The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
A meeting of the Board of Governors of the Federal Re"I've System was
held in Washington on Tuesday, February 26, 1946,
at 11:15 a. m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Eccles, Chairman
Ransom, Vice Chairman
Szymczak
McKee
Draper
Evans
Mr. Carpenter, Secretary
Mr. Hammond, Assistant Secretary
Mr. Connell, General Assistant,
Office of the Secretary
Mr. Morrill, Special Adviser
Mr. Thurston, Assistant to the
Chairman
Mr. Smead, Director of the Division of Bank Operations
Mr. Vest, General Attorney
Mr. Thomas, Director of the Division of Research and Statistics
Mr. Leonard, Director of the Division of Personnel Administration
Chairman Eccles stated that, in connection with the annual
aPPoin+w'LLent of members of the Board's Personnel Committee and the
434tria
t-°11 of members of the Board who will serve with him on the
e committee of the Federal Open Market Committee for the
Y.e41
'be
March 1, 1946, he mould suggest that Mr. Szymczak
VardaMan (who had been nominated by the President as a
441bers °f the Board but whose nomination had not yet been con11:11"bY the Senate) be appointed as members of the Personnel Comkttee end that Messrs. Draper and Evans be nominated to serve on
278
2/26/46
-2-
the e
xecutive committee of the Federal Open Market Committee,
with
Messrs. Szymczak, Vardaman, and Ransom to serve on the exec-
Ixtive committee in the order named as alternates for Messrs. Eccles,
IhsapA,,
and Evans, except that in the absence of Chairman Eccles,
Mr.
Rarlsom would serve as the first alternate.
There was unanimous agreement with Mr.
Eccles' suggestion and in accordance therewith, Mr. Szymczak and, effective as of the
date upon which he assumes his duties as a
member of the Board following his confirmation by the Senate, Mr. Vardaman were appointed to serve as members of the Board's
Personnel Committee for the year beginning
March 1, 1946.
Before this meeting there had been circulated among the
members
Of the Board a memorandum from Mr. Szymczak in which it
/74 stated
that pll of the Federal Reserve Banks except Philadelphia
had advised of the salaries fixed by the boards of diNetors
of the banks, subject to approval by the Board of Gover40re, for
the Presidents and First Vice Presidents of the banks,
e:4ective March 1,
1946.
On the afternoon of February 21, 1946,
committee of directors of the Philadelphia Bank met with Mr.
8%e2alt and advised him of the salaries proposed for the Presidellt and First Vice President of that Bank.
On January 31, 1946,
the Board approved the salary fixed by the board of directors of
the Federal
Reserve Bank of Boston for Mr. Whittemore, President
O
that i
nstitution. The salaries proposed by the directors for
279
2126/46
the Pre
- sidents
d
of the 11 Federal Reserve Banks, other than Boston,
all"or the First
Vice Presidents of all of the Federal Reserve Banks
were as
follows:
Fade
a1TIZ."-L
Ve
President
Ne
p w York
hil
01-evel,_
-adelPhia
nAtl
•ante.
8t.
1c11111eaPolis
ellsa .
8 cltY
alias
.,
,
ar
.v
rancisco
Present
Maximum
Salary for
Position
$45,000
Allan Sproul
25,000
Alfred H. Williams
Ray M. Gidney
25,000
Hugh Leach
25,000
W. S. McLarin, Jr.
25,000
C. S. Young
30,000
25,000
Chester C. Davis
J. N. Peyton
25,000
H. G. Leedy
25,000
R. R. Gilbert
25,000
Ira Clerk
25,000
Salary
Proposed
Present
Salary
Directors
$45,000
25,000
25,000
21,000
20,000
30,000
25,000
25,000
20,000
20,000
25,000
5,000
30,000
25,000
25,000
25,000
40,000
25,000
25,000
25,000
25,000
25,000
$17,000
34,000
16,000
16,500
15,000
14,000
20,000
18,000
15,000
15,000
13,500
16,000
20,000
40,000
17,000
16,500
18,000
16,000
25,000
18,000
16,000
18,000
16,000
16,000
First
Vice President
°aton
Ne
17 York
acielPhia
01evel
-4(thra.
