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260 A meeting of the Board of Governors of the Federal Reserve aYstem waS held in Washington on Thursday, February 21, 1946, at 10150 a.m. 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. &lead, Director of the Division of Bank Operations Mr. Vest, General Attorney Mr. Thomas, Director of the Division of Research and Statistics Mr 'Eccles stated that Mr. Anderson, Secretary of Agriculture, tele/311°118d him yesterday and advised that at a conference with the 1)1‘eeicient and others interested in the world food problem, it had been deeicied to ask for the services of Mr. Davis, President of the Fedex'a'l Reserve Bank th e activities of of St. Louis, for a period of 30 days to coordinate the various interested agencies in expediting trans13°I'tatic311 of food abroad and to handle the publicity in this country 14 e°114setion with the problem. the 13418, Chairman Mr. Anderson presented the matter to Eccles said, who felt that he had been away from Baj blItth 8° much that he could not ask for another leave of absence ' a it would be all right if Mr. Anderson wanted to take it up Igth the 80ard. Chairman Eccles added that he told Mr. Anderson that trr. Davis was selected by the board of directors of the St. Louis 261 2/21/46 -2- the matter should be taken up with them, and that if Mr. Davis and the directors felt he should accept the assignment and be away fx%°111 the sank, he (Chairman Eccles) would recommend approval by the Board. No action was called for until the Board heard further from Davis or the Federal Reserve Bank of St. Louis. The Secretary reported that telegraphic advices had been re- eelved from the Federal Reserve Banks of Cleveland, St. Louis, and Pl ' arleisco advising of the establishment without change of the rates °f discount and purchase in the Bank's existing schedules, and that ar advices tarks811141 of ..ew would be received today from the Federal Reserve 14 York, Philadelphia, Chicago, and San Francisco. Upon motion by Mr. Evans, it was voted unanimously to advise the Banks referred to that the Board approves the establishment without change by the Federal Reserve Banks of St. Louis and San Francisco on February 19, 1946, and by the Federal Reserve Banks of New York, Philadelphia, Cleveland, Chicago, and San Francisco today of the rates of discount and purchase in their existing schedules. Mr, kacie Eccles stated that, in accordance with the suggestion at ths meeting of the Board on January 31, 1946, Mr. Thomas 114cI stIldieri th monetary effect of action by the Board to increase Neerv e recIllirements of member banks in central reserve cities to 262 2/21146 the —3mum provided by law, and that it appeared that the action, iftaken, would increase required reserves by approximately $1.5 bil- 11414. Mr. Eccles suggested that, inasmuch as it might be found de— to take such action in the future as a part of the overall el'sdit policy of the System, the other members of the Board study P4I'ticillarly the problem of the proper timing of the action. It 1748 understood that copies of a memorandum prepared in the Division Research and Statistics on this subject under date of February 21 '1946, would be sent to all of the members of the Board. There was then presented a memorandum dated January 30, 1946, NIIM.r. Vest, General Attorney, to Mr. Ransom submitting a routine tsecitlest frora the Banking and Currency Committee for a report on Senate 411 1752, which would increase from $5,000 to $15,000 the amount of e4ell del)"it insured under the Federal Deposit Insurance Corporation ree°111nlendirlg, qclered, t° the ew of the improbability of the bill being con— that no report be made. Mr. Ransom had attached a memorandum file under date of January 30, 1946, concurring in Mr. Vest's l'eeolsril endation• In c onnection with the above matter, Mr. Ransom referred to the whichPli°ceclure adopted at the meeting of the Board on May 12, 1943, 011 C el, Provided that when a routine or other request was received from tiler : "for a report on proposed legislation, it be circulated among e*er8 of the Board in order that they might have an opportunity 263 2/21 /46 —4— t° suggest that the matter be discussed or that a report be prepared, allot that requests of this nature be placed on the docket with a rec— nIllendation from Mr. Ransom in each case as to whether a report should be de. Mr. Ransom suggested that this procedure be changed to pro— de /71 that the memorandum containing his recommendation shall be placed °II the docket for consideration at a regular meeting of the Board °114 when a member of the Board had some question or felt that the katter Should be handled in a manner different from that recommended bYM.r. Ransom. At the conclusion of a discussion, it was unanimously agreed to approve (1) the recommendation made by Mr. Vest and (2) the change in procedure suggested by Mr. Ransom 14r. Evans read a letter dated January 19, 1946, which he had N:eived from Honorable J. E. Wells, Jr., Deputy Governor of the Farm et AdMin istration, stating that the Presidents of the Federal 8anks would meet in Washington on March 4, to review again the 13tic)ceclure with respect to the sale of Consolidated Federal Farm Loan 13°4(183 and inviting him (Mr. Evans) to attend the meeting for the pur— 114e c't discussing