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Minutes for To: January 24, 1961 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to °e maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise ,e th Secretary's Office. Otherwise, please initial below. -if you were present at the meeting, your initials will indicate approval of the minutes. If you were not present, Your initials will indicate only that you have seen the minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on January 24, 1961. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 9:20 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson King Mr. Sherman, Secretary Mr. Johnson, Director, Division of Personnel Administration Messrs. Hayes and Treiber, President and First Vice President, Federal Reserve Bank of New York Officer salaries at New York Reserve Bank (Items 1, 2, and 3). Ndlt aa Martin stated that this meeting was being held for the purpose of havi, 'g Messrs. Hayes and Treiber meet with the Board to discuss the question Or off leer salary proposals for the Federal Reserve Bank of New York for the caaet, 48-1. Year 1961, the revised proposal for salary ranges for officers of ' thn".L 'BA/Ilp ---, and any other questions that might have arisen in connection '1-th 'Ae administration of the plan for officer salaries of the Federal -"e Banks. He then called on Mr. Hayes to express any views that he had. Mr- Hayes proceeded to make a statement substantially as follows: First,I should like to review the facts. On November 1960, the directors of the New York Bank fixed the officer ,!tieries for the calendar year 1961. They also approved a ;Ielvised scale of ranges for the various groups of officers. ese Were submitted to the Board at the usual time. SubserntlY, three of the directors of the Bank met with the ' lard to discuss this subject on December 2, 1960, and , 1/24/61 -2according to what they told us there was some indication that the Board was bothered about the $40,000 maximum that had been provided in the revised scale of ranges for officer salaries for the top group, that is, for C) salary Group A. They did not give any indication that the Board would disapprove the proposed salaries for individual officers or that they thought there were too alarlY increases included among the proposals that had been submitted to the Board, nor did they give any impression that there were any specific requests from the Board to gO on through them to us to submit a new schedule. This drifted on through December and, so far as I know, there Was no official communication to the Bank regarding the Board's views on this subject. Not having heard from the ,./.3.0ard, I began to wonder about the matter and called 30vernor Shepardson an December 28 at which time I ' learned from him that the Board would not approve the nelg salary range schedule with the $40,000 maximum for the top group and that it wanted a new schedule. That on December 28 and it was a little disturbing since " 14 we would ordinarily then have been ready to go ahead with .1111 adjustments at the year end. Chairman Reed had discussed 4) ( his with Chairman Martin. After my call to Governor .hePardson, the suggestion was made that either I or Mr. Treiber should meet with Governor Balderston to try to straighten out the questions. Mr. Treiber met with Gover1.1°1 Balderston on January 10, and I understand there was s°Me discussion as to just what the Board thought was ? 17 °11g with the proposals that had been made by the irectors of the New York Bank: that is, the size of ' the increases and the number of increases that were being Pr°Posed. The question was somewhat up in the air and it as agreed to have a meeting with the Board, and this Meeting was arranged for today. On the issue of salary ranges, the directors were very „14 48aPPointed that the Board would not approve the new proposal. rr: '', tileY felt quite strongly about this increase in ranges, parl' vicUlarly for the officers in Group A. In the light of our oerY severe competition from commercial banks among our senior fficer grade, they disagree with the action of the Board and , '_41ink it has mite unfavorable implications for our management uf the Bank in the future. But at the same time we recognize 1/24/61 -3- that it is the Board's statutory responsibility. Because of this, on January 5 the directors voted to adopt a new salary range schedule with $35,000 as the maximum for Gr°uP A, the same as the existing maximum, but with the maximums of some other groups adjusted and also the miniMum ranges adjusted to bring about a more satisfactory relation with the salaries paid in the top group of the 11°n-official staff. This was the proposal that Mr. Treiber handed to Governor Balderston when he met with him on January 10. We have not heard anything regarding that revised range proposal. Now as to individual increases, our salaries for 2fficers have long been geared to the rate fixed for the l'irst Vice President and to the top salaries paid for the 11°n-officer staff of the Bank. For this non-officer group, °ur Policy is to pay as nearly as we can in line with what Paid by the better employers in the community. In order r o attain that this year, we had to have a little more than 1 r -1/2 per cent increase in the average employee salary. That meant that with most of the officers in the lowest salary group performing well, and with most of their top grade employees getting salaries close to those for the °facers, it was very hard not to give increases to most the officers in the lowest grade. The November proposal liould have increased the officers' pay roll about 5-1/2 per r cent, a little less than the average increase in salaries Or employees other than officers. The point that I would like to stress above all is that, for one salary, the amounts proposed for the officers "e well within the approved ranges that are already in existence