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A meeting of the Executive Committee of the Federal Reserve Board 17118 held in 77ashington on Tuesday, December 27, 1932, at 12:10 p. m. PRESENT: Governor reyer Li'. Hamlin Yagee Mr. Mr. Mr. Mr. Morrill, Secretary McClelland, Assistant Secretary Harrison, Assistant to the Governor Wyatt, General Counsel. The Committee considered and acted upon the following matters: Telegram dated December 23, 1932, from the Chairman of the Federal Reserve :lank of Chicago, advising that the board of directors, at its meet4Lg on that date, made no change in the bank's existing schedule of rates Or discount and purchase. Without objection, noted with approval. Tele6raphic reply, approved by five members of the Board on December Z3 I—, ' 4. 62, to a telegram of that date from Deputy Governor Rounds of the ej Reserve Bank of New York, requesting authority for an advance in 4ee°1"a nce with the provisions of section 10(b) of the Federal Reserve Act, ka -'unued, to the First National Bank in Avon-by-the-Sea, New Jersey, in tile amount of‘,16,0000 for a period of sixty days, with interest at the rate 1/2,r per annum, and on the security of Obligations of the local It4Illic iPality with a margin of at least 25; Deputy Governor Rounds stating thekt the bank desires the advance to meet the withdrawal of a large 414ic1Pal deposit. The reply stated that the Beard authorizes the advance .113jeet to the terms and conditions recommended. Approved. Telegraphic replies, approved by four members of the Board on Deee 1113per 23, 1932, to telegrams of that date from Deputy Governor Rounds of 9 12/27/32 the Federal Reserve Bank of Hew York, requesting authority to purchase from the Savings Investment and Trust Company of East Orange, Yew Jersey, tax totes of the City of East Orange, in the amount of :A00,000, and from the Oceanside National Bank, Oceanside, rew York, a tax note of the Town of lieMPstead Union Free School District To. 11, in the amount of '20,000, and taX note of the Town of Hempstead Union Free School District /To. 31, in the amount of .a9,500. The replies stated that the Board authorizes the Purchases with the understanding that the notes net all requirements of ile gaation E except that the respective amounts of the notes offered, together with the notes of the issuing municipalities already held by the New York bank, exceed 25:d of the total outstanding warrants of the issuing 1114flicioa1itie0; that the respective populations of the Union Free School 143tricts Ho. 11 and 31 are less than 10,000, and that the Union Free School kstrict 1:o. 31 has not been in existence for ten years. Approved. Teleraphic reply to a letter dated Jecember 23, 1932, from Deputy ( ' Iciertter Rounds of the Federal Reserve Bank of Hew York stating that the 1144k is considering an advance under the provisions of section 13 of the ?ederal Reserve Act, as amended by the Act of July 21, 1932, to L. C. Smith t4:1 Corona Typewriters, Incorporated, in the amount of .300,000, and that technically the proposed use of the proceeds comes within the proof the Board's letter of Yuly 26, 1932 (X-7221), that except with 140 p°1-Tai5si0n of the Federal Reserve Board no such paper should be disQ°44ted if it appears that the proceeds will be used for the purpose of paying or.1% existing indebtedness to other banking institutions, it is believed, in 582 12/27/32 of the circumstances outlined in the letter, that the case is not of the type which the Board had in mind to prohibit. Lr. Rounds stated that the Proceeds of the advance would be used for the purpose of retiring at maturity °`74311 rcial paper which had been sold in the open market and is held by some t%ty-two banks none of which has granted the company a line of credit for " 4 in the usual course of business. The reply stated that with the under- that the note or notes of L. C. Smith and Corona Typewriters, IncorPc/rated, will meet the requirements of eligibility laid down by the law and the Board's regulations, and will be acceptable to the Federal reserve bank 1 a credit standpoint, the Board will interpose no objection to the pro* " 1548ed discount by the Federal Reserve Bank of New York because of the fact theA the proceeds are to be used for the purpose stated by r.r. Rounds. Approved. Letter to the Federal Reserve Agent at Chicago, approved by four Illeibers of the Board on December 23, replying to Assistant Federal Reserve 4 "ellt Youn3'8 letter of December 17, 1932, reporting that the First /rational taht. , bJecor, Illinois, has been continuously deficient in its required 68er1Tes for six months. The reply stated that in view of the information ktq/litted, and in accordance with the agent's recommendation, the Board will take no action in the matter at this tire other than to forward a copy of 116 Y°4191,V3 letter to the Acting Comptroller of the Currency for the informatic) , - or his office. Approved. Letter dated December 23, 1932, from the Chairman of the Federal Ileaerve Bank of Chicago, advising of the death on December 22, of 1.:r. U. T. 41* aV ono of the bank's appointees to the directorate of the Detroit branch. 