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2206 Minutes of actions taken by the Board of Governors of the kieral Reserve System on Monday, December 27, 1948. PRESENT: Mr. Szymczak, Chairman pro tem. Mr. Evans Mr. Clayton Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Thurston, Assistant to the Board Telegram to Mr. Paul E. Reinhold, Foremost Dairies, Inc., ksciaville, Florida, reading as follows: "Board of Governors of the Federal Reserve System has appointed you a Class C director of the Federal Reserve Bank of Atlanta for three-year term beginning January 1, 1949, and will be pleased to have your acceptance by collect telegram." Approved unanimously. Telegram to Mr. Rufus C. Harris, Tulane University, New Louisiana, reading as follows: "Board has appointed you Deputy Chairman of Federal Reserve Bank of Atlanta for year 1949 and will pe Pleased to have your acceptance by collect telegram:, Approved unanimously. Telegram to Mr. John W. Taylor, University of Louisville, Kentucky, reading as follows: "Board of Governors of the Federal Reserve Systern has appointed you director of Louisville Branch spf Federal Reserve Bank of St. Louis for three-year term beginning January 1, 1949, and will be pleased to have your acceptance by collect telegram." Approved unanimously. 2204 12/27/8 -2- Letter to Mr. Neely, Chairman of the Federal Reserve Bank er Atlanta, reading as follows: "This refers to your letter of November 23, 1948 and our conversations when you were in Washington recently with respect to the Board's attitude regarding the participation by officers and employees of the Federal Reserve Banks in civic and community activities. As an example, you mentioned the possibility that one of the men at your Bank might serve as a member of a committee in connection with a new Department of Commerce proposed for the State of Georgia. "As you know, the Board in 1915 adopted a resolution to the effect that persons holding political or Public office should not serve as directors or officers of the Federal Reserve Banks. Since that time, however, the Board has made numerous exceptions to its Resolution in particular cases involving service In civic and community positions, especially where it appeared that the position was not political in nature and where it carried only nominal or no compensation. In most instances the office in question was appointive rather than elective. By way of illustration, the Board has stated on different occasions that it would Interpose no objection to the service of officers, directors or employees of Federal Reserve Banks as members of a State planning board, a State conservation and development commission, a State park board or park commission, a State social security board, a State ! exiling commission, the planning board of a township, a 'own finance committee, and a town advisory board on Parks and playgrounds. In a letter dated June 15, 1938 l'RLS #3152) the Board made a general exception to its esolution in the case of officers and employees serving as members of school boards or boards of education. "Although the 1915 resolution applied only to of!leers and directors, the Board has taken the position that the principle involved applies also to employees °f Federal Reserve Banks. However, the Board has s_tated that officers and employees of the Banks should reel free to render public service of a non-political ilaracter if they are in a position to do so without interference with their duties at the Bank and if the Position is free from party politics and involves no Political activity in order to obtain or retain the Position. A 2205 12/27/48 -3- "It is hoped that the above will be helpful to you in indicating the position of the Board with respect to this matter. If you should require the Board's advice With respect to any particular case we shall of course be glad to consider it." Approved unanimously. Letter to Mt. Denmark, Vice President of the Federal Reserve 411k of Atlanta, reading as follows: "Reference is made to your letter of December 20, 1948, submitting the request of the Marion County Bank1.11g. Company, Guin, Alabama for approval, under Section 24A of the Federal Reserve Act, of a proposed investment in bank premises of $29,969.92, for the construction of a new bank building at Guin. "In view of your recommendation and the information submitted, the Board of Governors approves the investment in bank premises as proposed." Approved unanimously. Letter to Mr. Austin, Vice President of the Federal Reserve 44k Of Dallas, reading as follows: "This refers to your letter of December 17, re,.arding the penalty of $68.82 incurred by the First 