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68 A meeting of the Board of Governors of the Federal Reserve Sysem Was held in Viashington on Wednesday, January 13, 1943, at 12:00 noon. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary r. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Leonard, Director of the Division of Personnel Administration Mr. Cherry, Assistant Attorney Mr. Szymczak stated that the Federal Reserve Bank of Richmond hacl submitted for approval by the Board a revision of the personnel elliesification plan of the Bank and its branches which involved in' el eases in the maximum salaries of certain positions provided in the Pla42 and that the increases would have to be certified to the Joint Con,, mull.Lttee under the procedure worked out with the War Labor Board and the Commissioner of Internal Revenue. He also said that, inasmuch as acti°n by the Board in this case would in effect establish a policy Ilhich would be followed in connection with similar changes in the per8°11"i classification plans at other Federal Reserve Banks, it was felt the Board should have a bill discussion of the matter for the purP°se of determining what its policy would be in connection with such e4see. Mr. Szymczak added that if the changes submitted by the Rich111°tIci Bank were handled in the manner proposed by Mr. Leonard it would be k4 (Mr. Szymczak's) suggestion that the Presidents' Conference 69 1/13/43 -2- Committee on Personnel Selection and Training be requested to appoint rePresentatives from two or three of the Federal Reserve Banks to discuss the procedure established by the Board's action so that the Fedel'al Reserve Banks would be familiar with it in connection with future eases- No objection was offered by the other members of the Board to this suggestion. Thereupon, at the request of Mr. Szymczak, Mr. Leonard, after Ileviewing the discussions which he and Mr. Cherry had had with representatives of the War Labor Board and the Commissioner of Internal Revenue wth respect to the basis upon which increases in salary would be approved, made a statement substantially as set forth in a memorandum addressed by him to the Board of Governors under date of January 12, 1943, reading as follows: "CAUSL FOR MEMORANDUM: Attached is a letter dated January 5, 1943, from the Federal Reserve Bank of Richmond, submitting for approval numerous revisions of the Personnel Classification Plan of the Head Office and Branches. Most of these Changes are increases in maximum annual salaries which, if approved by the Board, must be certified to the Joint Committee under the procedure worked out with the Tar Labor Board and the Commissioner of Internal Revenue for handling this type of wage and salary increases under the regulations of the Director Of Economic Stabilization. "These are the first certificates submitted by a Federal Reserve Bank. "ItECOMLINDATION: The various changes have been reviewed and it is recommended that they be approved, with one exception, and that for the position of Manager, Printing and Supplies Department, at the Head Office (Certificate No. 2), a basic maximum annual salary of $3,600 instead of $3,900 be approved. Attached are arafts of a letter to the Federal Reserve Bank and to the Joint Committee. 70 1/13/43 -3- "CuMM_P_NTS: The pr000sed salary increases and new positions are listed on the attached sheets. In most cases the present basic maximum annual salaries were established in 1936. The proposed maximum salaries appear reasonable with the exception of the po-. sition of Manager, Printing and Supplies Department, at the Head Office. This seems to be somewhat out of line for the position. In discussing the case with Mr. Walden, First Vice President of the Federal Reserve Bank of Richmond, he stressed the volume of work, the overtime put in, and the ability of the present incumbent of the position, and said that they proposed to increase his salary to $3,600 and wished to have some margin for an increase next year, if one seemed to be in order. After discussion, he concurred in the suggestion that, in view of all of the circumstances, it might be preferable to establish a maxi:anal of 0,600 for the position at this time, and in a year, :if they wished to make an increase in recognition of outstanding work of the Manager, they could ask for a salary in excess of the maximum established for the position. "Frequent reference has been made in the press and otherwise to the Little teel formula of the War Labor Board whereby increases of 15% over wages of January 1, 1941, were allowed. As stated in the respective certificates attached, none of the proposed increases in basic maximum annual salaries would be in excess of 15% of the maximum annual salary as of January 1, 1941, except in the cases listed on the following page. "?ositions where increase in basic maximum annual salary is in excess of 15%. Per cent Basic Maximum