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1900 A meeting of the Board of Governors of the Federal Reserve SY-literal/m.8 held in Washington on Wednesday, December 15, 1943, at 2145 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Smead, Chief of the Division of Bank Operations Mr. Leonard, Director of the Division of Personnel Administration Mr. Dreibelbis, General Attorney Reference was made to a memorandum dated December 8, 1943, e P ersonnel Committee with respect to the reappointment of fli°111 branch 31, 19 directors appointed by the Board whose terms expire December 43, which Mr. McKee had asked to be brought up for discussion at 4 Meeting of the Board in order to raise a question with respect t° the re commendation of the Personnel Committee that Philip C. Ferguson, 4 director 44 °facer of the Oklahoma City Branch who has been on active duty as with the Marine Corps since March 1942, be not reappointed 48 4 d irector of the Branch. Mr. McKee said that there was nothing in the file to indicate anything detrimental to Mr. Ferguson, and that, ill/riew of the fact that he had been on active duty as an officer of the Ilarine Corps, had been wounded in the New Georgia campaign in the 1901 12/15/43 -28°11th Pacific, and was at present in the United States Naval Hospital at Sari Diego, California, he thought it would be more appropriate to c°1ftnicate with Mr. Ferguson and give him an opportunity to say whether heftuld be available for further service as a director of the Oklahoma eit YBranch. Ur. Clayton stated that there were some unfavorable factors in the s ituation, and at his request Mr. Leonard stated that Mr. Koppang, 41'st lace President of the Federal Reserve Bank of Kansas City, had him that there had been some embarrassment about the appointment l'erguson because it was thought by some that it had been a 13°11tical. appo intment, and that Mr. Ferguson had left Oklahoma City earlY in 1942 to enter the Marine Corps as a captain without advising 8411°Ile at the Oklahoma City Branch. Mr. Leonard also stated that there Ilas - Precedent for not reappointing as directors men who were on active d 147 in the military service in that Henry G. Chalkley, Jr., a Ilrect °r of the New Orleans Branch of the Federal Reserve Bank of Atlanta had not been reappointed due to the fact he was on active cillty a 8 an officer in the United States Navy. Mr. Leonard went on to however , that the Personnel Committee had held a meeting this Atorrlin that at which the question of branch directors was reconsidered and koteel et,44. tel _ egrdm to Mr. Ferguson had been prepared which might meet Mr. s suggestion. Mr. Ransom thought that the telegram to Mr. Ferguson should that the Board would like to reappoint him as a director of the 1902 12/15/43 -3Oklahoma City Branch but that before doing so it would like to know Whether he would serve. After a further discussion, the following telegram to Major Philip C. Ferguson at the United States Naval Hospital in San Diego, California, was approved unanimously: "Board of Governors would like to reappoint you as '.,Irsctor of the Oklahoma City Branch Reserve Bank for g?r,m beginning January 1, 1944. Can you serve? Best Wishes for your speedy recovery." In connection with this action, the Board approved the reappointment of Mr. Ferguson as a director of the Oklahoma City Branch of the Federal Reserve Bank of Kansas City for a term of three years beginning January 1, 1944, upon receipt of advice from him that he would serve, With the understanding that, in the event he indicated he would not accept reappointment, the Board would authorize the Chairman of the Federal Reserve Bank of Kansas City to ascertain informally whether Arthur B. Adams, Dean of the College of Business Administration of the University of Oklahoma, Norman, Oklahoma, would accept appointment as director of the Oklahoma City Branch and that the appointment would be tendered if he would accept. At thj5 point Mr. Thurston withdrew from the meeting. kittse charip„ Mr. Szymczak stated that at the meeting of the Personnel Cornthis morning a decision had been reached to make certain other in the recommendations it had originally submitted to the Board ill r„ it8 -(erti°rarldlinl of December 8, 1943, referred to at the opening of this so as to recommend at this time the reappointment of all 1_903 12/15/43 -4- 13141ch directors appointed by the Board whose terms expire December 31, 1943, except the following: Name Howard Kellogg W. Frank Roberts George M. Wright E. W. Palmer I. N. Barnett, Jr. Perry B. Gaines H. D. Myrick Jack B. Martin George G. Chance George T. Gerlinger Herbert S. Auerbach Charles