The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes of actions taken by the Board of Governors of the
Feder
,
c" Reserve System on Friday, February 10, 1950. The Ward met
the Board
Room at 10:50 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
McCabe, Chairman
Eccles
Szymczak
Vardaman
Mr.
Mr.
Mr.
Mr.
Lr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Carpenter, Secretary
Sherman, Assistant Secretary
Kenyon, Assistant Secretary
Morrill, Special Adviser
Thurston, Assistant to the Board
Riefler, Assistant to the Chairman
Thomas, Economic Adviser to the Board
Vest, General Counsel
Young, Director, Division of Research
and Statistics
Horbett, Assistant Director, Division
of Bank Operations
Noyes, Assistant to the Director, Division
of Research and Statistics
Anderson, Economist, Division of Research
and Statistics
Collier, Technical Assistant, Division
of Bank Operations
There were presented telegrams to the Federal Reserve Banks
or 80sto
11, New York
Cleveland, Richmond, Atlanta, Chicago, St. Louis,
kirinea
ard
P01i3
, Kansas City
Dallas, and San Francisco stating that the
'Pr°ves the establishment without change by the Federal Reserve 8
tanks
PedeIN n
alik of San Francisco on February 7, by the Federal Reserve
of
New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis,
-L18, Kansas City, and Dallas on February 9, 1950, and by the
Rese
ehae
rye Bank of Boston today of the rates of discount and pur-
their existing schedules.
Approved unanimously.
Chairman McCabe stated that late yesterday afternoon he reec?ivc,request from the Senate Banking and Currency Committee that
he
test.ify
before the Comroittee in connection with pending housing
le`;islation.
Chairman McCabe also said that this morning he discussed
th
fliatter with Senator Robertson who thought it would be sufficient
if the
Chairman filed a statement, and with Senator Maybenk who would
be ai reeabl
to the
filing of a statement but felt that the Committee
11c1 in mind
that the Chairman would aoear personally.
Chairman McCabe
Ecideci that he had sent a wire to tne Federal Reserve banks asking for
thej
7ieW8 on the matter, that he planned to call a number of insurance
s
utives
and others for the pur ose of getting their views, and that
'tiel*I°111d di„uss
the problem with 1.:r. Foley, Administrator, Housing and
41rie Finance Aency,at luncheon on February 13.
Ther
followed a discussion of the reauest, during which it was
the e°risensus that it would be preferable to submit a statement without
testi„Ion,
if that was acceptable to the Committee.
?,
There was also
8eussion of the fon-, the statement might take and it was understood
"at h,,
stff
Would;repare a draft of testimony for consideration by
8,
the
c'c
'rd at n
meeting on Tuesday, February 14, 1950.
di,11
d.
Ch`-irrIlan McCabe then stated that he ITA been invited to attend
nel"' in \lew York City tonight to be given by LeRoy Lincoln, Presiof the 14-etro,)o1it8n Life Insurance Company, for'cAle 'purpose of
169
2/10/so
—3—
Cussing informally the
bill, S. 2975, introduced by Senator COAahoney
PrOvide
equity capital banks to be operated in each Federal Reserve
or branch
- ahoney had called
territory. He stated that Senator 01 M
°11 the
telephone and urged that he attend the dinner at which
2erletOr n t
\J- Mahoney would also be present.
w"Ich he might ex-ore
Chairman McCabe outlined the
informally in connection with the bill.
It 1.'s the consensus of the members of the Board that Chairman
:lccab
e should use his judgment as to whether to attend the dinner and,
if he d i,
-1to what extent he would discuss the bill.
In connection with above matter, 11r. Car,Denter stated that
estercle-7 the Board received formal recuests from the Senate Banking and
eillTelleY Committee
for reports on the OtMahoney bill S. 2975, a bill to
e"lablish c
orporations to assist financial institutions in making credit
-0 commercial and industrial enterprises and to uro/ide capital
for such
ente
rnrises; the Maybank bill S. 2943, e bill to liberalize the
Policis of the Reconstruction Finance Corporation and of the
4e8('-rve Bankiac; System in favor of independent small business
l'Itel.Pl'ises; and the Lucas bill S. 2947, a bill to amend the Recon—
et'
'
I llet ton pinance
Corporation Act in order to provide more effective
`-lsista,nce for small husines-.
