Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, December 6, 1948, Volume 35, Part 4

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2047

MI-Mites of actions taken by the Board of Governors of the

1. 1e„aer

8.1 Reserve System on Monday, December 6, 1948.

the

The Board met

13°41M. Room at
10:05 a.m.
PET8ENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

McCabe, Chairman
Szymczak
Eccles
Draper
Evans
Vardaman
Clayton
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

4*,14_

Carpenter, Secretary
Sherman, Assistant Secretary
Morrill, Special Adviser
Thurston, Assistant to the Board
Riefler, Assistant to the Chairman
Smead, Director of the Division of
Bank Operations
Vest, General Counsel
Nelson, Director of the Division of
Personnel Administration
Leonard, Associate Director of the
Division of Bark Operations
Myrick, Assistant Director of the
Division of Bank Operations

r„
re this meeting there had been sent to each member of
'

194
t-11"ec

illenlorandum from Mr. Smead to Mr. Vardaman dated Novem,
,raumitting two volumes covering the 1949 budgets of

:
74t.4
8-1 Reserve Banks together with a memorandum from Mr. Myrick,
41°Verra,
1/ 1948, and drafts of letters to the Federal Reserve
1144ke
respect to the budget.
Ati r
commenting upon the work done in analyzing the budgets,
the lie

called upon Mr. Smead who stated that the 1949 budgets
sel-ve Banks
totaled 93 million dollars, an increase of 8




2048
12/6/48
r41111°11

dollars or 9.7 per cent over expenses for the twelve months

"dtrig J1I11e „

1948, that all Federal Reserve Banks reported in—

elaSeS

reflecting general salary adjustments.and higher costs for
Netically all
nonpersonal items such as supplies, furniture and
ecili1Plaent,
traveling expenses, postage, crinting, taxes, and repairs
alter
ations, and
that a larger volume of work was expected in the
rItleiPal
units but
that the volume increases were considerably less
1)Nellt
a.gevise
than the increases in cost. Mr. Smead went on to say

the't

there 14as
considerable variation in the budgets of the different
for
Iseeearch,
e
bank and public relations, provision of personnel,

4411.11etion, and
auditing functions, and that these budgets, az
41 Preiri
-°118 Years,
appeared to depend largely upon policies followed.

ot the respective Reserve Banks rather than upon any uniform measure
Of

4140141t

the8e

that was required to accomplish desired results in any

atkci

Pelticular functions. In the course of his remarks Mr.
t
ed that
the Division of Bank Operations contemplated an
aloll or
k

ti 4,

or in the coming year by the Division in studying the

,4,041

°Per`'tions of the Federal Reserve Banks.

Chilirtan
tob
blkiht

McCabe suggested that it might be helpful to have

-e of the
Chairmen's Conference work with members of the
exl
effort to find some standard by which to judge the
hr°11 Iprclvision of personnel, bank and oublic relations, and
114d
StEtiStiCS SO




that there may be some guides available

2049

-3ccnsideration of future budgets for these functions.
Mr' Smead said that there were no such guides at the present

t
ize.

Mr.
ties,

Thomas,

Director

of the Division of Research and Statis-

Noyes, Assistant to the Director of the Division of
ReNtreh ard

Sta.tisties) entered the meeting at this time.

141r. Thomas
stated that the research function budgets of the
hserve
la•ee

Baxiks

after

appeared to be reaching something of a leveling off

having increased rapidly and substantially over a number

Ye4rs) that
the increase proposed for 1949 would total about 20
%it
above
expenditures for 1948, that most of this increase
rqlecteci
hieher
salary
levels or the filling of positions that had
'\re.cejat at
the
little
beginning of the year, and that relatively
4i0/1 in
the type
ot4.
research departments
of work carried on by the
Reserve
contemplated in the 1949 budget.
Banks
was
resP°11se to a question from Mr. Eccles as to whether the
ch
0141