F. Larrabee Federal Reserve Bank Branch_ Buffalo Baltimore Charlotte Nashville Little Rock Louisville Helena El Paso Houston Portland Salt Lake City Seattle In accordance with this recommendation, the following were reappointed as directors of the respective branches of the Federal Reserve Banks shorn, each for a term of three years beginning January 1, 1944: Name Ed. L. Norton F. D. Jackson E. F. Billington R. C. Branch M. E. Noonen John D. Clark H. M. Cartwright Federal Reserve Bank Branch Birmingham Jacksonville New Orleans Memphis Denver Omaha San Antonio The following were reappointed as directors of the respective branches of the Federal Reserve Banks shorn, each for a term of two years beginning January 1, 1944: Name Francis H. Bird Robert E. Doherty Y. Frank Freeman Federal Reserve Bank Branch Cincinnati Pittsburgh Los Angeles 1904 12/15/43 —5Mr. Szymczak stated that the Personnel Committee also recommended that the Chairmen of the Federal Reserve Banks concerned be reTlasted to ascertain informally whether the following would accept apP°intillents aadirectors of the respective branches of the Federal Re"e Banks shown for terms beginning January 1, 1944, and that the aPPointments be tendered if they would accept: Federal Reserve Bank Branch Name Malcolm B. Holtz, a farmer of Great Falls, Montana George A. Slaughter, a farmer of Wharton, Texas Henry A. Dixon, President of Weber College, Ogden, Utah Helena Houston Salt Lake City Approved unanimously. Szymczak also stated that the Personnel Committee recommended (1) that the Chairman of the Federal Reserve Bank of Dallas be l'ecilaested to ascertain informally whether Mr. J. R. Parten, President (It the Woodley Petroleum Company of Houston, Texas, and Chairman of the lloard of Directors of the Premier Oil Refining Company of Texas would ezteePt appointment as Class C director of the Federal Reserve Bank of 1)41-las for the term beginning January 1, 1944, to succeed Mr. J. B. C°4°)(2) that the appointment be tendered if he would accept, and (3) that Mi. Parten be designated as Deputy Chairman of the Dallas Ete* for the year 1944. Mr. Szymczak went on to say that the Personnel eotraittee had in mind that Jay Taylor would resign as Chairman and 1905 12116/43 -6- Federal Reserve Agent at the Dallas Bank due to the demands being made ilPon him .3 active service as a lieutenant colonel in the United byni States nated Al-my and that at the appropriate time Mr. Parten would be desig- Chairman and Federal Reserve Agent to succeed Colonel Taylor. Approved unanimously. The Personnel Committee, Mr. Szymczak said, also recommended (1) that, if and when Colonel Taylor resigned in accordance with this Program, a ppropriate steps be taken to ascertain informally whether 4411 R. McKinney, Vice President of the Eaples Platter Company, Fort .1;orth, Texas, would accept appointment as Class C director of the Federal Reserve Bank of Dallas for the unexpired portion of Colonel TaYl°r's term ending December 31, 1945, (2) that the appointment be tendered if he would accept, and (3) that upon the designation of Mr. J. R., varten as Chairman and Federal Reserve Agent Mr. McKinney be dew '`griated as Deputy Chairman of the Dallas Bank. Approved unanimously. Board , 111". Szymczak stated further that, pursuant to the action of the ln deciding not to reappoint St. George Holden as a Class C diand Deputy Chairman of the Federal Reserve Bank of San Francisco, the per dir 8°rInel Committee recommended (1) that Y. Frank Freeman, now a ector of the Los Angeles Branch, be appointed as Class C director °I' the p ederal Jay -4,4ktary Reserve Bank of San Francisco for the term beginning 1944, subject to Mr. Ransom ascertaining whether he would 1_906 12/15/43 -7be will , ----"Lng to serve in that capacity, it being understood that if he were WiUing to accept such appointment he would not continue to serve as a director of the Los Angeles Branch, and (2) that Harry R. Wellman, °Ile of the remaining Class C directors, be designated Deputy Chairman cf the Federal Reserve Bank of San Francisco for the year 1944. Approved unanimously. Mr. McKee stated that he had noticed that Some memoranda conrecommendati ons with respect to the appointment of Class C rectors of the Federal Reserve Banks had been circulated to the Board for approval by the Personnel Committee, and that it was his IllUlerstA „ -rkung that all recommendations with respect to the appointment or Clas -8 %d directors should be circulated simply for consideration Prior tO discussion at a meeting of the Board. He said that he would like to suggest that as a matter of procedure all recommendations of this kin d in future be brought