at the Bank. Since they are well within the old /Inges, they are even more within the ranges proposed in our ' November 10 letter, and of course within the revised range ,tructure submitted with Mr. Trefber's letter of January 9. :e often talk about the compa ratio in salary administration. un the basis of the revised ranges submitted in our letter Z!: January 9, the November 10 salary proposals would leave compa ratio at 100 in the lowest salary group and be°17 100 in the other groups. Taking that as a frame of !'erenee, and if the whole idea of setting a range means anywe at the New York Bank are performing in a reasonable ex J -1 C) 44( f 1/2v6i Y. Proposed individual increases do not result in any distortion of the average salary within the ranges. We had thought that the whole idea of the salary administration Plan set up in 1953 was for the Board of Governors to be able to get rid of some of this responsibility for weighing of in dividuals. I really should think personally that it would. 1:?e very difficult for the Board here in Washington to do that; , 4. find it hard enough to do it myself. I should think it a great deal harder for you here to judge the individual officers. I should think that you would want to give the maximum amount 1 leeway to management as long as they were not pushing every7 °4Y up into the front half of the salary ranges. At this late date, it is very difficult for us to devise new schedule of individual increases. Here we get into an I-6811e that is crucial. I do not know how the Board feels about it, but my understanding is that when you discussed this th three of our directors on December 2 there was some disTission as to whether we had too many increases in relation to 'Ile number of officers, and there was some discussion as to !hether there should not be fewer increases and larger increases. vn that point, the view was expressed that it might be better to I've an individual a big increase and then to have him wait for ! 40 or three years for another increase. That is one way of " ci°ing it. The reason that we have shied away from it--although !°roe of the directors feel that that would be a good procedure-that we really thought there was a reluctance to see very 1-arge increases for individual officers. That seemed to come °Ilt also in Mr. Treibergs discussion with Governor Balderston On January 10. This puts us in a dilemma. If you are neither able to give a sizable percentage of the officers increases of moderate al 2ounts nor to give fewer but bigger increases, I just don't how to solve the problem. I presume you are just as .rterested as Mr. Treiber and I are in seeing that we keep the Nest people that we have throughout the System including the te14' York Bank. The whole philosophy of this is that we have t° go a reasonable distance in meeting the comnunity compeition. We obviously don't go very far in meeting it at the nior end, but on the lower end with junior managers it has _en e the practice to try to pay as good salaries as do the ommercial banks. In the Board's Annual Report for 1918 the ' V Oqe'W 4,4 1/24/61 -5- Board said on pages 29 and 30 that the Board had recognized from the outset that the compensation paid junior officers, heads of divisions, and clerks must be in line with that Paid by the larger member banks, and that sufficient inducements should be offered by the Federal Reserve Banks to make service with them attractive as a career. As far as I know that is still the Bosrd$s view. If that is the case, you have to keep the junior officers pretty much in line with the commercial banks and also with the top employees in the tleserve Banks. In a year like this where you have a 5-1/2 Per cent increase in the average rate for the non-officer employs, I just dontt see how you avoid a large percentage Of increase in individual officer salaries. That is about all I have to say unless Mr. Treiber has something to add. Mr. Treiter stated that he had nothing to add to what Mr. Hayes pre"Ilted Slid he would only comment that the problem for discussion involved both+1, `41e ranges that the New York Bank was proposing for officer salaries 811bmitted in the letter that he had left with Governor Balderston dated J81111 arY 9, 1961, and also the problem of salaries for individual officers as 13r'eBected to the Board in a letter from Mr. Hayes dated November 10, 1960. Chairman Martin then called upon Governor Balderston, who made a State ment substantially as follows: Mr. Treiber and I had a very realistic discussion of .4.411-a whole question on January 10. I told him at that time tlat I thought an improvement had been made in the salary !snge schedule that he brought with him as set out in their -Letter of January 9, that is the revised proposal as compared th the ranges submitted in their letter of November 10. I ;61$1.1ight, therefore, that we might devote most of our dis' ellssion to the implementation of the officer salary ranges and the salary administration plan. n As far as the schedule of individual increases is COn cerned, I said that it is still high. I could vote for the revised ranges if I thought that the New York Bank was 1/24/61 -6- going to implement this new schedule in accordance with the Boardts ideas as to administration of salaries of officers at the Federal Reserve Banks. I made it clear that I was 8Peaking for myself: although some of those ideas no doubt lould represent the feelings of other members of the Board, each Board member, of course, could speak for himself. I expressed to Mr. Treiber the view that, in addition tO its responsibility for general supervision of the Federal Reserve Banks, the Board has the specific responsibility to aPProve or disapprove salaries proposed for officers. This resPonsibility is one that the Board cannot divest itself Of. However, in 1953 the Board decentralized this function without abdicating its final responsibility and authority. It