41,
t4.s

Dro

De'rtments of Reserve Banks undertook projects on their
1,1re Or whether they consulted with the Board concerning

,
m
A4, c)1,y Jects
'--L. Thomas outlined the work of the System Research
ittee in
this connection and stated that all major

submitted to him or to the Committee before they
1111. 141 take
II) that the Board had done a considerable amount of
.11z;111,
IreYing the research budgets of the Reserve Banks during




2050

-4Aast
With a view to determining a standard by which research
elPellditures might
be measured, and that he felt the slackening aphrerit 14
the last few
years in the rate of increase in Reserve Bank
bilagets in
dicated that most of the Banks were getting their staffs
tairlY well
built up
to the standard that the Board contemplated
1?hezt it
encouraged the development of regional research programs
Zeve
1 Years
ago.
Mr.
On
4c1k.al

Evans raised the question whether some of the Banks were
research activities beyond their needs, and whether the

lieserve Bank of New York was doing work in certain fields

lilore

properly should be done by the Board. This point was
11..k118sed
together With the question of the steps that might be
telte
develop a
basis on which the research budgets could be estab
)3y

There was
also a discussion of what might be accomplished
coliZlittee of
chairmen and members of the Board as proposed by
rkirl.
McCabe and
what the scope of the Committee's work might be.
At the conclusion of the discussion,
Mr.
pls. Evans moved that the Board request the
chni en's Conference to appoint three
1.1,:nlen (or other Class C directors) to
with two members of the Board, to be
meJ-ected by Chairman McCabe, in the developtnt of standards or policies to be used in
0? future in preparing and approving budgets
st!
he Federal Reserve Banks for research and
bank and public relations, and
sion of personnel.

6arr This motion was put by the Chair and
d unanimously.




2051
-5Upon motion by Mr. Evans, it was also
voted unanimously to request the Federal
Reserve Bank of New York to submit additioninformation along the lines suggested by
r'F* Evans in connection with its proposed
research
budget for 1949. •

Turning to a discussion of the budgets for the bank and public '
l elations
function, Mr. Smead stated that each Reserve Bank set
11 its

Program in this field and that the Board had not given
of the type of program that should be followed or

(ekept bY
the
t114t shoLad be acceptance of the budgets submitted) of the amount
spent in performing it.

During the discussion, at-

teliti°4 /4as called to
the fact that the bank and public relations
tc>f
the
Federal Reserve Bank of Minneapolis (which included
13'5°° tc3r the Annual Conference for all Ninth District banks) was
°T th 3
-argest in the System, that the increased amount requested
tor the ye„
1949 largely reflected the plan of that Bank to revise

tta
14°1q14g,
ic

pictIare at a cost of
re
lations

activities) and that the budget which for several

COnsidered o
Oli

20,000 for use in carrying on its

in relation to the size of the

be t

even further out of line by the increased exc°11templated during the coming year.
It was agreed unanimously that the
Pol1s Bank should be informed that
c''e Board questioned the desirability of
1,1 1T1111.ing the annual conference of banks
ai 'fle Ninth Federal Reserve District, and,
r,this time, of spending a large amount to
fIrtee the Bank's motion picture, and that
-Litional information, along lines discussed,
10
:
0
;
2 desired to assist in further consideration

a

the question.




2052

-6aziother

At this point Chairman McCabe left the meeting to keep
aPpo
intment.

With respect to the Federal Reserve
811k of Cleveland, it was noted that a
2-0,000 item was included for a motion
Picture and it was agreed unanimously
that
question should be raised with the
Bank as to whether the making of the
fliOVing
Picture should not be deferred.
With
respect to the proposed bank and public relations
tklu
,
be t, tor
the Federal Reserve Bank of Atlanta, attention was
ee'llecl to
the
inclusion of a special item of 325,000 to be used
41' 114Dlic
relations activities and research. It was stated that
clerinite

plans had yet been made as to what projects would be

el‘t4Itela 'With

these funds, but that the Bank had suggested that

/Dr°11(1133-3r would
be used in holding meetings and conferences,
641 thb,
tile

inclusion of the sum was a recognition of the fact

he
ifotk

Atlanta Bank had
not done as much bank and public relations'
Past as some
of the other Reserve Banks.
Cl
aytori suggested that the Atlanta Bank be informed that

would not
approve at this time the $25,000 special item
hat Viler). a
-11t
program for use of the funds had been developed, and
1)

such use of funds was demonstrated, the Board would

`k to
sider the matter further.