up at a meeting of the Board for dis- Mr. McKee's suggestion was approved unanimously. At this point Mr. Leonard withdrew from the meeting. Szymczak then presented the following memorandum which he had aciA hiad —tressed to the Board under date of December 10, 1943, and which beerl circulated to the other members of the Board prior to consideration at a meeting: A. m.IT Attached is a letter dated December 7 from Mr. Res Creighton, Chairman of the Board of the Federal whierve Bank of Boston, together with enclosures, from eh it will be noted that the Board of Directors of 1907 12/15/43 —8— "the Boston Bank voted, subject to the approval of the Board of Governors, to purchase two parcels of real es— tate adjacent to the premises of the Bank for a consid— eration of $300,000 and to authorize the officers of the bank to select and employ conveyancers to render their :Pinion in regard to the title to such real estate and assist with and supervise the conveyance thereof to the the compensation to the conveyancers to be as agreed 10Z 1. rt:t . le officers with the approval of the Board of "The two parcels of real estate adjacent to the build— ia t4 comprise a land area of 13,996 square feet, having a story building on one piece and a six story building Qn the other. They were sold in 1919 for $1,465,000 and 8 111i-924 for $1,250,000. In 1923 the Boston Five Cents In Bank loaned $1,000,000 on a first mortgage on these ." ese Properties and now holds a first mortgage thereon the amount of approximately P,760,000. It has agreed the sale of the properties by the owners for .:,300,000, e$637e of mortgage. They are currently assessed for a total of ,000. ,L "Several tenants are now occupying the two buildings, ane b Federal Reserve Bank occupying five floors of the °Taller building. It is understood that all of the leases her than the Federal Reserve expire within the next year r two except the lease to Fairfield Ellis Insurance Corn— Which runs to 1952. That lease, however, provides it may be terminated by payment of $40,000 up to 745 and thereafter by payment of $30,000. on rm ullr. Creighton advised Mr. Smead over the telephone th 4"4rsday morning that all but two of his Directors favor abe Purchase of the land at this time for the price stated of°ve, that the architect has prepared preliminary drawings th a building to be constructed on the property, and that ,ee Directors will consider these drawings at a meeting on cember 20. It was Mr. Creighton's view that the Bank is need of additional space and that the land should be ght now regardless of whether building operations are the immediate future or at a later date. He reecrtaken is s that the price at which the land can now be obtained if atIll exceptionally good one and may not be available later is • e 0Ation is not exercised at this time. The option t1011. .ytTr of the Mr. Norman W. Kenny, who obtained it on be Reserve Bank. Z 1908 12/15/43 —9"It is recommended that the Federal Reserve Bank oie t Of Boston be authorized to employ conveyancers to render their opinion in regard to the title to the .!'w° Parcels of real estate and that the Bank be authorPurchase the property for 300,000 provided it obtainS a clear title thereto. "Mr. Creighton has promised to send to the Board a coPY of the report submitted by the architect." Ur. Szymczak stated that the Reserve Bank building at Boston 17"in unsatisfact ory condition, was in need of extensive alterations, and was not adequate to take care of the present space requirements (If the li trikts organization. He went on to say that when Chairman 4c1e3 and he were in Boston recently they were of the opinion from *lett they could see that the property which the Bank proposed to purchase Was a good buy, that the Bank's board of directors was in favor q the - Proposed purchase except for Messrs. Forbes and Allen who were 4—'e'd to the proposal simply because no one was in a position to stet e categoric ally what the space requirements of the Bank would he Year or two from now, and that speed was important because an option tob„ ' 44 cnase the property had been secured on behalf of the Reserve Elatk "ulch would expire January 2, 1944. atatea In the course of the discussion which followed, Mr. Ransom that he felt an independent appraisal should be made of the Pl'oPert Y before the Reserve Bank exercised the option to purchase. At the conclusion of the discussion, the Secretary, upon motion by Mr. Szymczak and by unarlimous vote, was authorized to advise Mr. Creighton, Chairman of the Federal Reserve 1909 12/15/43 -10Bank of Boston, that the Board would interpose no objection to his Bank's employing conveyancers to