118 :tional Bank, Lake Providence, Louisiana, on a deliciency in its reserves for the period ended November 30. "It is noted that the deficiency resulted from the inadvertent failure of the subject bank's correspondent to complete a transfer of funds, that the stIbiect bank did not detect that the transfer had 2 1.ct been completed through the reconciliation of the '!ederal Reserve Bank daily transcript of account, and that the bank had not had a single deficiency since november 1928. Ba,k "In the circumstances, the Board authorizes your —A not to make the assessment." Approved unanimously. Oki Letter to Mr. E. H. Foley, Jr., Acting Secretary of the lireesurY, Treasury Department, reading as follows: "Reference is made to your letter of December 21, 1948, regarding a proposed change in the procedure for preparing new paper currency for shipment by registered mail. "A copy of your letter has been forwarded to the President of each Federal Reserve Bank along with a r .equest for early advice as to whether any objection ls seen to the proposed procedure. We shall communicate with you further as soon as we have heard from the Reserve Banks." Approved unanimously. Letter prepared in accordance with the actions at the meet- 14 on December 6, 1948, to Mr. Erickson, President of the Federal Ileserve Bank of Boston, reading as follows: "The Board of Governors accepts the budget of the Federal Reserve Bank of Boston for the year 1949, as transmitted with your Bank's letter of September 23, 1948, except that with respect to the amount provided for the Check Collection function the Board would like further information. "In connection with the review of the budgets for the forthcoming year, a question arose regarding the illstification of the expenses incurred by certain Reserve Banks incident to the photographing of all outg°ing country 'checks. "Since only three Banks, including the Federal Reservee Bank of Boston, decided to make photographic records of country items after the requirements with to description of such items in incoming cash t -Letters le ters were discontinued by all Federal Reserve Banks .?11 MaY 1, 1948, the Board would be interested in knowWhether your Bank, in the light of its experience a. in the light of the conclusions and experiences of c) ''Ile other nine Reserve Banks, still feels that the cost I- maintaining photographic records is justified. n 22u 12/27/48 -5- "It will be appreciated if you will advise us the aPproximate cost per thousand items to perform this Operation at your Bank showing separately (1) direct out-of-pocket expenses, such as rental of equipment and cost of film and other supplies, and (2) other expenses, such as salaries of employees, if any, whose time is devoted to photographing checks, developing and filing films, etc. In addition, please also advise the cost of any equipment purchased for use in connection with the operation, such as film viewers, developers, file cabinets or shelves, etc., It would also be helpful if you could furnish information as to the extent it was necessary to refer to the films and as to the value you found in having the photograPhic records available. "It is the Board's understanding that your Bank is the only one whose regular check handling procedure involves the doublelisting of all outgoing country checks. In this connection it will be appreciated if you will advise us the approximate cost per thousand items of the second listing of such checks. "There are enclosed copies of two volumes containing memoranda and tables prepared in connection with the Board's review of the 1949 budgets of the Federal Reserve Banks. Copies of these volumes, which are .similar to those prepared in connection with the 1948 Udgets, were given to the Chairmen during their recent conference in Washington." Approved unanimously. Letter prepared in accordance with the actions at the meet°11 December 6, 1948, to Mr. Sproul, President of the FederalReserve Bank of New York, reading as follows: "The Board of Governors accepts the budget of the ederal Reserve Bank of New York for the year 1949, as tr ansmitted with your Bank's letter of September 16, 1948, except that with respect to the amount provided or the Research and Statistical function the Board woUld like further information. "The Board is somewhat concerned by the fact that Your budget reflects a further expansion in research f 2‘,408 12/27/48 -6- "activities. It is noted in this connection from the explanatory statement submitted with your 1949 budget that the increase of $81,000, or 18 per cent, over expenses for the 12 months ended June 30, 1948, is due in Part to provision for additional