rrld
"
41en,
TT"
144 °11i8
:
k %
'1)(31is
11alias
.vancisco
Mr.
the
'Cleral
th
act
William Willett
L. R. Rounds
W. J. Davis
Wm. H. Fletcher
J. S. Walden, Jr.
Malcolm H. Bryan
Charles B. Dunn
F. Guy Hitt
0. S. Powell
Henry 0. Koppang
W. D. Gentry
C. E. Earhart
0.8,000
34,000
18,000
18,000
18,000
18,000
22,500
18,000
18,000
18,000
18,000
18,000
Szymczak stated that when the committee of directors of
Reserve Bank of Philadelphia met with him on February 21,
vlsed that the directors proposed a salary at the rate
280
2h6/46
-4-
430,000 per annum for Mr. Williams because of his outstanding
cillalifications for the position rather than because of a belief
that he
had any larger job to do than the Presidents of other
Ileciersel Reserve Banks Whose salaries were at the rate of $25,000
or less.
In a discussion, all of the members of the Board agreed
that •
at the recommendation of the directors of the Philadelphia
Bank
were approved, it would mean that similar action would have
to
be
'aken in connection with the salaries of the Presidents of
Other p
ederal Reserve Banks receiving less than that amount and
that,
with the exception of the Federal Reserve Banks of New York
and Chicago, the salary of the Presidents should not exceed
$25 onn
per annum, regardless of who might occupy the position.
Chairman Eccles stated that a letter containing a full
taterilent of the reasons for the action of the directors of the
Pederal Reserve
Bank of New York with respect to the salaries
Proposed for
Messrs. Sproul and Rounds was handed to him by a corn:
i
hr
eectors consisting of Messrs. Ruml and Calkins. He
ekta that
reasons given were substantially the same as had
been
pre
sented to the Board before in connection with increases
Prq'osed in
the salary for Mr. Harrison when he was President of
the 844k3 and that he had told the directors' committee that the
eklat'Y °f the President of the New York Bank had never exceeded
2/24/46
160,000, that he felt that a higher salary was not justified,
aluithat if that salary were not high enough to hold Mr. Sproul,
the Bank
would find someone else as it had done in the past.
Cilaillaan Eccles stated that he favored an increase to $50,000
Pet
'anIlUIfl in the maximum salary approved by the Board for the
Pliesident of the Federal Reserve Bank of New York and in the
sa-417 for Mr. Sproul but that he would not be willing to go
beyond that
figure.
Chairman Eccles made the further comment that the letfront the New York Bank referred to above contained a sugge8tIon which might be valued more highly by the officers of the
?ecielsal Reserve Banks during the present period of high income
8
ta e than an
increase in salary, namely, that the Retirement
arsetera of the Federal Reserve Banks be revised to provide that
"I °facer of a Reserve Bank retiring at age 65 would receive
(114 addition to the annuity based on his own contributions) a
Peri8i°n of 40 per cent of his average salary for the last five
.ea.1‘8 of service, with a maximum pension of $20,000. He felt
that
this was a matter that should be given careful considerabY the Board.
There was a discussion of the form
that action might take to liberalize
the benefits provided by the Retirement
System and it was agreed that, while the
range of salaries in the Government re-
282
2/
-6mained unchanged the Board should not
approve salaries for Presidents and
First Vice Presidents at rates higher
than the maximums now in effect or approved at this meeting, the Federal Reserve Banks should be advised that although the Board had not yet reached any
decision on the matter, it was giving
consideration to the desirability of increasing the benefits provided under the
Retirement System for officers receiving
salaries in excess of $15,000 per annum.
It was pointed out that the salary proposed for Mr.
1°11118 was
higher than had been paid at any time to the President
the
Chicago Bank and it was agreed that the Board would be
Ilstified in increasing the maximum salary to $35,000 and approving
ealarY for Mr. Young at that figure, which was the amount paid to
443 Predecessors,
but that that should be the maithimm at that bank.
Mr. McKee stated that in order to do a good job, many
°t the Pr
esidents of the Federal Reserve Banks had to spend a con8iderable
amount of their own funds for lunches, dinners and other
Prepe„,
exPenses in connection with visits of bankers and others at
the
red.
eral Reserve Banks and when the Presidents were in the field,
114ch, under
the present arrangement, could not be charged to the
Pecieral Reserve
Bank.