render their opinion in regard to the title to the two parcels of real estate adjacent to the Bank building referred to in his letter of December 7, 1943, and that, in accordance with the recommendations of the directors of his Bank, the Board approved the purchase of the two parcels of real estate at a cost of 300,000, provided the owners were able to execute and deliver to the Bank a quit-claim deed giving to the Bank a good, clear, and merchantable title in fee simple to such real estate. The Secretary was also asked to advise Mr. Creighton that it would be desirable from the standpoint of the protection of the Bank's record in connection with the acquisition of this Property for him to obtain before the transaction was consummated an independent appraisal showing that the present worth of the property was not less than the amount proposed to be paid therefor. At this point Chairman Eccles, Mr. Thurston, and Mr. Thomas, Assistant Director of the Division of Research and Statistics, joined the meeting. Chairman Eccles stated that it had been the custom of the 151"esidents' Conference to appoint committees and subcommittees of the eclIference and in many cases to associate with such committees and 811bconraittees members of the Board or its staff, that the list of ex&sting committees which Mr. Szymczak had recently referred to him for corlsideration was quite extensive, and that it had occurred to him that if the Board were not careful it would be led into embarrassing 8ittlations. He thought it was proper for the Presidents to have a 1910 12/15/43 —11— conference and to appoint any committees or subcommittees it might Nliire composed of members of the conference or other officers or ecallloyees of the Reserve Banks, but he did not think that members of the Board or the Board's staff should serve as members of such corn— Mittees. He said that it seemed to him that, to the extent the Presi— dents' Conference or committees thereof wished to make recommendations, this should be done in a manner similar to that pursued by the Federal Alllisory Council, and that the Board might wish to refer matters of aYsten importance to the Presidents' Conference for consideration from qme to time. Mr. McKee suggested that the Board was partly responsible for this si tuation in that on occasions it had suggested that a member of the Board or its staff serve on Presidents' Conference committees or stibcormaittees for the purpose of keeping in touch with various matters. Chairman Eccles agreed with this and said that he was merely expressing areeling that it was a matter to which the Board should give considera- 14.1*. Ransom said that in looking over the list of committees he 40ticeci 04 on_ that Mr. Szymczak was serving on three committees and Mr. Evans and that there were numerous committees or subcommittees on Ithich a, ' 140er of the Board's staff had been appointed as an associate kether. Mr, Szymczak stated that he did not think members of the Board 1911 12 / 15/43 -12Serve on committees of the Presidents' Conference. Mr. McKee indicated that he thought it might be entirely ap13liate for staff members to serve on certain committees which were e°11certled with purely operating matters, and that the Presidents' Conference Committee on Collections was an operating committee of the type he had in ndald. Chairman Eccles said that in connection with the research ac- tleities of the System, for example, there should be better coordination, and he referred to the statement he had made on November 8, 1943, to the Chairmen's Conference. He went on to say that at that time he had Proposed that Mr. Goldenweiser head up a System staff committee e°11111"ed of representatives of the research departments at several of the Federal Reserve Banks, and that as far as he knew this committee had been functioning satisfactorily. He had also suggested that a corn- "'" consisting of a member of the Board, a member of the Chairmen's 411fererIce, and a member of the Presidents' Conference might constitute an advisory group which could do a good job of coordination in the tield of research from a System standpoint, and he thought that the Pederal Reserve System should take the lead in stutring postwar problems. Chat Man referred to the fact that there were already in existence the committee for Economic Development and the National Planning Associatl°n 'hut he said that the System had an obligation to keep abreast or developments and to make an important contribution in this field. Re also said that so far as the research departments of the Reserve 1912 12/15/43 -13- Were concerned, of course, they had a responsibility for advising their