did this by the device of salary schedules that give concrete expression to the salary "level" that the Board !PProves for the officers of each Reserve Bank. But, the Eoard retained the power to give approval to the application °f these salary schedules to individual officers. In the this approval has to do with the dispersion of actual salaries within the approved ranges and also with the number and amount of increases at any one time. The compa ratio is erelY a crude device for detecting misapplication of schedules. addition, salaries at any Reserve Bank that may either lag 4!hind the procession or lead it excessively give reason for Board as the coordinating agency of the System to call is situation to the attention of the Reserve Bank concerned. T In recent years, this Board has felt that the New York -a/ikt B 8 salaries were leading by more than could be justified. " i:sing the New York official salary level as 100, the other serve Bank levels are reflected by percentages such as ci ese: Boston 79 per cent; Philadelphia 77 per cent; -Leveland 73 per cent; Richmond 78 per cent; Atlanta 67 131er cent; Chicago 77 per cent; St. Louis 78 per cent; ..7 11flealoolis 76 per cent; Kansas City 73 per cent; Dallas Per cent; San Francisco 77 per cent. This year, I told Mr Treiber, the New York Bank submitted increases for 80 rer cent of its officers as compared with 58 or 59 per cent P °P all 12 Banks. The average percentage increase proposed 13j the Reserve Banks was 4.7 per cent, while that of New York 5.5 per cent. Since this percentage applies to larger —431-Ints, the proposed increases at New York are also larger 4 1/24/61 -7- the absolute, and they distort still further the differential between New York and the rest of the System. Of the 62 recommended increases above $1,000 in the whole System, 19 are in New York. The Board is aware that last year's rise of 6 per cent in salaries at New York creates in the official ramilY an expectation of raises for them also. This expectation might lead to disappointment unless the problem facing the System as a result of salary actions over several years is explained carefully. the It would not be my thought that New York should make no in creases this year but that they should be reduced both in !lumber and in amount. In summary, I feel that improvement has peen made in the revised salary range schedule proposed for sPProval by the Board. I still have concern about the differential between the New York level and the rest of the System and about the Board's responsibility to maintain a reasonable eQ/laistency throughout the System. Mr. Hayes stated that he would like to make an Observation. had the He 'slimed that the reason the New York salaries had been higher than rest of the System from the beginning was that the New York Bank was le'cated in the financial center of the country, which generally has a higher executive salary level than elseWhere, and in addition the New YtIrkReserve Bank has certain specialized responsibilities that other leserve Banks do not have. For example, it has certain operations in )ttllection with the open market function and with foreign activities. Aa far , comparisons with commercial banks were concerned, Mr. Hayes that he did not have a survey of the commercial banks in other cliatIsiQts but that it would be helpful to have such a comparison if it liere available. 1/24/61 -8Governor Balderston said that he would also like to comment on the coalmercial bank salaries. He would grant the point that the New York Reserve Bank had some special responsibilities in connection with open 4917ket operations and foreign operations. However, the level of commercial barl'jt salaries in New York was not so different as might be assumed. He had UP the figures for salaries paid to vice presidents at commercial bEalk„ ln New York and found that, taking 100 as the level paid to a sample I/1 N. 'w ork, the relative levels paid to vice presidents of commercial banks other cities would be about as follows: in Chicago, similar officers l°1-11-cl receive salaries about 95 per cent of the New York level; in San Fran , c 800, about 92 per cent of the New York level; in St. Louis and ' -'''P°1-1-8 about 80 per cent; in Richmond 79 per cent, and so on. These rePresQnted the salaries paid in senior positions. After Mr. Hayes commented that he did not know how Governor Balderstonts Bftro was arrived at, there was a discussion of how a sample might be taken t° give an accurate indication of the relative salaries paid to officers at comparable responsibilities at commercial banks and those ?ederej- Reserve Banks in various cities of the country. from During this discussion Mr. Hayes made the statement that, apart the a ctual salaries paid, officers of commercial banks shared in profitPlans and in retirement system benefits that were entirely different *°13i those provided for officers of Federal Reserve Banks. He thought -l‘c ‘ 4-f 1/24/61 -9- P°88iblY these represented benefits as much as 25 per cent above the sal arY level paid to commercial bank officers. At this point, Chairman Martin stated that at the meeting that the Board had with Messrs. Reed, Hill, and Alexander of the Board of 1)irect°rs of the Federal Reserve Bank of New York on December 2, the Ngestion was made that perhaps salary increases for a number of Perscirla propos, -d in the New York Bankts letter of November 10 might be el-L, -L minated but that there might be larger increases for some. He 110ted that Governor Balderston had not been able to attend that meeting, blIt he wondered whether there had been any discussion of a procedure this line either at Governor Balderstonts meeting with Mr. Treiber 04 jari llarY 10 or among the officers and directors of the New York Bank. *. Treiber said that this suggestion was considered but, in teak. lng with Governor Balderston on January 10, the latter had indicated that 1, e