ChairmPn McCabe then referred to the letter sent to ,aurice
8E414
912ident
G.
of the National Association of Supervisors of State
Superintendent of Banks in California, under date of February
-42, 101",,
')and stted that Mr. Sparling was expected in Washington on
21c)riclaY and Tuesday of next week and that he would plan to have lunch at
the E ,
(3'rd'5 building on one of those days.
Before this meeting, there had been sent to each member of the
R
memorandum dated February 10, 1950, presenting "A Staff Study
Of
t}ie
Problem of Leal Reserve Requirements of Member Banks", pre1:1 c1
i)ursuant to the discussion at the meeting on February 7, 1950.
14/'. Carpenter read the memorandum and there followed a dis'
--n of its form and content.
During the discussion, the view was
exr're2sed that
the memorandum would serve as a basis for discussion of
the Problp.fa
with the Federal Advisory Council at its meetin,, with the
(3a1"cl oil
February a, 1950, and it was suggested that copies of the
Inemor'enduIa, with such revisions in lenuage as might be desirable in
the ii""ht of the discussion during this meeting, should be sent to each
Federal Advisory Council, to the Secretr,ry of the Council,
Ehd to the P
resident of each Federal Reserve Bank.
Thereupon, unanimous approval
was given to a letter to members
of the Federal Advisory Council as
follows:
"You will recall that at the meeting of the Federal AdCouncil and the Board on November 15, 1949, one of the
s suggested that the Council be afforded an opportunity
for
full discussion with the Board of the proposal that the
re,,, elating to reserve requirements be changed to provide that
of',T:ve requirements of a member bank be based on the character
-"s deposits rather than the location of the member bank.
if , "Subsequently the Board su,b'ested to President Brown that,
=:r
- eeable to the members of the Council, this subject be made
171
—5—
:the first item on the agenda for the joint meeting of the
,ouncil and the Board on February 21, 1950, and that the whole
m°rnin6 be devoted to a discussion of the topic. It is our
und e:standing that no other topics have been suggested for the
eting, that arrangements have been made for the Council to
ulscuss the matter at its separate meeting on February 19, with
l ers of the Board's staff on Monday, February 20, and with
?.13°Erd on the morning of February 21, and that any formal
IlcZnm2b211.1e Council might take will be deferred until a
The
In connection with the above program, the Board recuested
th ,_ strf to prepare a memorandum setting forth the ,:roposal
might be made with respect to changes in reserve require—
'
cents and how the proposal would affect individual banks. A
the memorandum prepared by the staff in response to this
107:luest is attached. It does not represent the conclusive views
w
he staff and the Board has not considered or taken a position
'
‘ n.respe0t to the proposal contained therein. It will be ap—
oeted if you will regard the memorandum as being for your
,;ir:;tdIreaiginformation and as a basis for the discussion at the
of the Board and the Council. The Board has not
ad the benefit of the views of the Federal Reserve Banks on
the
toe?oposal. A copy of the staff memorandum is being sent today
e
their infor—
Zation.Presidents of the Federal Reserve Banks for
4
"As
ariva„ stated in the memorandum, the suggested plan has many
"'ec- es but at the same time there appear to be practical dif—
ficult
of .1„, ieS incident
to its introduction. Therefore, the purpose
:lie
discussion with the Council is not to urge the adoption
Of
or any other proposal but to have a full and frank dis—
hFn l(pn of the matter with the members of the Council as active
focfr8 with the hope tht a solution of the difficulties may be
/,q17,1u and en agreement reached on a program of legislation which
1" adept reserve recuirements to present—day conditions.
the rrhe Board has asked me to assure you of its appreciation of
di, will.'ngness of the rrembers of the Council to participate in a
cucsion of this important problem."
At this point Messrs. Horbett, noyes, Anderson, and Collier with—
P,
-01'1 the
Of
meeting.
- ent
the FCheirmsn McCabe then read a letter from Mr. E. E. Brown, Presic,
ederal Advisory Council, dated February 6, 1950, as follows:
172
Vio/50
—0—
On my return from Weshington I find your letter of
Fe
bruarY first, about the bank holding company bill.
"The statements in your letter are correct as to the
titude of the Council, which considered pending Bill S.