.This suggestion was agreed to
nlmously.




2053
1V6A8
-7At this time Messrs. Thomas and Noyes left the meeting and
!lessrs.
Millard, Director of the Division of Examinations, and
G°°arnall,Federal Reserve Examiner, entered.
In a discussion of the examination budgets of the Federal
hzerveBanks Mr.
Vardaman expressed the view that some of the Federal Re8erve Banks were inclined to Play down. the importance of the
Nrai/lers and
that an effort should be made to correct this situa,1.011
axlclt° 1-111Prov.e the quality of personnel wherever needed.
R

141**

elaYton suggested that this was a matter on which the

13°-11

'should. Work
through the Federal Reserve Banks, and that the
1)01103r
the Board
should not be one of having examiners make their
lattieLtio
011 the basis of current monetary and credit policy. He
s4tcl, thEtt the

1.

examiner should develop the factual situation at

ecarqineci and the officers should determine the steps to be
the light of
current monetary and credit policy. He agreed,

11°11%1'' that
the Board might continue to emphasize with the Vice
1.43ats1 charge
of examinations that adequate salaries be paid.
14r.Varclaman questioned whether salaries paid examiners by
e4raa
Reserve Banks were on a basis comparable with salaries
bY Other supervisory agencies.

Mr. Millard stated

11 telt that
1?Nt i
these salaries were comparable at some Banks but
()Iqe1' 'at Others.




-8141,

14 c
ommenting on this point and upon the budgets generally,

-eeles stated
that consideration by the Board of the budgets of
the ?
ecleral
Reserve Banks should not be on the basis of holding down
etPerlditures by the
Banks but of making constructive suggestions
11114tht at times
increase expenditures as well as reduce them.
It was voted unPnimously to advise
he Banks where
it was believed salaries
111 the examination department were substandard, that the Board was giving further
consideration to the question of
salaries of examiners as related to salaries paid by other agencies and that
this question would be placed on the
l
. enda for consideration at the next
4-residents, Conference.
a d
iscussion of the budgets

for the audit function at the

40

serve Banks, Mr. Millard reviewed the conference which he
lth th
tiohort e aUditors of the Banks at the time of the recent conven11 National Association of Bank Auditors and Controllers.
SZead referred to the decision at the meeting on Sep-

21,
1948 that letters be sent to the Federal Reserve Banks
4to/1.
eleve,,
-1..and, and Minneapolis requesting information with
14

Photographing
outgoing country checks and asking whether,
light
of their experience since the practice was adopted last
h

lt N1
eg/lirements for description of cash items were eliminated,
ect ciesi
tht.
rable to continue the practice. Be also suggested that
1.qtt

to
-°ston include a question as to the value and purpose




"055
12/6/48
(1olthle -1 Is
ting of outgoing country checks, a rractice which was
l'13110\4 c1 Iv
that otflk
at a considerable cost.
It was aEreed unanimously that
the budcet letters to the three Federal
Reserve Banks should contain the
comments referred to by Mr. Smead.

t„ sm The meeting
Nt

then recessed and reconvened at 2:20 p.m. with

e attend ance
as at the close of the mornin

ses5fon, except

• Srnead, Nelsen, Millard, Leonard, Myrick, and Goodman
'
c t ...Present;
Co1,14sen,,

Cha-Irman McCabe, Mr. Townsend, Associate General

'
344 MT. Paul C. Hodge, Technical and Legal Adviser to Mr.
Igere Present.
ills• Clayton
referred_ to the discussion at the meeting on