thought the New York Bank should cut down both on the number of ' iher eaaes and on the amounts of the increases. Mr. Treiber said that 1.1118 would be directly contrary to the views of the directors of the teral Reserve Bank of New that if a decrease was made the should be an increase vords 'if a man were passed York. The latter were clearly of the view in the number of officers receiving increases, in the amounts of those increases. In other up for a 2-year period, the amount of increase to b e given should be larger so that over time the man would move along to 1M/61 -10- ab°11t the same level. This, he felt, was a matter of local judgment. It V Mr. Treiber's view that the directors of the New York Bank would be " uit disturbed if they were called upon to reduce both the number and the amounts of individual increases proposed for the calendar year 1961. As .Lor the fact that New York had more increases over $1,000 than other R"erve Banks, Mr. Treiber felt that this followed automatically since the IT "ew York Bank dollar range was higher. Therefore, he wondered lether a percentage figure would not be more significant than a dollar Qom-. -varicon. Mr. Treiber also said that there had been discussion of cutting cjilt 8°1"Of those Who had been listed for increases in the November 10 lett, Lr but that in view of the failure to crystallize an understanding with Gove r"r Balderston on January 10, it had been concluded that there should be a further exchange of views with the Board before any action was taken tovar, Changing the recommendations submitted earlier. Chairman Martin said that he thought that Messrs. Hayes and Treiber colad see the problem that confronted the Board. I./ere The Board members also aware of the problem that confronted the directors and officers of the /e6 Bank. It was clear that there was not a meeting of the minds betv. 'en the Board of Governors and the New York Bank on how the officer Plan should be administered. Mr. Hayes said that he felt the Board in a sense was not sticking qt.}.1 its decision in 1953 and the principles involved in the salary plan r °trice,. of the Reserve Banks. " It was his understanding that when the 130ard aPProved the ranges for officers' salaries in 1953, there was I.41 1124/61 r"°gnition of the salary differential between New York and other Reserve Banks. Yet it seemed to him that there was an undercurrent of dissatisfaction amonp the Board members with the differential that existed between e York and the other Reserve Banks. Assuming that the Board was going to Stay with the plan that it had set up and approved, he did not think it " 11 fair to let a feeling that New York salaries might be too high triterfere with the plan that had been put into effect, unless the Board 1.4111ted to change the plan. This, of course, was a privilege of the Board. Otherv,i _ e 8 he felt it extremely difficult for the New York Bank to operate 141cier the plan. Governor King said that he did not think that any Reserve Bank '4°11-14 be faced with a great hardship if it were expected to operate within a Plan triere which allowed as many as 50 per cent of the officers to have an ase in salaries in a one-year period. There was recognition that the higher officers in a Federal Reserve Bank would draw some of their compenation - ,rom knowing that they were performing a public service. He did hot think that the handling of this problem could be reduced to precise 13ereentage terms, but in general, if 50 per cent of the officers could l'"eive an increase in salary in a year, he felt there would be ample heacir°equ for carrying on the management of the Bank satisfactorily. Thi8 I'muld be the case in any business with which he had been familiar. -°111d not understand why a Reserve Bank could not operate within 1/24/61 -12- 4 range, " and he noted that for the System as a whole somewhat less thall 60 per cent of the officers were proposed for increases this year. SPeaking generally, Governor King said that it was easy to be free with I./hen an organization did not have to account to shareholders for 131s()fit• He felt that one of the big problems in the American economy t°nì 414. vas the tendency for many persons to feel that an increase in the l'ate of ea-Lary should come each year, and in his opinion the Federal Ileserv- vas not setting a good example for the country if it felt that it mus+ raise two-thirds of the officers in salary each year. averse Mr. Hayes inquired of Governor King whether he would be t --elng raises at less frequent intervals but in fairly substantial 11 °1j3Its, to which Governor King responded that he would not object to thi 8 procedure. As an example, if a man received an increase at a twoo thy.ee- or four-year interval, the increase might be as much as 10 or Delia 8-138 12 per cent. He repeated, however, that this VBB not a matter that could or should be reduced to a precise percentage or a precise rigur, -, and it also would depend upon the particular salary bracket "1111 which the man fell. Mr. Hayes commented that he would be delighted with a policy that =J. alled for less frequent increases but substantial increases when that This, however, did not seem to be in line with the view Gclvern °r Balderston had expressed to Mr. Treiber on January 10. 4 1/24/61 -13Chairman Martin noted at this point that it was time for the Meeting of the Federal Open Market Committee to convene. He stated that he did not think the discussion had made much progress thus far end suggested that the Board reconvene with Messrs. Hayes and Treiber foil °74ing luncheon. The meeting then recessed and reconvened at 12:40 p.m. with the "Ille attendance as at the close of the morning session except that Messrs. 