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124 A meeting of the Board of Governors of the Federal Reserve SY .rtem was held in Washington on Friday, January 26, 1945, at 11:00 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Thurston, Special Assistant to the Chairman Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Smead, Director of the Division of Bank Operations Mr. Vest, Assistant General Attorney Mr. Thomas, Assistant Director of the Divi— sion of Research and Statistics Mr. Wyatt, General Counsel There were presented telegrams to Mr. Sanford, Assistant Vice Pt'esident of the Federal Reserve Bank of New York, Mr. Clouse, Secre— tar7 of the Federal Reserve Bank of Cleveland, Mr. Leach, President f3t the Federal Reserve Bank of Richmond, Mr. Dillard , Vice President the Federal Reserve Bank of Chicago, Ur. Stewart Secreta , ry of the ?ederal Reserve Bank of St. Louis, Mr. Ziemer, Vice President of the Peclel'al Reserve Bank of Minneapolis, Mr. Gilbert, President of the Fed— el'al Reserve Bank of Dallas, and Mr. Earhart, Vice President of the Peciel'al Reserve Bank of San Francisco, stating that the Board approve d the estab lishmen.t without change by the Federal Reserve Banks of St. 11°111-8 and San Francisco on January 23, and by the Federal Reserve Banks 125 1/26/45 —2— ' of 11 York, Cleveland, Richmond, Chicago, Minneapolis, and Dallas 011 januar7 25, 1945, of the rates of discount and purchase in their eisttng schedules. Approved unanimously. Under date of January 19, 1945, each of the members of the Board received a letter from Senator Thomas of Oklahoma in which he referred to an item appearing in the Wall Street Journal of that date to the effect that a bill was being drawn by the Board providing for a redu ctl°n in the reserves required to be maintained by the Federal Reserve Banks. The letter requested that in connection with the prepa— t'atio n of the bill the Board give consideration to the provisions of S. 13, which was introduced by Senator Thomas in this session of C°flgresay to authorize the carrying of obligations of the United States by banks, trust companies, savings and loan associations, and ineur, '"ce companies at their par value. In accordance with a suggestion that the reply to these let— ter8 shod be by the Board rather than by the individual members, a Iv- draft of reply had been prepared and was read at this meet— I 11 the discussion which ensued numerous suggestions were made aa to a the content of the reply, and the question was raised whether warePlYh 8 ould be sent without first taking the matter up with Senator grler, eh airman of the Senate Banking and Currency Committee, and the Treasury. 126 1/26/45 -3At the conclusion of the discussion, it was agreed that an interim reply should be sent to Senator Thomas stating that bill S. 183 raised controversial questions which the Board would like to review before expressing its opinion, that it was desirable that the legislation which had been drafted to reduce the reserves required to be maintained by the Federal Reserve Banks and to extend the authority of the Federal Reserve Banks to pledge Government securities as collateral for Federal Reserve notes be introduced and passed promptly, and that in these circumstances the Board and the Treasury would prefer not to combine this legislation with any measure of a controversial nature which might delay the passage of the bill. In taking this action it was understood that the nature of the reply to the questions raised by bill S. 183 would be studied and that a further reply to Senator Thomas' letters would be prepared without delay for the purpose of sending it as soon as possible after consultation with the Treasury and possibly Senator Wagner. During the discussion of the above matter Mr. Dreibelbis, Gen- er'l At t°111eY, joined the meeting. Mr* Evans referred to the technical referral service developed 41193 7 by mr. B. H. White, Vice President in charge of investments of he Liberty National Bank of Buffalo, Buffalo, New York, and which had been adopted by blasines the Smaller War Plants Corporation as a service to small s in war production and essential civilian production when Mr. /711ite Which Ilerlt into the armed service. Mr. Evans stated that the service, was a means by which technical information of various types could 127 4W45 benmde —4— available to small business, had proved itself to be of real value) that at his request Mr. Sproul, President of the Federal Reserve Bank of New York, had looked into the matter and had submitted an interesting report on it, and that Mr. Hopkins of the Board's research staff had made an investigation of the service as a part of his study 141 connection with the proposal of the Federal Reserve Bank of Atlanta to -uAe a contribution to the Southern Research Institute. Mr. Evans Went on to say that Colonel White had been invited to go to Canada to ex/Plain the program to banks there and had invited Mr. Hopkins to ace°n1PanY him. He also said that he was bringing the matter to the 13°411cl's a ttention at this time for the purpose of recommending that the Bo ard make arrangements to