?rid

iber 3,
194e), regarding the motion
r:°1‘kration. r
erluesting his disqualification as

filed by Transamerica
a participant in the

40cNittie
against that CorporttIon under the Clayton Act,
t411111 th4t)
after considering the matter further, he had come to
that it would be preferable from the standpoint of
-; insteqd
of his disqualifying, he refrained from
th,,

par-

Proceeding in any way with the understanding that

01 Ui5 disqualificatton would not be decided until such
i L ioecarie
necessary to decide whether he would or would not
tQl-DR:t.,,
ttN
th

tIle
Proceeding.

He stated that while this would re-

oDpc)
rtunity for him to make a statement with r.iirect to




2056
12/6/48
-10tile

charges made
in the affidavit filed with the motion to disqualIrY) he
felt that
course would be preferable to his disqualification
111th the
possible implication that, as charged in the affidavit, the
tc)Elisci had
been. influenced in its dealings with Transamerica.
in a

discussion of the matter Chairman McCabe said that the

one for Mr. Clayton to make and the latter said he had
ecl llot to
IrELS

Participate with the understanding that the question
cliscillalification would be decided later.
Thereupon it was agreed that there
Should be no present disposition of the
motion to disqualify Mr. Clayton.
esrs. Eccles and
Clayton withdrew from the meeting at this

Reference Was
made to the motion filed by Transamerica
4441' clEtte
then
of

l

t

December 1, 1948 requesting the Board to hear oral

011
motions to be filed for preliminary consideration and

ti° the

Zotion

the

filed on December 2, 1948 asking that the Board order

Prodlictiori
()r

the

Of

records in the files of the Board and the files of

Board relating to the Transamerica proceeding.
There was presented a draft of stateorder with respect to the motions
was read, discussed, and approved
1mously in the following form:

"DNI1ED STATES OF AMERICA
BEFORE THE
OF G
OVERNORS OF THE FEDERAL RESEEVE SYSTEM
MATTER OF
-,41SAI,TER
ICA CORPORATION

tei
411i




2037

-11"STATEMENT
On December 1, 194espondent filed a motion 7t
c ,
s_ting the Board to hear oral argument on and determine
motions which respondent has not yet filed, but
lielch it
intends to file at the opening of the hearing
These motions are described as likely to 'in:
13
basic questions respecting the persons who shall
,
-iciPate in the determination of this proceeding, the
Isdicti
-on of the Board of Governors, the venue of the
eZediug, the sufficiency of the allegations of the
arj:aiht, the ma er in which hearings in the proceeding
pott''0 be
conducted, and other questions which it is imPre: t° have determined officially in advance of the
Ofl of any evidence in this proceeding'.
deci,Ihe Board does not believe that it is appropriate to
N,'"e at this
time which, if any, of the motions respondent
Eletjile in this proceeding will require or justify either
itles-x). by or oral ar
ent before the Board. When the hear% ?De, respondent will have adequate opportunity to pree
motions to the Hearing Officer in the ordinary
Ifhetl:. At that time the Hearing Officer can determine
13Y th:r,anY of the motions so presented require decision
If s - 130ard before the taking of testimony commences.
toarci
°
'he will so advise the Board, at which time the
Dalt will take under consideration any request on the
°T1 counsel for the presentation of oral argument.
Ifhich
'
11 December 2, 1948, respondent filed another motion
asks
1i
that the Board order the production of 'any and
tl13;1111tes, records and papers contained in the files of
and the files of each member of the Board, showThe official vote and any other action of
the 14
ettd:'°ard and each member of the Board authorizing
be directing that the complaint in this proceeding
served
and filed, and any and all statements,
Or
by 4or written, made by members of the Board and
illm
ers to the Board as to the reasons for initiatlis Proceeding, and the identity of the persons
:
I)res
tic) -lit at the time when any such vote or other acWas
taken.
The official vote and any other action of
4114 Bo
je.rd and each member of the Board authorizing
the ii recting that an investigation be undertaken by
Jeet -8.rcl's counsel or staff with respect to the submatter of the complaint in this proceeding, and