111"8, Treiber, and Johnson were not present. Chairman Martin stated that he had asked the Board to meet at this time because he did not feel that much progress had been made in the -'slon with Messrs. Hayes and Treiber this morning. However, under -e t ' circumstances a decision should be reached in connection with the '411Y ill 'which officer salaries at the Federal Reserve Bank of New, York for the c'alehdar year 1961 should be handled. There was obviously a cleavage bete, --" the thinking of the Board of Directors and officers of that Bank allcl the views of the Board of Governors on the whole question. He felt that Board would have to work further with Messrs. Hayes and Treiber O thi 8 question in attempting to bring about a better understanding, but it vota d be desirable in view of the morale and other problems to give them some definite ideas of what they should do when they returned to ork today. One way of handling the immediate problem would be to tell me sers. Hayes and Treiber that the Board would approve the revised 1....)c 1/24/61 —14- 14garY ranges as proposed in Mr. Treiberas letter of January 9, 1961 and Ii°111d be prepared to approve a revised list of salaries for individual cers within these ranges, provided the total increase did not exceed " the figure of 4-1/2 per cent, which was the percentage of increase for "ricers in the System as a whole at the beginning of 1961. There followed a general discussion of this proposal and of Ele'reral other suggestions by individual members of the Board regarding the Procedure that should be followed. View expressed during the disc118810/1 included the following: (1) Prompt disposition should be made of the question of officer 860A-= ''es at the Federal Reserve Bank of New York for calendar year 1961, bt '4hatever decision was arrived at should be with the understanding that steps should be taken that would avoid a repetition of the situation that had developed this year. (2) As previously understood, the Board was not prepared at this tiane to consider a change in the salary levels for the President and the ?lret Vice President of the Federal Reserve Bank of New York, now $60,000 anniam for Mr. Hayes and $35,000 per annum for Mr. Treiber. (3) Approval of the revised salary ranges for officers below- the °f the President and First Vice President with a retention of the e istin, create any Maximum of $35,000 for those in Group A would not --"-Les for the Board that would not exist under the present salary 4-1QQ v24/61 -15- tructure and it would bring the various officer groups into better alignment than now existed in relation to the top salary levels for eraPloyees other than officers. (4) Freedom for the New York Bank to apply the revised officer "18'17 ranges, including application of the maximum for Group A of $35,000 (the 8aMe salary as that for the First Vice President), might bring pressure r°r change in the salary of the First Vice President. However, such salary rnaximtun was provided under the existing range, and perhaps the Board should ilc't Object to permitting the application of this figure if the New York 8alik 80 desired. On this point, the view also was expressed that a Vice differential should be maintained between the salary of the First 13.raaident and other Vice Presidents of the Bank. (5) °Iericer To request the New York Bank to adjust the total of its salary increases for 1961 to a percentage figure derived from EtVer aging salary proposals for all twelve Federal Reserve Banks Was not desirable since this device would not offer a scientific or satisfactory tile8"ris for determining the amount of increase that should be permitted to Etty -Ile Federal Reserve Bank in any given year. (6) Under all the circumstances, it would not be desirable to 1114eat the New York Bank to submit a new list of salaries for individual Orric era covering 1961, but this should not be construed as indicating that tht oard accepted the approach taken by the New York Bank in fixing 1/24,45a -16- Individual officer salaries as reported in Mr. Hayest letter of November '1960, and this view should be communicated to the Bank in writing. 10 (7) The Board should indicate that it concurred in the approach taken by Governor Balderston in his discussion of the salary administration Mall vith Mr. Treiber on January 10, as reported at the morning session of tc3claY's meeting. At the conclusion of the discussion, Chairman Martin suggested that tne Board reconvene after lunch with Messrs. Hayes and Treiber present, at 1.71,4 -4-en time the Board would indicate that it would approve the revised Sal ranges for officers nubmitted with Mr. Treiberts letter of January 9 and that it also would approve the payment of salaries to the officers of the 'cleral Reserve Bank of New York other than those of the President 1-11(1 ?irat Vice President at the rates stated in a letter from MT. Hayes dated N atate ovember 10, 1964. However, in taking this action, the Board would that it did not believe there had been a meeting of the minds between the di rectors and officers of the New York Bank and the Board of Governors Or the „ waY in which the plan for officer salaries adopted by the Board in 1953 should be administered, and it would request that there be a prelimi' lacussion by Messrs. Hayes and Treiber with the Board of detailed Prop° 18 for officer salaries for calendar 1962 early in the fall of " 1961, Prior to the presentation of proposals by Messrs. Hayes and Treiber to the directors of the Bank for their approval. v24/61 -17There was unanimous agreement with Chairman Martin's suggestion. The meeting then recessed and reconvened at 2:20 p.m. with the SaIlle attendance as at the session held at 9:20 a.m. this day. Chairman Martin stated that the Board regretted the way the 0 6815 for officer salarics at the Federal Reserve Bank of New York " ro, jc had developed this year and that it was clear there had not beeh. ' a satisfactory understanding between the New York Bank and the Board Q11 the Whole problem, including the way the 1953 plan for officer salaries 811°Uic be administered. Looked at from the