The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
152 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Friday, February 1, 1946, at 10:30 PRESENT: Mr, Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Carpenter, Secretary Mr. Connell, General Assistant, Office of the Secretary Mr. Morrill, Special Adviser Mr. Thurston, Assistant to the Chairman The action stated with respect to each of the matters hereinafter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Pederal Reserve System held on January 31, 1946, were approved unani- Telegrams to Mr. Flanders, President of the Federal Reserve of Boston, Mr. Treiber, Secretary of the Federal Reserve Bank Ot "York, Mr. McLarin, President of the Federal Reserve Bank of Atlant ' a 11.1"- Dillard, Vice President of the Federal Reserve Bank of Chi.ca Mr. Stewart, Secretary of the Federal Reserve Bank of St. 'and Mr. Mangels, Vice President of the Federal Reserve Bank Of P, Prancisco, stating that the Board approves the establishment Ivithout , enange by the Federal Reserve Banks of St. Louis and San PN.riet 8e° on January 29, by the Federal Reserve Bank of Atlanta on Jarlua 3O, by the Federal Reserve Banks of New York and Chicago on 153 2/1/46 januarY 31, 1946, and by the Federal Reserve Bank of Boston today of the rates of discount and purchase in their existing schedules. Approved unanimously. Memorandum dated January 29, 1946, from Mr. Paulger, Director of the Division of Examinations, recommending that the salary of eal‘l oll ' creased R. Highfield, an Assistant Federal Reserve Examiner, be in- from $3,750 to $3,970 per annum and that his title be changed tope _ deral Reserve Examiner, both effective February 10, 1946. Approved unanimously. Memorandum dated January 29, 1946, from Mr. Bethea, Director of the Division of Administrative Services, recommending that the basic annual salary of each of the following employees in that biri 4 84-on be increased, as indicated below, effective as of the beginOf the next pay roll period following approval by the Board: Name Title E. P. IINce Jordan L. Moffett tollise Wrightson Operating Engineer Operator, Duplicating Devices Charwoman Salary Increase From To $2,496 $2,562 1,980 1,500 2,034 1,506 Approved unanimously, effective February 10, 1946. Letter to Mr. Wiltse, Vice President of the Federal Reserve Of New York, reading as follows: lett tlIn accordance with the request contained in your er of January 24, 1946, the Board approves the apPointment of Richard E. Hunke 154 2/1/46 -3- tras an examiner for the Federal Reserve Bank of New York, the appointments of William H. Braun, Jr. Vincent C. Butsch Anthony Giachetti Theodore F. Nowak John F. Pierce John H. Vier Albin R. Wenzel e.s assistant examiners, and the designation of Richard C. Connolly Walter A. Stoecker Dudley L. Welstead as A special assistant examiners. Please advise us of the 'at's upon which the appointments of the exminer and the assistant examiners become effective." Approved unanimously. Letter to Mr. Wayne, Vice President of the Federal Reserve Bank Of lp; --4chmond, reading as follows: "In accordance with the request contained in your letter of January 26, l946, the Board approves the designati°n of H. C. Amick as a special examiner for the Federal Reserve Bank of Richmond." Approved unanimously. Letter to the board of directors of "The Farmers State Bank," Bro oksten, Indiana, stating that, subject to conditions of membership III1Mbered 1 to 3 contained in the Board's Regulation H, the Board ap1)1 ' °Ires the bank's application for membership in the Federal Reserve S'Ystem and for the appropriate amount of stock in the Federal Reserve 13'all of Chicago. . Approved unanimously, for transmission through the Federal Reserve Dank of Chicago. 155 -4In connection with the above matter, the following letter to the Federal Deposit Insurance Corporation was also approved unanimously: "The Board of Governors of the Federal Reserve Systoday approved the application of 'The Farmers State , ank', Brookston, Indiana, for membership in the Federal it?serve System, subject to compliance with certain conAccording to the Board's information the deposits 5 the bank are not at this time insured by the Federal Deposit Insurance Corporation." tCfll Telegram to Mr. Swanson, Vice President of the Federal Reserve 41* of Minneapolis, reading as follows: "Retel Board extends to February 16, 1946, time within which State Bank of Anoka, Anoka, Minnesota, may accomp.Lish membership." Approved unanimously. Letter to Mr. Alvin L. Bear, Los Angeles, California, reading ae follows: "This will acknowledge your letter of January 19, 1946, relating to the Board's margin requirements. trYou inquire in your letter whether, in view of Your Personal situation and the state of your brokerage there is any way in which a brokerage house can release funds or securities to you for purposes other han financing security transactions. Our regulations la not provide for any special dispensations, since the all! naturally contemplates that everybody will be treated potk!