He suggested that the Board should give con-
41eration to some arrangement under which such expenses incurred
1311 the Pr
esidents could be paid from Bank funds.
In connection with the salary proposed for the First
Viee p
residents, Mr. Szymczak stated that a salary at the rate of
283
2/26/46
—7—
had been fixed by the directors for Mr. Willett for the
'
l easorl that Mr. Whittemore was not familiar with the operations of
thebank
and it was felt that Mr. Willett's experience would be worth
that
ount. Mr. Szymczak also said that he advised Mr. Flanders
that he
was satisfied that the Board would not feel justified in apP"'
llg a salary of C25,000 to Mr. Whittemore and at the same time
4881417 of
$20,000 for Mr. Willett, that $18,000 was the approved
for the First Vice President of the Boston Bank, and that
"t48c)ard would not be willing to approve a salary in excess of
that
amount for Mr. Willett.
Mr. Szymczak then expressed the opinion that with a salary at
the
ate of
450,000 for the President of the Federal Reserve Bank of
NewYork, the Board might well approve a maximum salary of $35,000
r(31' the Position of First Vice President.
The opinion was also ex-
that the salary for the latter position should not exceed
he
arY of the President of the Federal Reserve Bank of Chicago.
"
14 Evans indicated that he would not be willing to vote for
a4
„crease in the maximum salary of the position of First Vice
e8ident
?1
'
of the Federal Reserve Bank of New York at this time.
There was agreement with Mr. Szymczakis feeling that, in view
141'
'Wa-l-dent s long experience in the Richmond Bank and as First
vie"resident, a
salary at the rate of
fied f0r him in
that position.
18,000
per annum was justi-
C)84
2dV46
The suggestion was made and concurred in by all of
the
leathers of the Board that, inasmuch as Mr. Dunn's salary was
increased $5,000 when he became First Vice President of the
Chjeago B
kon October 25, 1945, a further increase was not
zor at this time.
There was a discussion of the shortcomings of Mr. Hitt
48 First Vice President
of the Federal Reserve Bank of St. Louis and
S
zYlczak suggested that if the salary proposed by the direct('t's for him
were approved by the Board, it should be with the
luiciel'etanding that the directors would take whatever action was
rleces'arY to correct this situation.
In a discussion of the salary proposed for Mr. Koppang
48 Pi,.
4-8t
t
8
Vice President of the Federal Reserve Bank of Kansas City,
Uggested that his salary should not be increased to the
tila)4Dam
in one step and all of the members concurred in this sug-
geation
At the conclusion of the discussion,
Upon motion by Mr. Szymczak, it was voted
(1) to fix the maximum annual salaries for
the positions of President of the Federal
Reserve Banks of New York and Chicago and
the First Vice President of the Federal
Reserve Bank of New York at $50,000, $35,000
and $35,000 per annum, respectively, and
(2) to approve the salaries of the Presidents and First Vice Presidents of the Federal Reserve Banks at the annual rates and
for the periods beginning March 1 and ending
oar
2/26/46
Ped
1Z
1 4--al
‘
*ve-
-9with the respective dates shown below,
it being understood that the salaries
shown for Messrs. Sproul, Williams, Young,
Willett, Rounds, Dunn and Koppang were approved by the Board if fixed by the directors at those rates.
These actions were taken by unanimous
vote except that on the increase in the
maximum for the position of First Vice President at the Federal Reserve Bank of New
York and the increased salary for Mr. Rounds
In that position Mr. Evans asked to be recorded as "not voting."