standpoint of the morale of the Of leers of the New York Bank, however, and in the light of the delay , that "aa occurred in handling the problem since the meeting with Directors Re ' d }rill/ and Alexander on December 2, 1960, the Board was prepared to approv e the payment of salaries at the rates set forth in Mr. Hayes' letter th Of November 10, 1960, which excluded salaries for the President e First Vice President, and it also would approve the revised salary rarlges. submitted for officers with Mr. Treiber's letter of January 9, 1961, 41th- the all' understanding that well in advance of the formal submission of C SalSry proposals for officers for calendar year 1962 the New York arikl/ould take up with the Board the subject of officer salaries for that Yekr alid discuss in detail what proposals were to be submitted to the directc)rs of the Bank. the. Mr. Hayes stated that he understood the Chairman to be saying the Board was prepared to approve the revised ranges submitted with 1/24/61 14r. Tretberts letter of January 9 and also the proposed salaries for Individual officers other than the President and the First Vice President, as submitted in his (Mr. Hayes') letter of November 10, 1960. Chairman Martin responded in the affirmative, adding that the Board SS dcllig this, under all the circumstances, because the matter was more or less °Ut of its hands for the current year, not because it believed the Pr°Posed changes in salaries represented the best administration of the aalav, .*7 Plan for officers. Also, because it would be understood that, as the time for considering changes in salaries approached for the next year, eYec would arrange to come to the Board and discuss in detail what he had i 11 mind for proposing in the way of salary changes for officers for 1962, It was the hope of the Board, the Chairman said, that this would -n some meeting of the minds on salary administration for the Bank. Mr. Hayes then said that needless to say he appreciated the whole Of the approach by the Board to this problem. that However, he regretted e .uoard felt as reluctant as it apparently did in giving its approval to the "laries of individual officers. He would feel better if the Bank ctelete from the list of proposed increases s name here and there, if that 1r, `411d make the Board feel that the resulting list was a reasonable orle did not know whether that procedure would be practicable, however, krici asked Mr. Treiber for his comments. t) 1/24/61 -19Mr. Treiber said that Chairman Martints statement of what the Board vaS Prepared to do offered a workable arrangement and that he would prefer to _, 'bLiong that line. He said that he understood this to mean that, ad of talking with the Board at the budget discussions in August or SePtelliber of 1961 in general terms regarding officer salaries, this 14°111d call for a discussion at that time in terms of a schedule of names 84d 8PeC1fiC proposals. Chairman Martin and Governor Balderston stated that this was ect, and Mr. Treiber said that this seemed to him to be an appropriate c°11 ' 41c"• Governor Balderston also said that, to make certain that the approach Vas ci 4-ear, the Chairman's remarks were making a distinction between the 1'e/tilled schedule of salary ranges submitted in Mr. Treiberts letter of 41111ary 9, to which the Board did not take exception, and the list of Ilidividual increases that had been submitted in Mr. Hayes' letter of Ner"itiber 10. Governor Shepardson commented that this did not mean that the 13°ard arid 1411 1)11tth wJ-shed to get into the position of evaluating individual officers at would be appropriate in the way of salary increases for them, Bond wished to look at the total number, range, and amounts of triel'ea8(.8. So far as he was concerned--and he felt this was true for the Nal as a whole--ho did not believe that the Board would wish to pass on %that -44u of salary adjustment was appropriate for each individual officer thf, - ,ederal Reserve Banks. t 1/24/61 -20Governor Robertson said that in his opinion any proposal to increase in one year as much as 80 per cent of the officer force at a Federal Reserve Bank was much too high, and other members of the Board itclicated a similar view. Mr. Hayes said that he would not say that this was wrong, that it vas Probably right. He was puzzled, however, as to the way to reconcile that approach with a situation where, at the junior officer level, salaries --- on the level for the non-officer staff. After Governor Shepardson had 8 uggested that at some point it was necessary for management to show SOme resistance to upward pressures on the general level of salary costs, 141s1 RaYes said that he agreed with this comment as well as the comment G0vell1or King had made at the 9:20 session to the effect that an organi414°11 should be able to operate satisfactorily without annual salary kcihstments for more than half of its officer staff. 1(14 To this, Governor 4"Ponded that under circumstances existing today he felt that yearly illel'eases for 40 per cent of the officer staff or even less should he stIfficient to enable an organization to operate satisfactorily. Mr. Hayes then said that he wished to be sure he understood what the Boa rd was prepared to approve as to individual officer salaries for calserm ar 1961 at the New York Bank. It was his understanding that the tottrcl saying that it would approve the list submitted with his letter v " or Nov ember 10, 1960, excluding of course the President and the First 1/24/61 -21- vice P resident concerning which a separate letter from Chairman Reed had been sent to the Board on November 7, 1960. Governor Mills noted that Mr. Treiber's letter dated January 9, 1961) submitting a few additional salary changes for new officers or 8 in titles for others had circulated to the Board and that these " 11411 1(311-1(1 heAre to be fitted in with the changes covered by the November 10 letter. Mr. Treiber