operating managements, but that there should be a program from a 878telll point of view, and he referred to the fact that the Board was stdaa looking for a qualified individual to serve in the Division of Research and Statistics as a national director who would represent its Niearch staff in contacts with similar staffs at the Reserve Banks. Re said, however, that he had received an interesting letter dated oveber 29, 1943, from Mr. Williams, President of the Federal Reserve 113.111t of Philadelphia, in which Mr. Williams had stated that the creation of the two committees which he (Chairman Eccles) had suggested would lake the or ganizational aspect of research more complex inasmuch as the presidents' Conference already had a committee and a subcommittee to deal with the problem. Chairman Eccles read extracts from Mr. /11111amel letter, at the conclusion of which he stated that leadership the fi„, -1- 411 of research should be headed up in the Board and that he telt strongly that either Mr. Goldenweiser or a director to be selected should head up a committee on which the research people of the Reserve 1111/114 would be represented. Such a staff committee, he said, could the41 submit r ecommendations to the coordinating committee of three to he had referred. Mr. McKee thought that studies which were national in scope '444 be initiated by the Board whereas those which were local or N4teCi °n1Y to a particular Reserve district should be initiated in the field. 1913 12/ 15/43 -14Chairman Eccles pointed out that he was thinking particularly ln terms -4, ul postwar planning and that he would like the Board members tote thinking about the matter so that they could discuss it more ful.4 later. The Chairman said that another matter which he wanted to menW8 the fact that the Presidents' Conference had recently inaugurated the practice of holding meetings outside of Washington, whereas he felt that it was more appropriate that all such meetings be held in Washington. He said that the Federal Reserve System would survive (1114 8° long as it functioned as a System and that, if the present Practice continued, the Reserve Banks might be regarded as private 13141411g in stitutions and the System as a whole would not be effective. Re Pointed out that if anything went wrong in any of the Reserve Banks theBoard had to assume the responsibility and, as the agent of Congress, 41 to answer any criticisms. Chairman Eccles then read portions of a letter which he had 4esived under date of November 27, 1943, from Mr. Davis, President °t the Federal Reserve Bank of St. Louis, which, like the letter from was in response to a letter he (Chairman Eccles) had 4111 't0 the 4 0°13Y C0 fe eflc Presidents of all of the Federal Reserve Banks transmitof the statement which he had made before the Chairmen's r egarding the System's activities in the field of research P"t"r planning. The Chairman thought that Mr. Davis' letter 1_914 12/15/43 -1511"ed careful consideration, particularly the suggestion which he made that the System undertake the preparation of a comprehensive statement of its views, not only upon the major fiscal and monetary Pt'oblems but also upon the broader economic problems which will face the countrY after the war, and that such a statement be framed with a view to its being published. Mr. Ransom said that he felt it would be helpful if the Board W°111c1 issue public statements from time to time on matters of national 14113°14",....nce such as, for example, inflation or taxation. He felt atl'e41.7 that the Board had been remiss in this respect in recent Y'eare, and that it had a great responsibility to say what its attitude 1711s with respect to important questions of widespread public interest, 44° that even at this late date he would be disposed to issue a warning to the public on the need for higher taxes. Chairatan Eccles indicated that he agreed with Mr. Ransom's lInd that he felt public statements which the Board had made in the/34st 'even though they had been on controversial subjects, had tict been de trimental theo System in any way. He concluded by saying that a° 1°ng as such statements were carefully weighed, were free from Partisanship and bias, and were made in the public interest, they would be a factor in increasing the effectiveness and prestige of the System. At this point Messrs. Thurston, Smead, Dreibelbis, and Thomas 11:41%ell from the meeting, and the action stated with respect to each 't the -Matters hereinafter referred to was then taken by the Board: 1915 L2/15/43 -16- The minutes of the meeting of the Board of Governors of the Peciersi Reserve System held on December 14, 1943, were approved unani401184. Memorandum dated December 13, 1943, from Mr. Morrill, recomIttcrldftng that Howard L. tarwick, Jr., be appointed as an operator (duplicating devices) in the Secretary's Office on a temporary basis for "Ildefinite period, with basic salary at the rate of $1,900 per an11141, effective as of the date upon which he entersupon the performance ()this duties after having passed satisfactorily the usual physical e.)clallillati°n, with the understanding that if anything derogatory should devel°P in the investigation of his references his services may be ternlinated immediately. Approved unanimously. Memorandun dated December 13, 1943, from Mr. Smead, Chief of he Divis. 