with this
8 .ggeation were sent
to the members of the Board before this meeting.
Mr. Ransom
stated that the Personnel Committee had prepared its
41%rellciurn of
October 26 as one possible solution of the problems dis—
Ntsed at
the
meeting on October 17, 1944, but that the committee would
tlq be
prepared to vote for such a solution.
The
sAggestion was made that the only real solution to the prob—
legi
slation in some form, but that inasmuch as legislation could
4)
/11
12/1/44
—5—
t be obtained
at this time the Board should continue the present poi—
as
°Iltlined in the statement published on page 881 of the September
1942 Bulletin
that the Board had concluded to dispense with any fixed
rIlle ato the
length of service of Class C directors and would be
gelernedbsy—
the situation at a particular Federal Reserve Bank, but
that the
Board would adhere generally to the policy of limiting the
ealn1ce of
Class C directors.
said that the Personnel Committee would prefer to
that procedure
and there was general concurrence in the sugges—
tollowRans°
m
ti°441ade by Mr. McKee that, as long as there was no limitation on the
leheth of time
that A and B directors could serve, the situation with
48Pect to the appointment
of Class C directors should be as elastic
4 13"Sib1e so
that the Board could retain the C directors who were do—
a good
job and replace those who, because of age or otherwise, were
hot as effective
as other appointees who might be available.
the
11.r. McKee
referred again to the possibility of some rotation in
designation of Class C directors as Chairman and Deputy Chairman of
Pederea,
Reserve Bank but it appeared to be the feeling of the other
kernbers
that, because of
the fact that in most cases the residence of
the NPutyChairman or the third Class C director would not be in the
Peri
4
Reserve Bank city, that might not be a practicable arrangement.
At
this point Mr. Paulger left the meeting.
Elara
There were
then distributed copies of a memorandum submitted by
Eccles and Szymczak in accordance with the action taken at the
e
12A/44
—6—
leeting of the
Board on November 21, 1944, and reading as follows:
"EOARD PROGRAM ON BRhTTON MODS
Board statement
"The Board will publish a brief statement supporting the Bretton Vioods agreements and indicating the
"2. special interest of the Federal Reserve System.
Federal Reserve Bank activities
"The Board will raise with the Federal Reserve
Banks, other than New York, the question of what they
can do to inform their banking community with regard
to the Bretton Woods plans, and offer to send people
from the
Board to meet with their officers, directors,
713. and key member bankers if that would help.
&I.Z.1211
. aa_112.glalLtic2n
. "The Board desires to have three provisions embodied in the enabling legislation.
nalltagency cammittw The legislation should
establish a committee composed
of the heads (or their
alternates)
of the State Department, the Treasury Department, and the Board of Governors of the Federal
l'ieserve System. It should be specified in the legislation that
Governors and Directors
On the Fund the United States
and Bank must keep the committee fully
_ 11.formed of developments in the two institutions and
that: they must consult the committee on all major
13,?lleY questions in connection with the Fund and Bank.
ne United States Governors and Directors should be
required to meet with the committee at least once a
Month and make a report.
"Form of United States subscription to Fund: A
Portion of the 2,750 million dollar United States
.
Ilbseron to the Fund may take the form of securiAles as provided in Art. III, Sec. 5 of the Fund
tigreement.
The legislation should provide that any
It37tion of the U.S. subscription which is not in
.e.,rat form
should be provided so far as possible from
;fle 2 billion dollars now in the U.S. Stabilization
,
und and that the remainder should come out of the
'egular revenues of the Government.
t.
"Under present legislation the U.S. Stabilizal°n Fund expires June 30, 1945. Its life should be
ejtended only until the United States subscription
International Monetary Fund becomes due, or
11 June 30, 1947, if the Fund agreement is not
:'lopted by this Government before that date. Upon
XPlration of the U.S. Stabilization Fund any of its
Z
_7_
"net resources which have not already been employed
in subscribing to the International Monetary Fund
should be earmarked for that purpose.
"Federal Reserve control of official forei
balances here: The enabling legislation should give
the Board of
Governors of the Federal Reserve System
Power to require the dollar balances of foreign
central banks and governments to be held on deposit
With the Federal Reserve Banks.