2058

-12:tally and all statements, oral or written, made by
the
members of the Board and by others to the Board
as to the reasons for initiating such investigation,
and the
identity of the persons present at the time
when
any such vote or other action was taken.
'3. Any and all correspondence and other com'
L1cations, and memoranda and notes thereof, from
betnilarY 1, 1942 to date, of the Board and each memel. of the Board and the Board's employees with other
rigc)vernment officials, with competitors of Transamerica
rPoration or
competitors of any bank in which Transotberlca Corporation has an investment, and with any
of"er Person or corporation engaged in the same type
bi_tisiness as Transamerica Corporation or any bank
re wilioh it has an investment, with reference to a
ipicc).111Inendation or request for the filing of the comth
:
illt in this proceeding or any other complaint under
ie-.anti-trust laws, or the taking of any other action,
coglslative or otherwise, designed to stop, limit or
exati
etr
.01 the growth, development or progress of TransizIvreica Corporation or any bank in which it has an
trn
.ent, and showing the reasons for any such
actio
sii

3

reie 14. Any other papers of any kind whatsoever
vant to the
issues of this proceeding, the prooil
clret
i÷
i°11 of which may be requested by the respondent
or ;
'
.-.L S counsel from time to time during the course
"le Proceeding.
llest"a
ltdoes not appear to the Board that the material rein P
aragraphs 1, 2 and 3 of respondent's motion
r
v,
ell
i the remotest relevance to the issues which have
t 1eTi secl by
the complaint herein and which are to be
the-T the forthcoming Proceeding. Certainly the record
4
rd t s voting on the issuance of the complaint
the ist,
Transamerica or on the investigation which preceded
trlithss
,
r 11411ce of that complaint can have no bearing upon the
11%4 CI
'falsity of
the charges which respondent is called
cotZ,!!et• And the same is true as to any correspondence
-eletir:ll-cations which the Board may have had with others
ot,i
:
-e either to the issuance of the complaint against
c;oiolite
oitthoerrwtio the 'taking of any other action, legislase, designed to stop, limit or control the
thi°11 0 de/Te
n
loPment or progress of Transamerica Corporany
bank in which it has an investment.' Since
'
e- °n alone is amply sufficient to justify denial




O'9
1448
-13iof the
motion as to Paragraphs 1, 2 and 3, there is no
need
to
Quoi4. discuss other equally compelling reasons for so
;
Paragraph 4 of respondent's motion presents no
que
it
0n for the Board's decision at this time because
„'
oes not seek the present production of anything. If
when
11es o respondent formally requests access to other
sile
f the Board, the Board will at that time consider
requests in the light of all considerations then
'
- evant."
"ORDEE
or the
reasons set out in the Statement hereinapPearing, respondent's motion for oral argument .
tot.uete
nation before the hearings commence of certain
not yet filed in the proceeding is denied; and
tlie rtion for the production of certain material from
°ard's files is likewise denied.
BY the Board.
above

tt

(SEAL)

S. R. Carpenter,
Secretary.

ciG°vernors Eccles and Clayton took no part in the
eollsi"
”be eration or
decision of these motions.
eebe 6, 1948."
The following order was then presented and
approved unanimously.
"UNITED STATES OF AMERICA
I.(3ARD 0
BEFORE THE
- GOVERNORS OF THE FEDERAL RESERVE SYSTEM
TTER OF
--441ICA CORPORATION
n1
"ORDER
the D131,1..PPearing
e
to the Board that, at the opening of
hearings of the above -entitled matter, re64b7aelit filed three separate motions and requested oral
N'teithereon before the Board prior to the taking of
"0
Y in the proceeding, it is by the Board
rlIZ
.ellted —"'
e
that oral argument before the Board be preOO
morning, December 11, 1948, at 9:30 a.m.
1202 -ul the Board's offices in Washington, D. C.