Annual Salary of Total Proposed Increase 1-141 Increase % of k2a4MPA Head Office Builaing Mechanic k,?1,500 $1,800 20 32 Engineer 28.3 1,680 16 2/3 1,440 Cleaner 1,320 1,020 29.4 42.4 Elevator Operator 33 1/3 1,200 900 46.7 Chief Audit Clerk 3,600 16 2/3 21.7 4,200 Manager, Money Dept. 3,300 18.2 3,900 23.6 Coin Teller 16 2/3 1,800 2,100 26.7 Coin Counter 16 1,500 1,740 27.6 Porter, Money Dept. 1,020* 1,320 29.4 42.4 Manager, Printing and bupplies Department As proposed: 3,240 20.4 25.9 3,900 As recommended: 3,240 11.1 3,600 14.9 Registered Mail Clerk 2,100 26.7 1,800 16 2/3 Baltimore Branch Cleaner 1,140 1,380 21 33.2 It 1/13/4 3 -4"it. Position established 2-5-42, maximum salary same as for cleaner, which was $1,020 on 1-1-41. # This column shows the increase in basic maxim= annual salary plus supplemental compensation over the basic maximum annual salaries of January 1, 1941. "Supplemental compensation was not being paid on January 1, 1941 and is now being paid at the rate of 10% on the first $1,800. Taking into consideration supplemental compensation, the increases In basic maximum annual salary plus supplemental compensation over the basic maximum annual salary as of January 1, 1941, for positions other than those in the foregoing list would range from 15% to 26%. In all cases, however, the resultant maximum salaries after allowance for supplemental compensation appear reasonable and are within the range of prevailing rates for similar or cornParable positions in the area or within the Reserve Bank itself, as reported by the Reserve Bank. It will be noted from the above list that the greatest percentage of increases are in the lowest salary brackets, such as cleaner or elevator operator. "One of the principal factors in making the adjustments is the increased number of Government employees in the areas with salaries under the Civil Service scale, and the proposed salaries, Where comparable, come within that scale. "The Reserve Bank proposes to create the new position of 9fficerts Secretary, with a maximum annual salary of *21100, and In the letter dated January 5, 1943, expressed the opinion that this is the creation of a new position which need not be referred to the Joint Committee under the certification procedure. This was discussed with Jadir. Walden and Mr. Guthrie during their visit ten days ago when they came up to discuss the general procedure. It is a close question, but in view of the fact that the new position will permit higher salaries to the individuals who will continue to do the same work they have been doing for past months samply by changing the title, Mr. Cherry, of the Legal Division, and I felt that the question of doubt should be resolved in favor of certifying the change." During Mr. Leonard t s statement, Mr. Dreibelbis, General Attorney, J°illed the meeting. In the ensuing discussion, it was pointed out that under the eci$tirig arrangement the Federal Reserve Banks could increase salaries 4S the result of (1) individual promotions or reclassifications, (2) trldividual merit increases within the existing personnel classification (3) the operation of an established plan of salary increases based 1/13/43 -5- on length of service, (4) increased productivity under incentive plans, or (5) the operation of an in-training program, but that they could not increase salaries beyond the maximums specified in the personnel classification plans or increase the rate of supplemental compensation being Paid at the present time without certification of the increases in accordance with the procedure established by the War Labor Board and the C°4missioner of Internal Revenue. It was also stated that the War Labor board and the Commissioner of Internal Revenue had authority to approve increases in salaries being paid on September 15, 1942, in order to correct maladjustments and inequalities, to eliminate substandards of living, to correct gross inequities, or to aid in the effective prosecution f the war, so that, in effect, the latitude for increasing salaries 1111cier the President's Executive Order was still very broad. In response to an inquiry from Mr. Ramsom, Messrs. Dreibelbis 44c1 Cherry stated that in their opinion there was nothing in the proceallre recommended by Mr. Leonard that would be contrary to law, but Mr. Cherry Pointed out that the certification of increases in the manner 131 ' °Posed did not mean that the increases necessarily would be approved bY the Joint Committee. At the conclusion of the discussion, Mr. Szymczak moved that the Board approve the procedure proposed by Mr. Leonard, with the understanding that the question whether adjustments in maximum annual salaries proposed by a Federal Reserve Bank in the future would be approved by the Board would depend on the circumstances in each individual case. 73 1/13/43 —6-Mr. Szymczak's motion was put by the chair and carried unanimously. Mr. Szymczak then moved that the