"Or, alternatively, the legislation should give
the Board
power to require these official balances to
be held on
deposit with the Federal Reserve or member banks and to require that the member banks hold
114. 2
_200 per cent reserves against such deposits.
tXag.edure on Board's proposals,
"The Chairman will invite Dean Acheson and his
financial advisor, Mr. Collado, to lunch with a few
Board people for the purpose of discussing the
Board's
proposals on the enabling legislation. This
c,Ilscussion may lead to some modification of our
ideas. The proposals will then be sent to the Presidents of the twelve Federal Reserve Banks for discussion at the December 12 meeting. Finally a
memorandum embodying the proposals will be sent to
the
Treasury."
Copim.c,
Of a draft of a public statement of the kind contemplated
l'st Paragraph of the memorandum were also distributed and the
and
tcles
statement were read.
the
ensuing discussion of the proposed statement Chairman
slIggested that
the statement might create the impression that the
Qoarci was
the telik °f the opinion that the International Stabilization Fund and
for Reconstruction and Development would be more effective and
c1 work
more
smoothly in solving the problems with which it had to
al all
d wa,
41eaae '
an a more ideal mechanism than might actually turn out to be
111411
that
p
p
d that he
would like to see the statement revised to cover
oint
and to make it clear that, while the Fund and the Bank would
17
12/1/44
-8114116811c)rtcomings and there were other controlling factors in the situati'Lcm, the
Bretton Woods proposals were the best solutions available for
adifiatult problem.
After considering how Chairman Eccles' suggestion could be met
tliediscuseion turned to the steps to be taken in connection with the
Inertic)rarlduz and proposed statement, and Chairman Eccles expressed the
°I*Ii°r1 that it
was important that the matters referred to in the memoWhich would
affect enabling legislation be placed before, and
48e""ci with,
representatives of the Treasury and State Departments
at
earliest possible moment so that they could be considered before
the
legislation was crystalized.
There was also a discussion of whether the proposed statement
1.1(11c1 be released
before the conferences with the Treasury and State
1)ePartnients, and
Chairman Eccles suggested that the form of the public
ti
eta.tellierit and the decision of the Board with respect to its release
-‘ght be af
fected by the outcome of the discussion with respect to the
kttera
to be
covered in the enabling legislation, and, therefore, he
1'1°11111
prefer to
send the proposed statement to the Treasury and State
4.11',/ziehts as a
tentative one that was under consideration by the
karci.
During the course of the discussion,
I'Lr. Evans moved that the whole matter be
referred to Messrs. Eccles and Szymczak
With power to act along the lines suggested by the Chairman.
Ther
"Pon, Chairman Eccles said that what he would like to do
In
12/1/44
-9-
11°111d be to
prepare letters to the Secretaries of the Treasury and
State De
in which the questions with respect to the enabling
legislation would be
presented and to which the proposed public state41Th in a form agreed
upon would be attached as a tentative statement
that was
being given
consideration by the Board for publication in the
Pecieral
Reserve Bulletin or for release to the press as the position
tthe
Board, and that when the
letters were signed he would send
eePies to
Under Secretary of the Treasury Bell and Assistant Secretary
State
Acheson,
and would call them on the telephone and advise them
thq the
letters were being placed in the mails. He also said that
e()Ples cr the
letters to the State and Treasury Departments and the
13t°174)sed
statements could be handed to the Presidents of the Federal
4
,,esellie Banks when they
,,seenther
arrived for their conference in Washington on
'hert.
8 and the matter could be discussed with them while they
were
ea
Mr 0
• uzymczak suggested that under that arrangement the proposed
st
atement would not be released until after a decision had been
d
were
On the questions with respect to the enabling legislation that
°f interest to the
Board.
At the conclusion of the discussion
Mr. Evans' motion was put by the chair and
carried, with the understanding that fol—
lowing the discussion with the State and
Treasury Departments Messrs. Eccles and
Szymczak would submit a recommendation to
the Board as to the statement to be made
and as to its publication.
On this action :Ir. McKee asked to be
recorded as "not voting".
—10—
The meeting
then recessed and reconvened at 2:40 p.m. with the
441ein a
ttendance as at the end of the morning session except that
Itessrs. T
hurston and Vest were not present.