commented that, in addition to the list submitted ''ILt4 14r. Hayes" letter of November 10, seven promotions or changes in tilae which Governor Mills had referred had been made by the directors of the New York Bank at their meeting on January 5 and submitted for approval in a letter of January 9. Martitts His understanding of Chairman statement was that the Board was prepared to respond to the letter of November 10, 1960, approving payment of the salaries therein laisesented, that it would respond separately to that portion of his letter Or 41111E17 9, 1961, covering the few individuals Governor Mills had referred to, 'Au that the Board would also respond separately on the revised salary rellges for officers submitted in the letter dated January 9, 1961. Chairman Martin stated that this was correct, adding that it was 44°°rtant that the New York Bank receive these letters from the Board 'before it took further action regarding the changes under discussion. 1/24/61 -22Governor Balderston said that it was also important that it be Itaderstood that, in the early fall of 1961, specific salary proposals for "cers of the New York Bank be taken up with the Board--a step that he 11:t should be taken before Messrs. Hayes and Treiber discussed with the directors of the New York Bank what they had in mind to propose in the 14s5r of salary changes for 1962. Governor Robertson stated that he would like the record to show Messrs. Hayes and Treiber were present that he concurred fully in the y, ,eocition that Governor Balderston had stated earlier today regarding Mnh1 "Istration of the officer salary plan for Federal Reserve Banks. Chairman Martin said that the entire Board was in agreement with the 130 sltion stated by Governor Balderston and that it would not be correct to 4811,me that, in approving under all the circumstances the payment of 841eries for calendar 1961 at the rates set forth in Mr. Hayes' letter of liber 10, the Board was departing in any way from the approach that Gc)verlaor Balderston was trying to convey in his remarks. In response to a question from Mr. Hayes as to whether the Board's IllProval of Payment of individual salaries would include that for Mr. Rouse, *Itch vould place his salary at the same rate as that for the First Vice Presia Chairman Martin answered that the only exception that the Board 114111akingas to the salaries proposed for the President and the First Vt"resident in Chairman Reed's letter of November 7, 1960. 1/24/61 -23Secretary's Note: Later in the day, pursuant to the understanding stated at this meeting, letters were sent to the Federal Reserve Bank of New York in the form of attached Items 1 and 2 giving approval to (a) a revised range of salaries for officers as set forth in Mr. Treiber's letter of January 9, 1961; and (b) payment of salaries to certain individuals at the rates set forth in Mr. Treiber's letter of January 9, 1961. Subsequently, under date of January 27, 1961, a letter in the form of attached Item No. 3 was sent to Mr. Hayes giving approval to the payment of salaries for calendar 1961 to officers of the Federal Reserve Bank of New York as set forth in a list enclosed with that letter. The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the following items: lies Memorandum dated January 6, 1961, from Mr. Koch, Adviser, Division of b4rch and Statistics, recommending the appointment of Louis Zeller as the 421 Computer Programmer in that Division, with basic annual salary at rate of $4,345, effective the date of entrance upon duty. 4/3 Memorandum dated January 19, 1961, from Mr. Koch, Adviser, Division of e4arch and Statistics, requesting authorization for that Division to part Oftirt4-eiPate in the 1961 Consumer Survey Program of the Survey Research University of Michigan, with the understanding that the proposed ciPation involved a subscription of $1,000 to the Survey Research ' Cett ProN38.71. and that the cost would be charged against the Contractual Qnal Services Account of the Division's regular budget. ' Secretary 4‘,1 BOARD OF GOVERNORS "0044444 F .0 OF THE FEDERAL RESERVE SYSTEM Item No. 1 1/24/61 WASHINGTON 25. O. C. ei Ai:maces orricum COPINCISPONOCNCIC TO TICIt 110A110 January 24, 1961 CONFIDENTIAL (FR) . 14r. Villiam F. Treiber, First Vice President, !,:ed!tral Reserve Bank of New York, "" York 45, New York. Dear Mr, Treiber: The Board of Governors has approved, effective immediately, the ranges for the officers' salary structure at the Federal Reserve Bank of New York, proposed in your letter of January 9, 1961, as follows: Group Minimum Maximum A $24,000 $35,000 21,000 30,000 18,000 25,000 15,500 21,000 13,500 18,000 12,000 16,000 Very truly yours, :ned.) Ec r:Ltt Slacrmr:n Merritt Sherman, Secretary. BOARD OF GOVERNORS .0011tN4 ''.00004 OF THE 4 Item No. 1/24/61 FEDERAL RESERVE SYSTEM tt, WASHINGTON 25. D. C. AOOPICIIIS orrtaim. OOPINCIII•ONOCNOC '1,,:kritor;" TO YNC •OANO ' a44.0* (Juary 2, 1(-) COtipm ' ' ---E13 . 1 1g2._LE111 Mpri, ‘ William F. Treiber, p'st Vice President, iTederal Reserve Bank of New York, 'ell Y°11c 45, New York. ipear Mr. Treiber: The Board of Governors approves the payment of salaries theO tor 4 cIfficers of the Federal Reserve Bank of New York named below 1114.'ne Period January 5 through December 31, 1961, at the rates tep, lcated, which are the rates fixed by your Board of Directors as -Ited in your letter of January 9: Name ------JR°}1 j 1 p• Jensen pc,ari_rt G. Link R rl'c W. Schiff ' lzra) ,, 1‘°1-d W. Lewis ' ert J. Crowley Title Annual Salary Assistant Vice President Assistant Vice President Manager Manager Assistant Counsel !:t18,000 16,750 15,000 114,000 12,500 Buffalo Branch John T. Keane Assistant Cashier 11,250 Peter The Board also approves the payment of salary to Mr. tor tl:cusek as Senior Economist at the rate of $15,000 per annum "6 Period January 21 through December 31, 1961. N. p. 1, The Board has noted the change in