1°n of Bank Operations, submitting the resignation of Mrs. Charlotte M. Hugele as a clerk in that Division, to become effective 011 bee cepted 15, 1943, and recommending that the resignation be acas of that date. The resignation was accepted. Letter to Mr. Leland, Chairman and Federal Reserve Agent at cetera'. Reserve Bank of Chicago, reading as follows: yo,, "lin accordance with the request contained in Mr. letter of December 9, 1943, the Board of Goveras , is approves the appointment of Mr. Everett D. Jones tederal Reserve Agent's Representative at the Detroit .vranch, e ffective when he enters upon his duties, with 191_6 12/15/43 -17-m salary at his present rate of 13,500 per annum. This approval is given with the understanding that Mr. Jones will be placed upon the Agent's pay roll and will be solely responsible to the Federal Reserve Agent, or during a , ivacalle.Y in the office of Agent, to the Assistant Federal neserve Agent, and to the Board of Governors, for the t prcTer performance of his duties. When not engaged in Performance of his duties as Federal Reserve Agent's epresentative he may, with approval of the Federal Reflerve Agent, and the Vice President in charge of the 7anch perform such work for the Branch as will not be consistent with his duties as Federal Reserve Agent's Aepr esentative. • ,."Mr. Jones should not enter upon the performance 'us duties as Federal Reserve Agent's Representative til his bond has been examined by your Counsel to dewhether its execution complies fully with the rules . printed on the reverse side thereof following Whichthe bond should be forwarded to the Board promptly approval. Please advise us as to the date when Mr. A cnIes actually assumes his duties as Federal Reserve Ageat's Representa tive. "Please advise us also as to the action, if any, ;: should take with respect to releasing the bonding whniPany from liability under the bond of Mr. Raether, Ag :11's submitted his resignation as Federal Reserve 10,T" s Representative to become effective December 15, .m n Approved unanimously. ream_ Letter to the Presidents of all the Federal Reserve Banks, g as follows: "For your information there is enclosed a copy of a c n_ memor andum received from the Navy Department, date (3;ember 11, 1943, signed by William A. Coolidge, Chief se Finance Section, in connection with adjustments under ,ti°11a 5 and 6 of the guarantee agreements executed onc: oehalf of the Navy Department." Approved unanimously. 1917 12/15/43 -18-At this point Messrs. Morrill, Bethea, and Clayton left the leeting and the Board went into executive session. At the conclusion °the executive session Mr. Szymczak reported to the Secretary that theB °ard had approved increases in the basic salaries of members of 48 Staff as follows, effective January 1, 1944: brae J. P. Dreibelbis Georn. 5e B. Vest noodlief Thomas Iv Nee Designation General Attorney Assistant General Attorney Assistant Director, Division of Research and Statistics ,Salary Increase To From 10,000 a5,000 12,000 10,000 12,000 increases were approved by the Board in the light of (1) the 131'ececlent previously established by the Board in fixing salaries at the rate of t15,000 per annum for heads of the divisions of its staff 411cl (2) the opinion expressed by Mr. Dreibelbis in a memorandum written Irhillaunder date of December 14, 1943, with respect to changes in the clikes of Mr. Vest, and in connection with a memorandum from Mr. Evans Of the same date with respect to changes in the duties of Mr. Thomas, that view of the change in Mr. Vest's position in the Legal Division Et4c1 his increased responsibilities resulting from the change, and in \l'elif of the change in Mr. Thomas' position in the Division of Research 44d Statistics and the increased responsibilities resulting from the ehet , a ppropriate increases in their salaries would come within the Ope °I' increases permitted under the salary stabilization regulaticts.
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