The action with
respect to Mr. Hitt's salary was taken with
the understanding that Mr. Szymczak would
talk to President Davis and Chairman Dearmont
with regard to the action to be taken to meet
the problem with respect to Mr. Hitt:
President
New
Phil"1*
Clev elphja
R. elaad
lehmom
Atlan
ta
ki -011is
It:ea-1304s
D413.4s City
s pas
ari
ranei8C0
Allan Sproul
Alfred H. Williams
Ray M. Gidney
Hugh Leach
W. S. McLarin, Jr.
C. S. Young
Chester C. Davis
J. N. Peyton
H. G. Lee0y
R. R. Gilbert
Ira Clerk
Salary
Approved to:
$50,000
25,000
25,000
25,000
25,000
35,000
25,000
25,000
25,000
25,000
25,000
March 31, 1947
April 30, 1947
April 30, 1946
May 31, 1947
May 31, 1946
March 31, 1947
May 31, 1946
May 31, 1947
May 312 1947
May 31, 1947
April 30, 1947
$18,000
35,000
17,000
16,500
18,000
16,000
20,000
18,000
16,000
16,500
16,000
16,000
April 30, 1947
March 31, 1947
April 30, 1947
April 30, 1946
May 31, 1947
May 31, 1946
March 312 1947
May 31, 1946
May 31, 1947
May 31, 1947
May 31, 1947
April 30, 1947
First Vice President
11°eto
New n
Phi.J2?k
Cle -"lPhia
,
4.1ehnv,-"u
c1Atlant
Chic2
-n.o
tiQuis
kallbe lp01iS
Cit7
a8
cisco
William Willett
L. R. Rounds
W. J. Davis
Wm.H. Fletcher
J. S. Walden, Jr.
Malcolm H. Bryan
Charles B. Dunn
F. Guy Hitt
0. S. Powell
Henry 0. Koppang
W. D. Gentry
C. E. Earhart
23
2/26/46
-10-
The meeting then recessed and reconvened at 2:30 p.m., with
the
same attendance as at the morning session except that Mr. McKee
al"r. Thomas were not present.
Mr. Draper read a memorandum dated February 19, 1946, from the
Pers
°Iinel Committee stating that the retirement of Mr. Wyatt as
Geriel
'
al Counsel would become effective February 28, 1946, and that
the
ereonnel Committee recommended that, effective March 1, 1946,
the d.„
-Qlgnation of Mr. Vest be changed from General Attorney to
GN,
-4. Counsel and that of Mr. Townsend from Assistant General
kt°111
:
0Y to Assistant General Counsel.
The memorandum also recam-
Illetklecl) with Mr.
Vest's concurrence, that, effective March 1, 1946,
the
designations of the following members of the Legal Division be
chartged from
Attorney to Assistant Counsel:
G. Howland Chase
Alfred K. Cherry
Howard H. Hackley
Wilson L. Hooff
Frederic Solomon
John C. Baumann
) Now on military leave
Jerome W. Shay
Approved unanimously.
Reference was then made to a memorandum dated February 21,
1914, to
kr. Szymczak from Mr. Leonard relating to the need for a
e°11Prehenstire revision of the personnel classification plans of the
Pecielial
Reserve Banks and submitting a suggested program for acN311.shing the revision.
237
2/26/46
-11Mr. Szymczak stated that, inasmuch as the Presidents were
11°71 in session in Washington he thought it desirable that the matter be
brought to their attention while they were here and that to
that end he would recommend approval by the Board of the following
dIc'art of letter addressed to Mr. Sproul as Vice Chairman of the
131lesidents' Conference.
"The Board hopes that a comprehensive revision
of the personnel classification plans of the Federal
Reserve Banks may be well under way, if not completed,
QuIring the coming year.
"The personnel classification plans now in effect are based on the report of the Subcommittee which
was approved
in 1936, and the Board believes that any
l'evision should take into consideration both the ex,
Perience of the Reserve Banks in working with the prosellt classification plans and developments in the field
of job classification during the past decade.
"The Board suggests that before any revision
i8 undertaken, there should be agreement upon the general type
and style of personnel classification plan,
ich type and style should be uniform for all Federal
e ssrve Banks, and that in the program of revision an
trneet effort should be made to strive, so far as praccable, toward uniformity of job description and job
title.
a
"The Board requests that the Presidents Conference
,
PP°int a committee to consider the whole question of
;;Iersonnel classification plans and that the first assign:
It of the committee be to submit a recommendation to
Board and the Presidents as to the general type of
en to be used, i.e., whether the present type with job
criptions and maximum annual salaries should be conor some other type adopted.
.Many other questions, of course, would have to
be
vnsidered but it is believed that there is no neces'
1u'Y to detail them or even outline them at this time.