2060

-14eal.
IT IS FURTHER ORDERED that counsel for respondent
tIVounsel for the Board each be allowed one hour and
rt minutes in which to present such oral argument.
%Ili:), IT IS FORD:1M ORDERED that such oral argument be
folitted to a discussion of the issues raised by the
°1 111g motions filed herein by respondent:
:
Motion That Complaint Be Dismissed and Notices
of Hearing Quashed and Vacated for Improper
Venue, Insufficiency of Allegations and Failure
, to Comply with Administrative Procedure Act.
c. Motion to Dismiss for Lack of Due Process of Law.
3. Motion That Complaint Be Dismissed for Lack of
Jurisdiction.
the Board.
S. R. Carpenter,
Secretary.

Hbecernber 7,
1948."
Mr.
z,•te

Draper suggested Mr. Evans be authorized to incur such

(42 dis
tinguished from traveling expenses) in connection

"t11

a„ itic°11duct

of the Transamerica hearing as appeared to him to

IDY conditions as they developed.
Mr. Draper's suggestion was ap'Loved unanimously.
Mr m
-,0 suggested that some special provision for travel
"Vei14.8
tic,,Li
) lit4e'DI)ea
a red to be justified in connection with the hearing,
flNio

4Partment and travel expenses for wives if it should

D thz 4.
Part-c4-i 4

Pants from the Board were required to be on the

c°ast
a considerable period of time.
Iv
It was agreed the Personnel Comtittee would submit a recommendation
0 the
Board on this matter.




2061

-15At this point Messrs. Eccles and Clayton returned to the
liessrse

and all of
the members of the staff with the exception of

CarPenter and Morrill withdrew. In compliance with the
"ti°11 t k
a -en. at the meeting on Friday, December 3, 1948, the Perso
,
)
04)nlinittee
t10118:

submitted the following memorandum of recommenda-

sheailL
(1) The title of Associate General Counsel Townsend
ue changed to Solicitor and there shall be assigned
110„,,,
41) subject to the direction and supervision of the
the responsibility for the representation of the
Ell [rc
,
1, in all litigation to which the Board may be a party
ceeci'°r the
:
institution and conduct of all formal pro
by or on
Bioris
behalf of the Board to enforce provi13
c)f law or of the Board's regulations. Since the
estIllaY be called upon from time to time to determine
ktin,i,°fle arisinc, during or in connection with such liti°r Proceedings involving the need for independent
acivisprvice, the Solicitor shall keep the General Counsel
able 17 currently
as to all developments and make availslIch ;
o4him all documents and records in connection with
the 0
°fle. Likewise, the General Counsel shall keep
1111.sir
n:?e
of the Solicitor advised as to any matters
the routine conduct of the Legal Division that
so
'
'
ll ve a bearing upon formal proceedings for which
,i-Litor would be responsible.
1.1 41 ql,.
2
.) Ikon recommendation of the General Counsel,
rla1.1
concurrence of the Personnel Committee, there
be
appointed a special counsel, qualified by exand expert knowledge in governmental proceedl
a-lcf°11Iing the Administrative Procedure Act and
Provisions of law, who shall be a member of
*ect-ice of General Counsel and responsible as such
11(1' lY to him. Steps have been instituted to this
th "(3)
I gliest Since Mr. Townsend has heretofore been handling
11,/'tio4 re s3ns arising in connection with the proposed legislating to the regulation of bank holding companies,
Out
to do so under the direction and super111;e1.
or the
Board and in collaboration with the General