2
318 * The provisions regarding tax exemption were stated
,%be sEtisfactory by members of the Council, who had ,one
the provisions with their lawyers, and their statement
0 accepted by
all the other members of the Council.
aterlZe Federal Advisory Council stted that it desired an
•,_at providing that a bank would not become a bank hold°11.Pany merely by reason of ownership of the stock of a
company which did no commercial banking business. The
ID;rd stated it had tried to work this out with the banks
31,,,
11:11-1Y affected, but no formal amendment embodying this
-vJ.sion
has been presented to the Council for its approval.
h . 'I do not need
to remind you that a new Council has
e4 elected which has not yet met and organized :,nd there
be five new members of the Council for 1950. I cannot
of
l'et?°.tir
i se speak as to their attitude. It is of course theoentle -1Y possible that the majority of the Council as presN4
constituted might take a different view of the bill.
I think
this is unlikely."
He ,1
so reported that Colonel Wozencroft and z.epresentatives of
.fldc?'Pendent bankers associations, Messrs. Harry J. Harding, Ben
nH
• E. Manuel, were coming to lunch with hir, today.
At this
POint, tessrs. fdefler, Thomas, Vest, and Young with'171d the action stated with respect to each of the matters hereforth was taken by the Board:
Mi'-es of actions taken by the Board of Governors of the FedSystem on February 7, 1950, were approved unanimously.
14-irlutes of actions taken by the Board of Governors of the FedP-esc,r.v,
SYstem on February 8, 1950, were approved and the actions
Nor,
cid,
therein were ratified unanimously.
t,iern
'crandum dated February 7, 1950, from Pr. BetheP, Director of
7-
173
2/10/50
—7theDivision of Administrative Services, recommending an increase in
the
basic sa1,7ry of
Thomas V. Kopfman, a clerk in that Division, from
$2,650 to
per annum, effective February 19, 1950.
Approved unanimously.
'
24emorand.,. from the heads of the divisions indicated below rec-`11g aPPointments to the staff in those divisions, effective as
(n the
dates upon which the appointees enter upon the performance of
their
duties after
.Late of
having Passed the usual physical examination:
Duration of
Name
Appointment
Salary
Title
ST7RVICES
17:171 W. Kushner Telegraph Operator
Temporary
0,035
(two months)
Miss Betty Jean Plaugher Stenographer
Permanent
2,i5O
Approved unanimously.
Letter to Mr. Earhart, President of the Federal Reserve Bank of
n Franc.,
reading as follows:
des. n°11 January 4, 1950 the Board of Governors approved the
11;
,tlelation of Mr. H. F. Slade as the officer in charge of
,'_ank Examination Department. In order that our records
ue complete the Board approves the appointment of Vice
ofTdent Slade as an Examiner for the Federal Reserve Bank
'an Francisco."
Approved unanimously.
e
Letter dated February 9, 1950, prepared in accordance with the
1,„,
4t the meeting of the Board on January 20, 1950, to Mr. Paul Grady,
()1.1014s: '''erhouse & Co., 56 Pine Street, New York 5, New York, reading as
EoLrci aeference
is made to the informal discussions in the
s offices on February 3 with Members of the Board and
74
2/10/50
-8-
"8teff in which you and Messrs. DeVos and Herz participated
rerdilg the scoot:, of the survey which the Board desires
(pur fir-1 to
undertake at an early date.
the basis of these conversations the Board under,frlds that your firm will survey the Board's budgetary and
';',Icounting system and make recommendations with res:,ect to
'deeuacy of existing procedures, practices, and methods,
tLcludin (1) whether the accounts should be kept on a funcre0nal instead of °II a departmental basis; and (2) in what
Oects, if any, the preparation, presentation, and consider-° of the Board's annual budget might be improved. It is
understood that the survey will be undertaken under your
othnal supervision, that you will use the assistance of
,(3,_er Personnel of the firm as reauired and that the charges
4
1
this
service will be computed rt the same hourly rates as
,e charged by your firm in connection with its work for the
re`fd ill reviewing the functional expenses and other accounting
bugrent.stulippitted by the Federal Reserve Banks, plus reimor any necessary traveling expenses that may be ineurrAd
stir "It is
understood further that you will undertake this
vialrieY 'within
a proximately six weeks and that your report
p
pos
e completed and submitted to the Board as promptly as
1,011i1,1- ule. In this connection, it would be helpful if you
kj-vs us your best estimate as to the outside cost of
Si
urve;,Y and some indication when your report may be exPecte
4
Approved unanimously, with
the understanding that the appropriate item in the budget of the
Division of Administrative Services,
would be increasedy .amount
costs.
sufficient to co
/11;10'
gumo`iiirAdlr
°6
Secretary.
raved:
,(.16e,;
Chairman.
@FedFRASER