Ar1_,
"The Board will expect its Director of Personnel
istration, Mr. Leonard, to work closely with the
vramittee or subcommittee to which the subject may be
"signed.
r
r
j
288
2/26/46
-12"It is believed that the committee or subcommittee
having the matter under review should be able, if it
?"0 desires, to have the advice of expert consultants
In the field of job classification and the Board is
Prepared to consider proposals for appropriate compensation for such professional services as may be required."
Upon motion by Mr. Szymczak,
the letter was unanimously approved with the understanding that
it would be delivered to Mr. Sproul
today while the Presidents? Conference is still in session.
Mr. Eccles again referred to the discussions by the Board
the
existing arrangement under which Mr. John H. Williams served
°4 a pa
rt-time basis as a Vice President of the Federal Reserve Bank
(3t ilew York,
and to the Board's letter to Er. Sproul of January 21,
19463 with
respect to the appointment of officers of the New York
84111t for
the current year, in which it was stated that the reN*Ilintment of Mr. Williams was noted with the understanding that
the cont
inuation
of his part-time employment would be reviewed at
all an,
vvropriate time in the light of previous discussions.
The 'whole matter
was discussed on the basis of the earlier
ftsellssions and Mr. Eccles stated that inasmuch as the Federal Open
Ilarket C
ommittee would appoint its officers at the meeting on March
"
1 1946, for
another year and since it was probable that Mr. Williams
17°111d be
reappointed as an associate economist of the Committee, he
th°11tht it
desirable for the Board to reach a decision as to what its
289
2/26/46
-13Position would be.
Mr. Thurston read a draft of letter to Mr. Ruml
Challtiall of the Federal Reserve Bank of New York, and during the
ensiling discussion Mr. Ransom expressed the feeling that the present
l'ise a most inopportune time to raise the matter and that he would
Prefer to
wait at least a year before any action was taken which
result in the termination of Mr. Williams' connection with
the
"ew York Bank and the Federal Open Market Committee.
Mr. Ransom
seid the reason for his position was that, while he was opposed to the
151sent part-time arrangement, particularly in view of the importalit Position
of the New York Bank, Mr. Williams had been most
helPful in
his statements at the meetings of the Federal Open Market
e43111Mittee in connection with the problems before the Committee and
he (h%
Ransom) would like to see him continue as an official of the
C°141Trd.ttee, even if it meant a continuation of the part-time arrangeket at
the New York Bank, so that his counsel and advice vocsuld be
elratlable in the
difficult period that is ahead.
Chairman Eccles was of the opinion that he would have no
6bjecti°n to Mr. Williams continuing as a full time officer of the
4411.°1* Bank subject to the same limitations as other officers with
l'eePect to speeches and published books and statements, but that it
11 funda
mentally wrong for him to have full access to the informa" airailable to the Federal Open Market Committee and the New York
0
6w90
2126/46
-14-
Bank arid still retain the freedom of expression that he had felt
he was entitled to as an outsider.
He said that after all the
discussion that the Board had had on the matter, if action were
"Ilg to be
taken at any time it should be taken now.
Other members indicated that they would favor a letter
to the New York Bank at this time and Chairman Eccles suggested
that 4,
'"e Board decide on the objectives which it would seek to
440111Plish by such a letter.
For the purpose of stating the ob-
jectives that might be agreed upon, Chairman Eccles said that the
letter
Should state that the Board is of the opinion that the present Part-time arrangement with Mr. Williams should be discontinued
1„4
-"er than the beginning of the next academic year, that the
lloard
would be
willing to have him become a full time officer of
the R
eserve Bank and as such continue as an associate economist
°I* the p
- ederal Open Market Committee, but that his connection with
the c_ .
vmmattee should not be continued on any other basis, and
that .
lf he were retained by the Bank in an unofficial capacity as
a cr,
—11841tant it should be on the basis of a fee which would be
co/1sta
srablY less than the salary now paid to him by the Bank.
Mr. Evans moved that the objectives
as stated by Mr. Eccles be approved and
that a letter to the New York Bank be
prepared in accordance with them.
The motion was put by the Chair and
carried, Mr. Ransom voting "no" with the
statement that when he saw the draft of
letter he may wish to vote for its approval.