12/27/32 58:3 -4Noted with regret. Letter dated December 24, 1932, from the Federal Reserve Agent at Chlea0o, advisint; that because of the present banking conditions in Detroit lt is -Pelt necessary that a successor to Er. W. C. Recknagel, who recently Ile8igned as Assistant Federal deserve Agent at the Detroit branch, be 4PDo1nted without delay, and that the Federal reserve agent has determined, subject to the approval of the Federal Reserve Board, to appoint Er. W. R. 1)iereks, at Present an examiner at the head office of the bank with salary ctt the rate of :4,500; it being planned that Er. Diercks will also act as the agent's representative in the credit department of the brannh and that he will supervise, if not conduct, examinations of banks in the metropolitan clistrict of Detroit made on behalf of the Federal reserve bank. After discussion, the Federal reserve agent's letter was referred to the Chief of the Division of Examinations for a reconnendation to the Board. Letter dated December 23, 1932, from the Secretary of the Federal Reserve Bank of Chicago, advising of the unanimous adoption by the board of cilrectors of the bank at its meeting on that date of a resolution providing share-the-work plan at the head office which would require a reduction (1111111C the six months period beginning Xanuary 1, 1933, of one-half day semi40IithlY in the working time of each employee; a deduction of 2cro from the —4,(ries of the present officers and employees of the bank; and for the P°rarY emPloyment during the period of from 35 to 40 employees at a total 1rY for the Period of apProximately ,22,000, in order that the work of the ' "l 1) 11.1, 'nlaY be carried on without loss of efficiency in operation. The letter stated that the board of directors had approved the adoption of a similar Ala 4 at the Detroit branch where it was thought that 7 or 6 additional 584 12/27/32 enaPloyees could be employed temporarily at total salaries for the period of ab uut34,200. After a discussion it was decided to interpose no objection to the nlan as outlined and to approve the salary payments involved in the employment of additional people at the head office and Detroit branch in accordance with the plan; Mr. Hamlin stating that while, for reasons previously stated, he is opposed to the plait as submitted, in view of the position taken by the majority of Board in approving plans of this character at New York, Philadelphia and Cleveland, and in order that the executive comndttee of the Board could act on the plan subndtted by the Chicago bank, he would not record a negative vote. Letter dated December 20, 1932, from the Chairman of the Federal Reeve Bank of San Francisco, transmitting a copy of a resolution unanimously EldoPted by the board of directors of the bank at its meeting on December 15, 1932, providing for a share-the-work plan at the head office and branches of the bank which would provide for a reduction in the working tire of the 1/1'esent full tine officers and employees of one day per month during the six nl011ths period beginning January 1, 1933; the employment of the additional teMporary employees necessary to carry on the work of the bank; and a l'eduction in the salaries of the present officers and employees of the bank on saluries up to 32,909, C on salaries from :;3,000 to 34,990, al on 1313-taries from ,)5,000 to 39,999, and 5;) on salaries of 310,000 and over; it understood that the employment of additional people would be "eobnplished without adding to the total salary roll of the bank. After discussion it was decided to interpose no objection to the adoption of the plan and to approve the salary payments involved in the employment of additional people in accordance with the plan; :r. Hamlin making the same statement in connection with his vote as was 'mode by him in connection with the sharethe-work plan submitted by the Federal Reserve Bank of Chicago. 585 12/27/32 -6- The Governor then stated that the Governor of the Federal Reserve rislik of Chicago had advised him over the telephone that Deputy Governor 'Blair, who has been in ill health for some time, is resigning on December 31) 1932, and that the board of directors proposes to appoint Mr. George Schaller, who at the present time is president of the Citizens First 11"ional Bank, Storm Lake, Iowa, and a class A director of the Federal Reere Bank of Chicago, as deputy governor of the Chicago bank, and, subject to the approval of the Board, to fix his salary at the rate of ::18, OW per 4111111m- Attention was called to the fact that it appears that Mr. Schaller °s7113 295 shares of the capital stock of the Citizens First National Bank 44cl Tlestion was raised as to the propriety of his continuing to hold this 8tock or otherwise retaining his connection with the natiopnl bank during 1118 service as deputy governor of the Federal reserve bank. The opinion 7413 concurred in by the members present that Governor repougal should be 4dvised that the Board, while inclined to approve the salary proposed for kr. ,, challer, does not look with favor upon the appointment to the official 8tilfr of a Federal reserve bank of a person who is a stockholder in a ellIber bank, as his interest in the bank might affect his attitude toward it • in matters involving its relations with the Federal reserve bank, or liMit his usefulness to the Federal reserve bank by reason of the possibility th4t he would be influenced by such an interest. Governor Feyer stated that "ould take the matter up with Governor EcDou6a1 by telephone and report t° the Board later. Thereupon the meeting adjourned. 41)Proveci:
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