* You will have noted, however, that it is always e-Lble for a customer whose account is 'frozen' to take ' 131,4111 cash or securities if he will pay off his debt to the ii, clker, either by liquidating securities or otherwise. e 0;Nill then, of course, be in the same situation as any;!ould be in case he had not borrowed any money for t)rC'L a - securities, and his fully-paid securities could We Used, under the present terms of the regulation, as 156 2/1/46 —5— "Collateral for a loan for the purposes you describe in Your letter. mrou may already be familiar with the provision of the margin regulations permitting withdrawal of interest and cash dividends received on securities in an account. TN-s is set out in the second paragraph of section 6(g), wulch appears near the top of page 13 in the enclosed coPy of Regulation T. "You inquire also as to the legal power of the Board to require existing margin accounts to be closed out. At pi:esent, as your letter observes, this question is academic, !ince the Board has not yet imposed any such requirement. : -1 11 the opinion of counsel, however, legal authority exists case conditions should seem to the Board to require such action in order to carry out the purposes of the Securities change Act of 1934." Approved unanimously. Letter prepared for the signature of Chairman Eccles to Mr. Leia , A Chairman of the Federal Reserve Bank of Chicago, in accordance with the request of the members of the Board following informal dis— °ns of what, if 111'• tute any, action should be taken in connection with 1A„ e--"LOs recent address at the University of Pittsburgh's Insti— °t1 Business and Economic Problems: at "This letter is prompted by your recent public address tc the University of Pittsburgh's Institute on Business and fo°n°mio Problems in which you discussed certain proposals anr d the management of the public debt. You were quoted widely first knowledge of the address came from press and 1.1„nl-ng sources after it had been delivered. We have had vrerous inquiries endeavoring to ascertain whether, in ' se w of the fact that you are Chairman of the Federal Re— Bank of Chicago, the Board agreed or disagreed with Your t4f,views, or whether, in effect, you were sending up a ' nat 4- balloon on behalf of the Board. These inquiries as -1!fallY have been embarrassing because in your position Chairman you are also the Board's official representa4" e at the Federal Reserve Bank and you had not informed 157 2/1/46 -6- "the Board in advance of your proposed address or provided any opportunity to discuss its advisability. It has been necessary, of course, to emphasize in our replies the fact, as you stated at the time, that you were speaking only for Yourself. Nevertheless, this response has not been satisfactory to many, particularly bankers and newspaper correspondents. Their point of view is illustrated by the following quotation from the Chicago Journal of Commerce: 'You get a strong impression from the Leland speech that the Federal Reserve System has considerably more than an academic interest in the proposal. The professor said he spoke as an individual and not as chairman of the Federal Reserve Bank of Chicago. The average man will have a little difficulty picturing Leland, the professor of public finance, harboring ideas and convictions not also entertained by Leland, the reserve bank chairman.' s. "You and I have discussed at length on previous occa1°ns the conditions which affect the advisability of speeches and other publications by chairmen, as well as by full-time , , c)f ioers of Federal Reserve Banks, on subjects of national °'icY which concern the Federal Reserve System. I have ' Ps?inted out to you the difficulty and, in fact, the imposylbility of disassociating yourself in the public mind from : 111 4f o ficial position and its relationship to the Governconversations that you were in vcomplete understood from our agreement with MB on the general principles inPartedYour speech at Pittsburgh, however, not only deet from what I had understood was a full understanding ween us, but it came at a most inappropriate time because er the subject matter is currently under discussion by the Fedalt: Open Market Committee and the Treasury. Later developtTinaemayraise a serious question in the minds of many interpretation which shod be given to our statements asul met pre_You were speaking entirely for yourself and without vlous consultation with the Board regarding the subject xllatter t_ "The Board is of one mind in regard to the unsatisfach'a? situation exemplified by this episode and, accordingly, comesuggested that you should, at your earliest convenience, sire to tashington so that we may discuss with you the dedeci:.whioh I am sure you share with us, to come to some l poin:on which will best meet the situation from the stand'of the Board and the System as well as from your own. 158 2/1/46 -7- "I would appreciate it, therefore, if you would advise me as to when it may be possible to come to Washington in accordance with this request." Approved unanimously. Thereupon the meeting adjourned. Chairman.
@FedFRASER