Before this meeting the attention of the members of the Board
bac' been called to
a memorandum dated November 13, 1944, from Mr.
Go1derrisreiser r
ecommending that the basic salary of Miss Cornelia B.
an economist in the Division of Research and Statistics, be
''ielleased
from the rate of $3,800
to 4.1200 per annum, effective
114etnber 16, 1944.
The Personnel Committee had considered the recom—
tnetici4t4n and
indicated approval by the initials of the members (Mr.
elaYton
tialing for Chairman Eccles). Mr. Szymczak had also
41)proved; U..r.
tt
McKee had noted on the memorandum that he wished to vote
'and
Draper had handed the memorandum to Mr. Eccles with the
441'errtent
that he
would prefer to vote "no” on the increase but would
detel
'to
Chairman Eccles' judgment as Chairman of the Personnel Commit—
tee
the
matter. Chairman Eccles had requested that the memorandum
134ced on the
docket for consideration at the next meeting of the
kard
.
At this
meeting Chairman Eccles stated that when the memorandum
eke to biz,
and he noted the work that Miss Rose was doing in connec—
t411 with the civil
affairs handbooks for the War Department, it raised
:
his mind as to the status of the handbook project as well
-sSil"ti°11
the workin
being
Nee
conference.
done for the State Department in connection with the
He said these two projects were undertaken for a
A
12A/44
—11—
uu that they had taken more time than had been anticipated
*ler
'they
were be
, and that the question might be asked whether the
13°8'11 was
justified in continuing them and, if not, the services of
1488 Rose
might be no longer necessary.
14r. McKee stated
that the reason for his vote on the recommended
illerease was
related to the question of general policy of the Board with
resPect to
salary increases, that he was under the impression that salalles Were
.higher in relation to the work done, that substantial incr'eases were
granted more readily in the Division of Research and
Statistics than
in other Divisions of the Board's staff, and that he did
Want to
approve salary increases in the Division of Research and
Stati8tics
as long as it appeared that there was greater freedom with
resPeet to
salary levels and salary increases in one Division than in
11.0thers
14
the
connection with Mr. McKee's comment, the Chairman stated that
PrIalar7 res
ponsibility for recommending salary changes rested with
the r
espective Division
ot per
heads. Mr. Leonard said that when the Division
eonnel A
dministration was created he understood that one of the
ret
•
PetsIbIlities of the Division was to watch the recommendations subt° the
or co
Board, with a view to substantial uniformity in salaries
ktte
th411.113'4rable
positions in the different Divisions of the staff, and
Nc Iti the discharge
of that responsibill
•ty he had discussed salary
-eticlations actually made by Division heads and in some cases had
kgP.
--eted
that
Proposed adjustments be delayed and in other cases that
12/11.A4
-12"4411 salaries be
reviewed to see if they should be adjusted upward.
4 ale° Said that in his opinion the salaries paid in the Board's orbelow those of heads and assistant heads of divisions were
generally
about on a level with salaries paid in other Government
Nellizati°11swith possibly some exceptions which might be slightly
belN that
level.
McKee raised the question whether it was still expected
tha't there would be a
periodic review of the salaries of all members
'
ct the 18,.
''Pdt s staff and it was stated that the instructions issued by
the )al'd to the
heads of all divisions of the staff to review all salin the
respective divisions at least once during each calendar
?e4r.1 f°/'
the pu
rpose of insuring that all employees within
thin the respec-
:
111e ii-11-18icns received proper consideration, had not been changed and
"el%
atila
outstanding.
In connection with the status of the civil affairs handbooks
kci the
studies for
the State Department in connection with the peace
celiterence,
Mr.
44)144
Goldenweiser stated that the former project was now
near'ing completion, that several of the handbooks had been
k'41Pleted and
were being given wide circulation by officials of the
war
workNpartment who were very appreciative and spoke very highly of the
dorle
by
the Board's staff, and that substantially all that had to
°11 the r
emaining studies was the final typing and duplicating.