assignments of Messrs. jai/is) : 1 441. Quackenbush, Waage, Bergin, Niles, Post, and Small ed tr, 4 .1..n your letter. Very truly yours, (signed) Eerritt Sherman Merritt Sherman, Secretary. Ott,t , , r1t> 441%,)1 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINOTON Item No. 3 1/24/31 OFFICE OF THE VICE CHAIRMAN January 27, 1961 ; 1 11% Alfred Hayes, President, Ieral Reserve Bank of New York, York 45, New York. Z Uear Al: 'When you and Mr. Treiber met with the Board Tuesday afternoon, the effirard indicated it would approve the payment of salaries to the ers of the Federal Reserve Bank of New York, other than the President arid, 1 , zirst Vice President, at the rates stated in your letter of November v)„ 1960• This letter constitutes formal approval of the payment of sala cle ,-Les for the calendar year 1961 at the rates set forth in the en8ed list. In giving this approval the Board wants to repeat what was kid at been our meeting on January 24, that it does not believe there has klik 4 meeting of the minds between the directors and officers of your rice and the Board of Governors on the way in which the plan for of?et salaries adopted by the Board in 1953 should be administered. the p , In addition to its responsibility for general supervision of approeueral Reserve Banks, the Board has the specific responsibility to the Bor disapprove salaries proposed for officers. However, in 1953 ,,ard partially decentralized this function. It did this by the delle° salary schedules that give concrete expression to the salary that the Board approves for the officers of each Reserve Bank. kea,,P I e Board retained the power to approve the application of these to ci'J schedules to individual officers. In the main, this approval has with the number and amount of increases at any one time. (The ol' s'n• ratio is only one of the devices used in appraising the application bqiine ules.) In addition, if salaries at any Reserve Bank either lag (IrdiZi.'ho procession or lead it excessively, the Board, as the coagency of the System, must exercise its responsibility and ()rity. 04icer This year your Bank submitted increases for 80 per cent of its Peroen,8 (as compared with 59 per cent for all 12 Banks). The average q 4, 'age increase proposed by the Reserve Banks was 4.7 per cent; that the York was 5.5 per cent. Since the latter applies to larger amounts, Pro 1.41.1 Posed increases are also larger in the absolute, and they distort drstettifurther the differential between New York and the rest of the SCAR° OF Mr, Alfred Hayes GOVERNORS OF THE FEDERAL RESERVE SNSTCM -2- It would be desirable, therefore, if there could be a pre1iminary discussion of the precise proposals you may have in mind for ?,f_ficer salaries for the calendar year 1962 at the time you meet with .4ne Board's budget committee, perhaps as early as August 1961. We ttnderstand from the discussion on Tuesday that both you and Mr. Treiber 4_ee1 that this procedure might be helpful to you as a means of avoiding a situation such as developed this year. Sincerely yours, 6C. Canby Balddiston, Vice Chairman. 1-lel°81.1re A Federal Reserve Bank of New York Name Annual Salary Title Harold. A. Bilby Charles A. Uoward, 1). Coombs Ilareus A. Crosse Ha.rris Herbert H. Robert V. Kimball R obert G. Roosa use lter H Wa. Horace L. Rozell, Jr. Todd G. Sanford , John J. Clarke T. Iloriaan P.Davis Tiaford Davis C. Gaines Ge°1'ge Garvy „'"civrarci G . ret?. Guy Lang ,411Als Macinnes, 9eneer S. Nd 4. Marsh, Jr. Piderit, rerice E. Quackenbush Jr.* i'ecierick L. Smedley he hTnias O. 1Vaage 'IL°11a1c1 J. W. Cameron Bergin 1-1. Braun) Jr. °bert L. Egcooper e '1'4/1R. ,Johrl P. Holmes Jenson Ilrecl R6b R. Klopstock ert G. Ilarn Link E. gigeline Marple rierb Meek mewhinneY ert Muether iald C rr. Niles 4. Noa k 41-ara F. Palmer arik" E* Peterson '11 Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President and General Counsel Assistant General Counsel Assistant Vice President Assistant Vice President Assistant Vice President Adviser Assistant General Counsel Adviser Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President General Auditor Manager Assistant Counsel and Secretary Manager Assistant General Luditor Manager Manager* Manager Manager* Manager Manager Manager Manager Manager Manager Manager Manager el7 Jarrtla e and rate approved effective January 50 24, 1961. 00,000 26,000 24,500 28,000 32,500 31,000 35,000 24,500 21A,500 32,500 25,500 22,250 20,000 17,000 18,500 21,500 20,000 21,500 20,000 18,500 19,500 18,250 20,250 20,000 13,500 17,500 13,500 14,000 16,00o 16,500* 16,000 16,000* 16,750 15,000 13,500 17,500 18,000 15,500 15,000 16,500 See Board's letter of Federal Reserve Bank of New York Name Annual Sc.lary Title Ji*m F. Pierce hirett B. Post Charles R. Pricher John?. Ringen Thmas J. Roche Waltr 4ank. S. Rushmore W. Schiff Thomas C. Sloane Kenneth E. Small (14orge c. smith illoysius J. Stanton Robert W. Stone ROhert Thoman Thomaslvi. Tirnlen, .014eraY/1 N. Trued "obert young, Jr• Chief Examiner Manager Manager Manager Manager Manager Senior Economist* Assistant Counsel Manager Manager Manager Manager Manager Assistant Counsel and Assistant Secretary Manager Assistant Counsel i;15,500 15,000 15,500 15,500 17,000 15,250 15,000 16,000 15,750 17,000 114,250 16,000 12,500 13,500 15,500 13,000 Buffalo Branch Irlsley B. Smith Rarold M. Wessel G:Iorge J. Doll (*aid H. k° Monroe Greene Myers Itt Vice President Assistant Vice President Cashier Assistant Cashier Assistant Cashier 26,030 181000 15,750 13,750 13,750 71 ", L t1 iS noted that Mr. Gaines resigned effective January 4 and that l'r essrs. H. A. Muether and F. E. Peterson will reach retirement age uring 1961. Accordingly, payment of salary to them is approved ' fly to the respective dates of their separations. Ile17 tit ls" approved effective January 50 See Board's letter of January 24, 19610
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