the possibility of using the facilities of the Fed— Reserve 13anks as fiscal agents for getting out circulars and tak— lrig '1`113seriptions for future issues of Federal Land Bank Bonds, much 44 41dbeen 4eililtiese done in the past with respect to issues of Government Mr. Evans said that he and Messrs. Morrill and Piser of 264 212a/46 the —5- lo ,clardts staff had had informal discussions concerning the mat- ter "Arith r epresentatives of the Farm Credit Administration, that the latter had taken the matter up with the Treasury, that on January 25 the Treasury telegraphed each of the Federal Reserve Banks askOr e stimates of the cost of handling the operation, and that c)f the Reserve Banks had replied. In its letter of February 6, 1946, the Federal Reserve Bank of New York had expressed the opinfor reasons outlined in the letter, that the suggested procedure 1148 11°t a desirable one and the Federal Reserve Bank of Chicago, in P4 of February 11, stated that the Bank preferred that offer— Of Federal Farm Loan Bonds be made through regular investment barliting c hannels. Mr. Evans said he was bringing the matter up at tinle for the purpose of ascertaining the views of the other mem"ere of the Board before the meeting of the Presidents of the Federal tarici 8anks. In a discussion, some of the members of the Board concurred 84ggesti0n of Mr. Eccles that, as Federal Farm Loan Bonds were 4°t eIla ranteed by the Government and were ineligible for purchase by the ay. lieeervstern °Pen market account, it was not advisable for the Federal e 8anks to act as the instrumentality of the Government in the 4`trib + uvion of the bonds, and that if the facilities of the System Ivere "Cl for that purpose it might raise the question of support of 265 2/21/46 —6— the bo nus in the market. It would also raise the question he said, Itether the same service should be performed for other agencies such as the Federal Housing Administration, and the Home Owners' Loan Cor— Poration, and he suggested that if the purpose was to save expense, Prelieion should be made in the law for a Government guarantee on all slleh issues so as to take advantage of a lower rate and to make them for purchase by the Federal Reserve Banks so that the question 4arket support would not arise and any purchases made by the Reserve knits 10, -c4A-Ld be in accordance with System credit policies and not for the PlIrpose of market support. Szymczak inquired whether this was a matter that should be die cussed by the Federal Open Market Committee. However, in a ether A4 " s°11esion Messrs. Eccles, Ransom, Szymczak, and Draper ex— preaeed eholad the ()Pinion that the facilities of the Federal Reserve Banks 11°t be made available at this time for the marketing of Fed— er41 L , a n (3 — .uonds, and it was agreed that the matter should not be taken 1113 With the Federal Open Market Committee. the At this point Messrs. Smead, Vest, and Thomas withdrew from Lseting. 4tter The action stated with respect to each of the matters herein— referred to was then taken by the Board: 266 2 / 2 1/46 —7— The minutes of the meeting of the Board of Governors of the Pederal Reserve System held on February 20, 1946, were approved unani- illouely. Memorandum dated February 15, 1946, from Mr. Thomas, Director Qt the n4„ --va-sion of Research and Statistics, recommending that Orville 4. Th_cam, -vson be appointed as an Economist in that Division on a tem- P(Irarlt basl •e for an indefinite period, with salary at the rate of 101200 Per annum, effective as of the date upon which he enters upon then verformance of his duties after having passed the usual physical ec`LIELinati -°n- The memorandum stated that Mr. Thompson would become a kezabe Of the Federal Reserve Retirement System unless he still haa furr-3 ' s in the Civil Service Retirement System from his employment the War Department. Approved unanimously. IleMorandum dated February 15, 1946, from Mr. Thomas, Director ef the 0. lvision of Research and Statistics, recommending that Miss 411.01111 e j• Punk be appointed as a clerk-typist in that Division on a teillpor al7 basis for an indefinite period, with salary at the rate of 14 ' 704 D. r -e- annum, effective as of the date upon which she enters upon the Pert, -rmance of her duties after having passed the usual physical 414Inats , o 1--- The memorandum stated that Miss Funk would become a kekb er ° the Federal Reserve Retirement System. Approved unanimously. 267 2121/46 —8— Memorandum dated February 14, 1946, from Mr. Bethea, Director orthe n LA-vision of Administrative Services, recommending that Miss Patl'icia A. Wahler be appointed as a page in that Division on a tem— Porary basis for an indefinite period, with salary at the rate of 4)506 per annum, effective as of the date upon which she enters upon the Performance of her duties after having passed the usual physical elt4Lirlation. shewould The memorandum stated that it was not contemplated that become a member of the retirement system. Approved unanimously. Letter to Mr. Ruml, Chairman of the Federal Reserve Bank of tiew reading as follows: 11 , "This is to acknowledge your letter of February 16, 47_46)'With regard to the action of the Board of Direc— ' aura tt their meeting of February 7, 1946. mr.The Board of Governors approves the appointment Allan Sproul as President, and of Mr. Leslie R. ' 48 as First Vice President of the Federal Reserve of New York, each for a term of five years begin---ug March 1, 1946. 