0 that it
was his thought that, because of their intimate
Aledge (If the
countries on which they had prepared material, the
12444
-13eervices
alaeirl
of employees who had worked on the handbooks would be very valu-
connection with the studies being made for the State Department
in
connection with the regular work of the Division, and that,
therteforey with the
exception of some individuals who might voluntarily
lealre earlier,
their services should be continued until the expiration
(It
their
temporary appointments, at which time there should be a deteritill4tierl o• f whether
they should be assigned to other work or whether
Ni
-remPloyment should be terminated. He added that the work for the
8t4te Department
was something that the staff of the Division would have
lia.clt° do in
any event, that it had been very helpful in creating closer
re4ttonships with
persons working on foreign matters in other offices
(ItheGove
rnment, and that for these reasons it should be continued on
soke
Pertlanent basis.
With
respect to Miss Rose, Mr. Goldenweiser stated that it had
beet
A
th18 Il• tention to recommend that her appointment be made permanent
e reas°n that when her work on the civil affairs handbooks was
131-et ti
e- her
Specialized training could be used to good advantage in
lie Irte
ttorl
r -'1°nal Section, particularly in connection with the preparac044°t e41'rent comments on foreign developments similar to the current
rite Pla• ePared in the Division of Research and Statistics on domestic
and f
inancial matters.
At the conclusion of the discussion,
the salary increase recommended by Mr.
. Goldenweiser for Miss Rose was approved
to become effective December 1, 1944)
MrMcKee voting "no".
-14Chairman Eccles stated that Congressman Patman had called him
ell the
telephone this
week to say that as soon as the new Congress con-
after the turn
of the year he proposed to introduce a new bank
holdin
g Company bill along the lines that had been suggested by the
At this
Point Messrs. Goldenweiser, Dreibelbis, Leonard, Thomas,
atici Ga
1\-Lner withdrew from
the meeting.
The
after
action stated with respect to each of the matters herein-
referred to was
taken by the Board:
Net.
al
1.
The minutes of
the meeting of the Board of Governors of the
Reserve System held on November 30,
1944, were approved unani-
Letter
to the Presidents of all the Federal Reserve Banks readfollows:
"Th
cover -ere have been forwarded to you today under separate
kellaber
copies of form F. R. 107, to be used by State
oanks in submitting their reports of earning and
a.ethrds for the calendar year 1944. The form is the same
1943.- °ne used in
submitting reports for the calendar year
thitted Valbursements received for services in redeeming
c.
`)tates savings bonds should, as stated in the Boardt..,
te
'of S
eptember 30, 1944 (S-795), be reported in earne d dividends reports against item 1(e), other service
ehargall
ebar s, commissions, fees, and collection and exchange
ges.n
Approved unanimously.
ttemor
andum dated November 27, 1944, from Mr. Bethea, Director of
wiaion
Of Administrative Services, recommending that the following
777
W4/44
—15—
increases in basic
annual salaries of employees in that Division be ap14.°Ired,
effective December 1, 1944:
Ste
Designation
Salary Increase
From
To
Stenographer
Guard
$1,800 $1,920
1,620
1,680
Approved unanimously.
thet:enlorandum dated December 1, 1944, from Ir. Bethea, Director of
lsicn of
Administrative Services, recommending that Mrs. Elizabeth
ch
Iltalorls be
appointed as a cafeteria helper in that Division on a
telliDora
atthe
:
r basis for a period of not to exceed 60 days, with basic salary
ale of $1,080 per annum, effective December 1, 1944, and with the
141
derstandin
E that she would not become a member of the
'Lek a
retirement sys—
s'alring the period of her temporary employment.
was
the
zecieral
Approved unanimously.
_
stated that from time to time requests were received from
Reserve Banks that the Board designate someone from its staff
rqttiess the
()tile
mutilation of a signature plate bearing the name of an
el' c't a Federal
Reserve Bank which had been used in signing checks
441 the
capacity of the Rank as fiscal agent of the United States,
kl it
'Was suggested that Mr. John DeLaMater in the Board's Division of
du
N
^
tilY4 ,
.s_
be (1 °13
.erati°1's and Mr. R. E. Sherfy in the same Division, as his alternate,
"lgriated to
the p
serve until December 31, 1945, as the representative of
ecietl
Reserve Banks to witness the mutilation of these plates.
Approved unanimously.
Thereupon the meeting adjourned.
Chairman.
@FedFRASER