help and for employees added during 1948. In the past the Board has recognized, and in some instances has urged, the need for the extension of the activities of certain of the Reserve Banks in the research field. In view of the fact, however, that your Bank has had for many years a well-established Research Department, which has conducted a broad and excellent research program, continued expansion of these activities at the Federal Reserve Bank of New York was not anticipated. Accordingly, the Board would like to have further advice with respect to the need for the increases in personnel and the consequent additions to Your 1949 budget. "It is also noted that the budget for the Provision Of Personnel function for 1949, when compared on a per capita basis with the budgets of other Federal Reserve Banks, continues to be high. The costs of administration and personnel maintenance, employees' magazine, and the medical program, which were already high, have continued to rise and the Board questions the advisabllitY of increasing such costs. It is suggested that reconsideration be given to the policies with respect to these items, and it is hoped that advantage will be taken of every opportunity to reduce such costs wherever Possible within the limits of accepted and efficient administration. "There are enclosed copies of two volumes containmemoranda and tables prepared in connection with the Board's review of the 1949 budgets of the Federal ?serve Banks. Copies of these volumes, which are ,1111ilar to those prepared in connection with the 1948 pudgets, were given to the Chairmen during their recent conference in Washington." Approved unanimously. Letter prepared in accordance with the actions at the meet°4 December 6, 1948, to Mr. Gidney, President of the Federal lieser ve Bank of Cleveland, reading as follows: 220J 12/27/48 -7- "The Board of Governors accepts the budget of the Federal Reserve Bank of Cleveland for the year 1949, as transmitted with your Bank's letter of September 30, 1948, except that with respect to the amounts provided for the proposed movie in the Bank and Public Relations function and for the Check Collection function the Board would like further information. "With regard to the provision in your budget of $10,000 for the production of a movie, the Board has some question as to the advisability of undertaking such a project during the present period of high prices. Accordingly, your comments on the possible deferment of this expenditure would be appreciated. "In connection with a review of the budgets of the Federal Reserve Banks for the year 1949, a question arose regarding the justification of the expenses incurred by certain Reserve Banks incident to the photographing of all outgoing country checks. "Since only three Banks, including the Federal Reserve Bank of Cleveland, decided to make photographic records of country items after the requirements with respect to description of such items in incoming cash letters were discontinued by all Federal Reserve Banks on May 1, 1948, the Board would be interested in knowing whether your Bank, in the light of its experience and in the light of the conclusions and experiences of the other nine Reserve Banks, still feels that the cost Of maintaining photographic records is justified. "It will be appreciated if you will advise us the aPproximate cost per thousand items to perform this oPeration at your Bank showing separately (1) direct °Ilt-of-pocket expenses, such as rental of equipment and cost of film and other supplies, and (2) other expenses, such as salaries of employees, if any, whose time is devoted to photographing checks, developing and filing films, etc. In addition, please also advise the cost of any equipment purchased for use in c_onnection with the operation, such as film viewers, developers, file cabinets or shelves, etc. It would !lso be helpful if you could furnish information as O the extent it was necessary to refer to the films ! tnd as to the value you found in having the photographlc records available. "There are enclosed copies of two volumes containmemoranda and tables prepared in connection with 2210 11427/48 -8- "the Board's review of the 1949 budgets of the Federal Reserve Banks. Copies of these volumes, which are similar to those prepared in connection with the 1948 budgets, were given to the Chairmen during their recent conference in Washington' Approved unanimously. Letter prepared in accordance with the actions at the meet1111, 11 December '' 6, 1948, to Mir. Leach, President of the Federal Re- 811're Bof Richmond, reading as follows: "The Board of Governors accepts the budget of the Pederal