2()fa*

-16"(4) Then- shall be transferred to the office of
the Sol' • tor
an attorney and such secretarial or clerical
c:)11nel as he may request, with the concurrence of the
mitetral Counsel
and the approval of the Personnel Com€T. If it should develop that additional assistance
or t,°e needed, the established policies and procedure
d
ollne
owed.
Bciar with respect to personnel matters will be
zibiell(5) The Solicitor shall submit as promptly as posace° uhrough the
Division of Administrative Services in
m dance with the established procedure a budget of
the r
the gers°nal and nonDersonal expenses of the office of
?olicitor.
Appropriate adjustments shall be made
the 1D,A
-,-Lget of the General Counsel."
Mr. Morrill
stated that, upon request of Chairman McCabe,
haci
wedof
the above recommendations with Messrs. Vest and
-olftiseilci,
each
the zezcrarlaum whom had stated that the arrangement outlined
Was
se
at
d isfactory.
pos

N

-that

the

responsibilities of the Office of the

D

/
1
41eitor relat„

Mr. Townsend desired to be

not only to the conduct of the Transamerica

but to all
litigation and other enforcement proceed-

Ofth,
Board.

Mr. Morrill said that he pointed out that

rtirtiora.ricluna

expressly stated that the Office of the Solicitor
Ilc)111c111'\re "
responsibility

the representation of the Board in

.111itigation to
Which the Board may be a party and for the inc

on.duct of all formal proceedings by or on behalf of

toatcl to
) arld.

enforce Drovisions of law or of the Board's regulaT°wnsend agreed that the language clearly covered

13Q1rit
*

Mr. Townsend
also would like to be assured, Mr. Morrill




2063
12/648
-17-at he
would receive copies of the dockets of meetings of
the8°"land would be permitted to attend meetings (other than execlIttte
sessions) whenever in his judgment matters were on the docket
his office
was interested.

Mr. Morrill added that he told

4I'rIllssIric1 that
he would reconanend this to the Board and that he
tte'lre that the Board would be willing to give that assurance.
After a brief discussion, the recommendations of the Personnel Committee were
approved unanimously with the understanding that the arrangement referred to by
1.1r. Morrill with respect to copies of the
docket and Mr. Townsend's attendance at
the meetings (other than executive sessions) of the Board would be carried out.
8efors this
meeting there had been sent to the members of

the

8°41 a draft of
reply to a letter dated November 23, 1948, from
the Budget requesting an expression of the Board's
'14113%11"th respect
to a draft of bill to increase the rate of cornktletttiori or eads
ather orricer
:or and assistant heads of executive departments and
4:4 Of

tkt4 ehkliges vere

l(11QC1

During a discussion, cer-

suggested in the draft and it was understood that
be revised
along the lines of the discussion and resubmitted

thc 8°" for
4

the Federal Government.

approval.

At this
time Messrs. Sherman, Thurston, Smead, Vest, Nelson,
'alld MYrick
reentered the meeting.

41141,1,

ClaYto n
referred to the Board's action in January 1948
%3act to
reclassification of reserve cities, stating that




2064
12/%8
he hali

-18be

asked informally by Mr. Young, President of the Federal

4selilrel3anit of
Chicago, whether the Board would now give consideratio4
to a reqUeSt
of member banks in Peoria, Illinois, that the
(141
eltiti°11 of Peoria as a reserve city be discontinued.
The matter was dicussed in the light
of the fact that the action taken by the
Board on December 19, 1947 contemplated
that the classification of reserve cities
voUld be reviewed only at three-year intervals and it was agreed unanimously that
1dr. Clayton would call Mr. Young on the
telephone and inform him that the Board
:
1 46. concluded it would not wish to open
he
question at this time.
riketio

lielson then discussed the 1949 budgets for the personnel

the Federal Reserve Banks stating that increases in the
bud
gets Were general and that most of the increases reflected
4Rher
ottrib„,
"A-Lons to the retirement system due to a higher level
Bqtittie
Re added that at certain banks it appeared that the in°4
lalproposed expenditures for this function might not be jusYettril

bud,

liiere followed a discussion of the
at the conclusion of which, upon
ni?fl by Mr. Vardaman, it was voted unanii-s-LY that letters should be drafted to the
beueral Reserve Banks accepting the 1949
srgets except as agreed during the discusat this meeting.
ge