4,1 "The matter of appointments has been acted upon in derilee of any consideration of salaries, which has been vicerred until the salaries of the Presidents and First be e Presidents of all of the Federa Reserve Banks l can ietrteviewed at the same time, or of the proposals in your tit regarding the liberalization of retirement bene— s as part of compensation policy ." Approved unanimously. Letter aerve to Mr. Gentry, First Vice President of the Federal Re— 441k of Dallas, reading as follows: the ,„ e Board of Governors approves the changes in e Prsonn el classification plan of the Federal Reserve 268 2/21/46 -9- r ank of Dallas, involving the establishment of the posion of Administrative Assistant (C) and the addition of symbol ID to the present positions of Research Assistant, Statistical Clerk, and Administrative Assistant, as requested in your letter of February 11, 1946." Approved unanimously. Telegram to Mr. Clark, Vice President of the Federal Reserve 8411k Of Atlanta, reading as follows: ti "Retel February 20, 1946. Board approves designaf on of Wilbur W. Lawrence as special assistant examiner or the Federal Reserve Bank of Atlanta." Approved unanimously. Letter to Mr. Wayne, Vice President of the Federal Reserve °I' R ichmond, reading as follows: lett "In accordance with the request contained in your er of rlatioa of February 15, 1946, the Board approves the desigC. C. Armfield, Jr. W. L. Gilliam, Jr. L. N. Fourqurean W. C. Wilson M. B. Harris ea 8, Of ircial assistant examiners for the Federal Reserve Bank .. L Lehmond." Approved unanimously. Let ter to Mr. Sheehan, Chief Examiner of the Federal Reserve Bank or New y s3rk, reading as follows: 1946 "Reference is made to your letter of February 14, Go;,,, submitting for the consideration of the Board of 8 to °' pursuant to condition of membership numbered I-I-eh the member bank is subject, the proposal of the yorcanington Irving Trust Company, Port Chester, New -' 60 invest from $25,000 to $30,000 additional in 269 2/21/46 —10— 'ba--lag premises to provide quarters for a proposed -ranch in Port Chester. "In view of your recommendation, the Board will ;1,nterpose no objection to the additional investment in nking premises as proposed. It is assumed, of course, b Z!uat approval of the appropriate State authorities bill e ined for completion of the transaction as proposed." Approved unanimously. Telegram to Mr. Volberg, Vice President of the Feder3 Reserve tank of San Francisco, reading as follows: t "Relet thirteenth. In view your recommendation m°ard approves exercise by Nevada Bank of Commerce, Elko, ;;11.?.da, of all trust powers authorized under its articles 8 , 131 :11c°rPoration and the laws of the State of Nevada, - Ject to its acceptance by formal resolution of its boa p rd of directors of the three standard trust conditions. ease obtain and forward certified copy of resolution." Approved unanimously. tank T elegram to Mr. Volberg, Vice President of the Federal Reserve c't San Francisco, reading as follows: Bo "Relet thirteenth. In view your recommendation Rear ' d approves establishment and operation of branch in vr;T: ) , Nevada, by Nevada Bank of Commerce, Elko, Nevada, understanding that Counsel for the Reserve Bank will t;_lew and satisfy himself as to the legality of all steps to establish the branch." Approved unanimously. Telegram to Mr. Volberg, Vice President of the Federal Reserve Sa r rancisco, reading as follows: toal.d"Relet February 15. In view your recommendation m aPProves establishment and operation of a branch "0rth Sacramento California, by American Trust 270 2/21/46 " that.uip C-any, San Francisco, California, with understanding Counsel for the Reserve Bank will review and satisfy himself as establish the branch." to legality of all steps taken to Approved unanimously. Letter to Mr. Young, President of the Federal Reserve Bank of Chic ago, reading as follows: t, "Your letter of February 11 commenting on the ques4!:°n raised in the Board's letter of January 31 concernflg the desirability of terminating the reserve city e! . us of reserve cities other than those in which Fedal Reserve Banks and branches are located has been ul'c'uglt to the Board's attention. " 'fl view of the circlImstances brought out in your etter and of your suggestions, it would not seem to be worth While to discuss the matter at this time even on °nridential basis with bankers in Indianapolis, Des C oln", and Milwaukee. There is, of course, no objection Yc)ur discussing the subject with President Leedy of "e Federal Reserve Bank of Kansas City." j Approved unanimously. Memorandum dated February 15, 1946, from Mr. Carpenter sub411"411g drafts of entries for the record maintained by the Board, in ileet)rdance with the provisions of the last paragraph of section 10 of 41eFederal Reserve Act, with respect to the policy actions taken by the ederal Open Market Committee during the year 1945. The memorand1114 stated that the draft of record had been revised in the light of Neeetions received from one of the representative members of the Petlel'al Open Market Committee. Approved unanimously. Thereupon the meeting adjourned.
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