Reserve Bank of Richmond for the year 1949 as transmitted with your letter of September 23, 1948. "It is noted, however, that the costs of several activities in the Bank's Personnel budget for 1949 have increased rather substantially over expenses for the Period ending June 30, 1948, and that the total cost has also increased. The Board realizes that expenditures for these purposes have been increasing during the Past few years because of the establishment of new personnel policies but it is hoped that the enlarged personnel program will not result in further increases in expenses. t • "There are enclosed copies of two volumes conlining memoranda and tables prepared in connection ! nth the Board's review of the 1949 budgets of the -u'ederal Reserve Banks. Copies of these volumes, which EIre similar to those prepared in connection with the , 4-948 budgets, were given to the Chairmen during their recent conference in Washington." Approved unanimously. Letter prepared in accordance with the actions at the meet°4 December 6 1948, to Mt. McLarin, President of the Federal • Ileaerv e Bank of Atlanta, reading as follows: "The Board of Governors accepts the budget of the PeA ,keral Reserve Bank of Atlanta for the year 19149 as 2,1,41_1 12/27/48 -9- "transmitted with your letter of September 11, 1948, except the special fund of $25,000 included in the item 'Meetings, conferences, etc.' of the Bank and Public Relations function. "It is noted from the material submitted with your budget that the Executive Committee instructed the officers of the Bank to place in the budget the special fund of $25,000 for the purpose of 'public relations activities and research', which amount was 'to be over and above the sum regularly placed in the budget for Bank and Public Relations activities'. It is understood that when the budget was submitted no definite Plans had been formulated regarding the projects for Which this sum is to be used. Before approving this item in your budget, the Board feels that it should be informed regarding the purposes for which this fund is to be used. Upon receipt of such advice, the Board will be glad to give further consideration to this matter. . "There are enclosed copies of two volumes conQ:uning memoranda and tables prepared in connection !ith the Board's review of the 1949 budgets of the rederal Reserve Banks. Copies of these volumes, which are similar to those prepared in connection with the 1948 budgets, were given to the Chairmen during their recent conference in Washington." Approved unanimously. Letter prepared in accordance with the actions at the meet- ' 11 December 6, 1948, to Mr. Peyton, President of the Federal ve Bank of Minneapolis, reading as follows: "The Board of Governors accepts the budget of the /iederal Reserve Bank of Minneapolis for the year 1949, ts transmitted with your Bank's letter of September 13, p948, except for the amounts provided in the Bank and , Ublic Relations function for the item 'Meetings, conerences, etc.' and for the replacement of the movie '1'-tek of Banks and Business.' The Board would also — 11,:4 e to have further information as outlined below with respect to the Check Collection function. I 12/27/48 -10- "The total amount provided in the budget of your Bank for the Bank and Public Relations function is relatively much larger than that for any of the other Federal Reserve Banks and, as you know, from time to time in the past there has been discussion of the question whether the annual expenditure, estimated for 1949 as $13,500, for the Annual Conference for Ninth District Bankers is justified. The Board has reached no conclusion in the matter of the Annual Conference but feels that the question of policy should be settled one way or the other. The Board will appreciate it, therefore, if you will forward for its consideration a full statement of your views as to the benefits derived from the Conference and the reasons that might be advanced to justify the expenditure as an appropriate one for a Federal Reserve Bank. The Board also has some question as to the advisability of undertaking a movie project during the present period of high prices and your comment on • the possible deferment of this expenditure would like'wise be appreciated. "In reviewing the budgets of the Federal Reserve Banks for the year 1949, a question arose regarding „tshe justification of the expenses incurred by certain tieserve Banks incident to the photographing of all out°111.g country checks. "Since only three Banks, including the Federal Reserve Bank of Minneapolis, decided to make photographic records of country items after the requirements with re!Peet to