291
2/26/46
-15-
Reference was made to the subjects which the Board would wish
to di8
cuss at the joint meeting of the Board and the Presidents and
R
a.usan stated that he mould like to take up with the Presidents
theqUestion of future policy with respect to the enforcement of
Ilegulati°r1 W, Consumer Credit.
He said that there was a wide differ-
the enforcement policies of the Federal Reserve Banks at the
III'"ent time,
that it was his opinion that there should be greater
Iltlifcrmity so that the regulation could be effectively enforced, and
that
tl-"e Problem should be presented to the Presidents with the ad-
that the Board
was contemplating calling a conference at an early
date for a discussion primarily of the enforcement of Regulation VI and
lated matters.
Mr. Ransom also said that he felt that it might be
cillieahle to
have Mr. Townsend come into the joint meeting at the proP" tilne tor the purpose of explaining the Board's current views with
Nect to
the problem of enforcement. The other members of the
131c1
expressed agreement with Mr. Ransom's suggestion.
°t the
8er°re this meeting there had been circulated among the members
8°ard a memorandum dated February 21, 1946, from Mr. Smead sum44.1z4
4-11g the
replies received from the Federal Reserve Banks to the
4.rdt s
j-etter of December 27, 1945, asking for their views with rePeet t
riot„
the discontinuance of the circulation of Federal Reserve
keht
11 denominations of $500 and above and the means by which this
be accomplished.
Three of the banks favored the suggestion, one
292
2/26/46
-16-
haclno objection, two agreed that the large denomination notes served
11° legitimate or
useful purpose but doubted the advisability of discelltilluing their issuance, and six were opposed to the suggestion.
The zemoranclum
recommended (1) that no objection be made at this time
to the use
of existing stocks of Federal Reserve notes of the higher
ciell°41inations but
that no change be made at this time in the Board's
cleci i°r1 to discontinue any further printings of such notes, and (2)
that
before taking final action with respect to furnishing Federal
Re8erlie notes
of the higher denominations for circulation purposes,
the zatter be
discussed at the joint meeting of the Presidents and
theBoard.
Mr. Smead's recommendations were
approved unanimously.
At this point Messrs. Smead, Vest and Leonard withdrew from
the
The
4tter
action stated with respect to each of the matters herein_
rieferred to was then taken by the Board:
The
minutes of the meeting of the Board of Governors of the
,terai
traolle
:
iteserve System held on February 25, 1946, were approved unan-
or the
emorandun dated February 11, 1946, from Mr. Thomas, Director
131-vision of Research and Statistics, recommending that Albert R.
IC°11 be
appointed as an Economist in that Division on a temporary
293
2iV46
—17—
b48is for an indefinite period, with salary at the rate of t5,600
"
173
1111m1, effective as of the date upon which he enters upon the
PelI017flance of his duties after having passed the usual physical exellination.
q* the
The memorandum stated that Mr. Koch would become a member
Federal Reserve Retirement System.
Approved, Mr. McKee not voting.
Memorandum
dated February 21, 1946, from Mr. Bethea, Director
efthe D
ivision of Administrative Services, submitting the resignatio4 of
James H. Macklin, a laborer in that Division, and recommending ths.t
the resignation be accepted effective as of the close of
eb
17 22, 1946, and that a lump sum payment be made for the ac1eave remaining to his credit at that time together with
48141 411101111ting
131
to four weeks' pay because of termination of his em-
ent,
The resignation was accepted as
recommended.
the
Letter prepared for the signature of all of the Members of
utirci to Mr. Walter Wyatt, General Counsel of the Board of
(11'ellior8 of the Federal Reserve System, reading as follows:
Your"As you leave the Board's staff to accept
stat new position with the Supreme Court of the United
es on March 1, 1946, you carry with you the best
T-Lshes of the
Board and your associates on the staff.
"During
the almost 29 years which you have
bee,
140.1",; a member of the Board's Legal Division --since
4 as General Counsel -- you have rendered distin"4.shed public service, particularly in the
294
-18"development of the legal and regulatory
work of the
Board.
"The Board is truly appreciative of the deService you have given and the contribution you
ha,ve made
to the Board and the Federal Reserve System."
Approved unanimously.
Thereupon the meeting adjourned.
Chairman.
@FedFRASER