:

16t4 It was also agreed (1) that the budget
Witrrs should be addressed to the Presidents
Dr;" eoPies to the Chairmen, and that at the
-Per time in the future the question should




2065
12/6/48
-19be raised with the Chairmen whether the
letters should be sent to the Chairmen,
and (2) that copies of the budgets should
be handed to the Chairmen during the Chairmen's Conference and sent to the Presidents.
At this
point Messrs. Smead, Vest, Nelson, Leonard, and
withdrew and the action stated with respect to each of the
hereina,fte
1411111tes of
Li

set forth was taken by the Board:
actions taken by the Board of Governors of the

Re

'
el-7e System on December 3, 1948, were approved unani11s4.

Letter to
t the Presidents of all Federal Reserve Banks

Izgas

follows:
azielicixaj`uur attention is invited to the following two
Iiitex
:
Ilts to the Regulation W 'Summary of Published
Cletol[retations',
S-1044-a, enclosed with S-1044 of
er 8

, 1948:

Kra
,
b1. The first sentence of the fourth paras_,Munder the subheading 'Listed Articles' in
PP. 9, 10, is amended to read as follows:
'The classification "Refrigerators, Me:
c ,
1111-cal" does not include cabinets to hold
isplay ice cream or other products for
e; nor coin-operated machines for dispens?g beverages; nor water coolers; nor milk
°01ers not designed for household use.'
gra,,2. The first two sentences of the eighth para8,1UhUnder the subheading 'Listed Articles' in
m-11, PP. 9, 10, is amended to read as follows:
The classification "Furniture" does not
zn kkle an ice refrigerator of 12 cubic feet or
te,rated capacity. The classification "Furniki;e1 includes mirrors, unpainted furniture,
chen or breakfast room sets, swings, and pre0 icated decorative fireplaces not suitable
'heating purposes.'




2066
12/6,48
-20As You will see, these amendments concern only
1)44-4 coolers and 'prefabricated decorative fireand, as so amended, the Summary now conforms
lkne origin 1 interpretations regarding these two
"
4cles.n
- a
Approved unanimously.
Letter to Mr

o

Gilbert, President of the Federal Reserve Bank

11414s

J

reading

as follows:

"Reference is made to your letter of September 27,
e in which you advised that it appears the actual
exce2..zes for 1948 at your head office and branches will
'd budget
estimates for the year as follows:

1g

(IA
______PU4ction.

Olt
head
;421'18104 of
Space
Etoti Equipment
erdpEquso
i
1,ellere.1
T4t4ge. Service
;
Exp
1181Zrat
ressage
te
'ecikrities
0};':elleY and
Coin
A'clt
tvizcl1 Collection

San
Head
El Paso Houston Antonio
Branch Branch
Branch
Office
*' 73
-07156 $ 699
$ 102
$ 725
15,234
1,303
3,500
1,754

2,005
1,298
1,595
19,384

"d141

g
b.-1/44erea
ezefi Reserve
'irch
Note Issues
?orei
ezd.
statistical

850
1,807
2,132
65
451
3,850
5,546
702
437
802

500
2,972

988

351
4,300
655
101

14,072
lette,:14.
t l'iould seem from the statements made in your
Etria
these increased expenditures are necessary
th;P..i'°Priate notations to this effect are being made
'Qoard's records."
Approved unanimously.

11

Letter
to

Mr. Gilbert, President of the Federal Reserve

reading as follows:




2067

-21-

438,erence

is made to your letter of October 28,
which you advised that it appears expenses
194P1 In
connection with Consumer Credit operations
'
the amount to $24,174 at your head office, $2,500 at
$3Z Paso Branch, $2,995 at the Houston Branch and
tio u at the San Antonio Branch. Appropriate notar, 4 to this effect are being made in the Board's
-cords-.11
f

in




Approved unanimously.