description of such items in incoming cash letters were discontinued by all Federal Reserve Banks on 73r 1, l9148, the Board would be interested in knowing 1.111ether your Bank, in the light of its experience and ln the light of the conclusions and experiences of the Other nine Reserve Banks, still feels that the cost of Maintaining photographic records is justified. "It will be appreciated if you will advise us the approximate cost per thousand items to perform this uoPeration at your Bank showing separately (1) direct It-of-pocket expenses, such as rental of equipment . : and cost of film and other supplies, and (2) other enses, such as salaries of employees, if any, whose is devoted to photographing checks, developing a 1c1 filing films, etc. In addition, please also ad, v1 'se the cost of any equipment purchased for use in T 22 12/27/48 -.11- 'Connection with the operation, such as film viewers, developers, file cabinets or shelves, etc. It would also be helpful if you could furnish information as to the extent it was necessary to refer to the films and as to the value you found in having the photographic records available. "There are enclosed copies of two volumes containing memoranda and tables prepared in connection with the Board's review of the 1949 budgets of the Pederal Reserve Banks. Copies of these volumes, which are similar to those prepared in connection with the 1948 budgets, were given to the Chairmen during their recent conference in Washington." Approved unanimously. Letter prepared in accordance with the actions at the meet1118 on December 6, 1948, to Mr. Williams, President of the Federal —ye Bank of Philadelphia, reading as follows: "The Board of Governors accepts the budget of the Federal Reserve Bank of Philadelphia for the Year 1949 as transmitted with your Bank's letter °f September 30, 1948. tai :There are enclosed copies of two volumes con111-ng memoranda and tables prepared in connection „7,"-th the Board's review of the 1949 budgets of the l'ederal Reserve Banks. Copies of these volumes, Vhich are similar to those prepared in connection th the 1948 budgets, were given to the Chairmen liring their recent conference in Washington." r Approved unanimously, together with similar letters to the Presidents of the Federal Reserve Banks of Chicago, St. Louis, Kansas City, Dallas, and San Francisco. Letter to Mr. Willett, First Vice President of the Federal Bank of Boston, reading as follows: "Reference is made to your letter of December 10, 1948 in which you advised that it appears expenses t rOr 1948 at your Bank. will exceed the budget estimates or the year as follows: Nailvd 12/271)48 -12- $24,440 "General Overhead 60,131 Provision of Space 7,065 Furniture and Equipment 6,816 Provision of Personnel 25,947 General Service 19,947 Postage and Expressage 20,982 Consumer Credit 2,607 Securities 11,034 Currency and Coin 49,195 Check Collection .6,862 Accounting Legal 9 6,998 Bank and Public Relations 5,664 Bank Examination 24,110 Federal Reserve Note Issues "The Board accepts the revised figures as subMitted, and appropriate notations are being made on the Board's records." Approved unanimously. Letter to Mr. Mills, Vice President and Cashier of the Fede 1 'eserve Bank of Minneapolis, reading as follows: i "Reference is made to your letter of December 17, 1?48, in which you advised that it appears expenses head office and branch will exceed budget ' stimates for the year as follows: Helena Branch Head Office General Overhead $1,458 $16,830 ?I'ovision of 893 8,843 Space Pu 4,159 rniture and Equipment5,345 ?°8tage and Expressage 14,176 212 ..tock of Supplies 984 4.nsurance 396 Fierlelamer Credit 35,500 2,279 oecurities 68 e r ncY and Coin 13,420 4,421 iikleck 4,492 763 Collection B44k and Public Relations 10,350 ,ank E Examination xamination 30 ?e 144 Poreign Reserve Note Issues 1,750 ii„ "The Bcard accepts the revised figures as subtheLed, and appropriate notations are being made in Board's records." Approved unanimously. 4 22.1.6 12/27/48 -13- Memorandum dated December 24, 1948, from Mr. Hooff, As- tat Counsel, recommending that there be published in the law ciel tment of the January issue of the Federal Reserve Bulletin te'tenlents in the form attached to the memorandum with respect to the fo llowing subjects: Consumer Instalment Credit Amendment to Regulation W Preservation of Records Conversion of Non-Instalment Credit to Instalment Basis Amendments to Summaries of Previously Published Interpretations Deliveries in Anticipation of Sales Sets and Groups of Articles. Approved unanimously; Secretary. 4131)roved: Chai tern
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