Board approve the following letter to the Joint Committee on Salaries and Wages: "Under the procedure established by General Order No. 19, of the War Labor Board and the authority granted by the Com— missioner of Internal Revenue, transmitted herewith are the origja5 and four copies of certificates Nos. 1 to 6 of the Federal Reserve Bank of Richmond with respect to adjustments, under the personnel classification plan, in the maximum an— nual salaries for certain positions at the Head Office and the Charlotte and Baltimore Branches. "These increases have been approved by the Board of Gov— ernors of the Federal Reserve System as submitted, with the exception of the proposed increase for the position of Manager, Printing and Supplies Department, at the Head Office (Certif— icate No. 2), for which the Board has approved a basic IMTXIMUM annual salary of $3,600 instead of $3,900, as proposed. "In transmitting these certificates, attention is called to the fact, which has been discussed with representatives of the Tar Labor Board and of the Commissioner of Internal Revenue, that the maximum annual salaries approved under the personnel Classification plan are not, in general, established rates Paid for all employees coming within the respective groups. They represent instead maximums within which adjustments, in— ?luding increases due to individual merit and earned through long service, may be made by the Reserve Bank without further reference to the Board of Governors. Mr. Szymczak's motion was put by the chair and carried unanimously. Unanimous approval was also given to the following letter to Mr. Walden, First Vice President of the Federal Reserve Bank of Richmond: "The Board has approved, with one modification, the re— visions in the Personnel Classification Plan submitted with Your letter of January 5, 1943. "For the position of Manager, erinting and Supplies De— partment, page 63 of the Personnel Classification Plan for the Head Office, the Board approves a maximum annual salary i?3,600 instead of $3,900 as submitted by your Bank. The appropriate change will be made on page 63 of the Board's 0.P51* of the ?ersonnel Classification Plan. It is understood that this change has been discussed with you by Mr. Leonard." 74 1113V43 At this point, Messrs. Dreibelbis, Leonard, and Cherry withdrew tr°m the meeting, and the action stated with respect to each of the matters hereinafter referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Pederal Reserve System held on January 12, 1943, were approved unanipiously. Memorandum dated January 11, 1943, from Mr. Goldenweiser, Direct°r°t the Division of Research and Statistics, recommending, with the e°11cUrrence of the Secretary's Uffice, that Miss Joan E. Conlen, a page in the Secretary's Office, be transferred to the Division of Research Statistics as a clerk, with no change in her present salary at the l'at e of $1,260 per annum, effective as of the date upon which she enters tIP°/1 the performance of her new duties. Approved unanimously. Letter to Mr. Neely, Chairman of the Federal Reserve Bank of Atlanta) reading as follows: "On December 12, 1942 you wrote to us stating that your Board had set aside 425,000 as a special fund for work on the Program for regional economic studies and that Mr. George W. Simons, Jr. had been employed to work on this project at a per diem salary at the rate of $7,500 a year. Approval for these actions was requested. Mr. Goldenweiser replied on December 21 expressing interest in the work that Mr. Simons would do and requesting a more detailed statement of the project. This wa! acknowledged by a letter from Mr. Bryan on December 23 in which it was stated that you would send us as soon as possible a more detailed outline of Mr. Simon's work. t , "As you know, the Board is greatly interested in having lifork in connection with the program for regional economic i 16t".es actively prosecuted. At the time this program was set P it was contemplated that the work would be done by the re-search department of each Bank in collaboration with the Board's 75 1/13/43 -8- "Division of Research and Statistics and that, where necessary, a:dditional members would be added as quickly as possible to the department's staff. Before giving approval to the somewhat different arrangement that you suggest, the Board would, therefore, like to have for its consideration a detailed statement of the work planned, the manner in which it would be done, and its relationship to the Bank's research department. In the meantime, however, in order to clear the record on this subject, the appointment of Mr. Simonsat a per diem salary at the rate of 0,500 a year is approved provisionally, pending receipt by the Board of more detailed information about the work and approval of the arrangement." Approved unanimously. Thereupon the meeting adjourned. M ecretary Chairman.
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