have Mr. Hopkins explain the plan and What had developed in connection with it at the next joint meeting of the 13oard and the Presidents of the Federal Reserve Banks in Washington. Mr. Evans' suggestion was approved unanimously. There was a further discussion of the invitation received V illasenor, Director General of the central bank of Mexico, to Mr • Hammond, Assistant Secretary, to go to Mexico City for the Purpose of assisting in the preparation of an agenda for a conference of staff representatives of central banks in the Western Hemisphere. Qllestions were raised as to the necessity or advisability of any one e°111g from the Board to Mexico City at this time to participate in the formulation of the plan proposed by the central bank of Mexico, 128 1,V45 —5- 14/th °n account of travel conditions and by reason of the desirability °I.e • .cling any unwarranted impression that the Board was taking an undue part in promoting and arranging the proposed conference. The Board however was in agreement with the general objective of the program as it had been proposed and with the suggestion that the matter of the Board's participation be left to Mr. Evans to work out. 111% Ransom stated that yesterday he called Mr. Ruml, Chairman Of t• he Federal Reserve Bank of New York, on another matter and that citiring the conversation Mr. Ruml stated that at the meeting of the b°ard of directors of the Bank on that day he expected that a report Prepared by Messrs. Williams and Roelse of the Bank's research staff °4 t• he Murray full employment bill would be presented, and that he felt that 4.r. -LI on matters of this kind he could have the views of the toard before the matter was discussed at a meeting of the board of directors of the Bank it would be possible in many cases to avoid situations in which the directors would take a position contrary to the toar,Is ,4 views. Mr. Ruml asked, Mr. Ransom said, if the Board would be enough to have the bill analyzed and see if there were any good that it might wish to express for presentation to the directcTs of the New York Bank. This matter was discussed briefly but no e'rIcliasions were reached. At this point Messrs. Thurston, Goldenweiser, Smead, Dreibelbis, /1e8t, Th -°'as, and Watt withdrew from the meeting. 129 4V45 —6— The action stated with respect to each of the matters herein— after referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Feclera-1 Reserve System held on January 25, 1945, were approved unani— mously.. Memorandum dated January 20, 1945, from Mr. Goldenweiser, Di— rector of the Division of Research and Statistics, recommending that the basic salary of Robert Triffin, an economist in that Division, be illeased from $5,600 to $6,500 per annum, effective at the beginning °1*. the pay—roll period following approval by the Board. Approved unanimously, effective Feb— ruary 1, 1945. Memorandum dated January 22, 1945, from Mr. Bethea, Director c)f the Division of Administrative Services, recommending that the fol— , : Increases in basic annual salaries of employees in that Division be ''Proved, effective February 1, 1945: Name Designation ilarles ..1.,,. A. W. Storm Jordan L. bn'-1-liara Moffett Gardner ; 4 1erett J ones J. Griffith Ma Maintenance Mechanic Operating Engineer Supply Clerk Guard Laborer Chief Telephone Operator Salary Increase To From $2,300 1,980 1,620 1,560 1,320 1,920 $2,500 2,160 1,680 1,620 1,380 1,980 Approved unanimously. Uemorandum dated January 24, 1945, from Mr. Bethea, Director 130 1/26/45 —7— of the Division of Administrative Services, recommending that Mrs. Beatrice Bronson be appointed as an elevator operator in that Division temporary basis for a period of not to exceed six months, with basic salary at the rate of $1,200 per annum, effective as of the date C1114 1113"ich she enters upon the performance of her duties after having P488ed sa tisfactorily the usual physical examination, with the under— etani4. "Ing that if anything derogatory develops in the investigation of her '-ierences her services may be terminated immediately. The memo— ratickiz stated that Mrs. Bronson would not become a member of the Board's retireme,, system. Approved unanimously. Letter to Mr. Clark, Vice President of the Federal Reserve Bank c3r Atian+, reading as follows: "In 1 1leter ofaccordance with the request contained in your January 22, 1945, the Board approves the desig— aatlon of Stuart H. Magee, J. 0. Hooper, and Marvin Miller 138 ePecial assistant examiners for the Federal Reserve ank of Atlanta." Approved unanimously. Letter to Mr. Woolley, Vice President and Cashier of the Federal Reaerve 1d4nk of Kansas City, reading as follows: It In accordance with the request contained in your letter n er of January 22, 1945, the Board approves the desig— in'n of M. E. Ratkie as a special assistant examiner r the Federal Reserve Bank of Kansas City. th "The name of Fred R. Fritz has been removed from e list of special assistant examiners in our records." Approved unanimously. 131 1/26/45 -8Letter to the Presidents of all of the Federal Reserve Banks, Prepared in accordance with the action taken by the Board on January 19, 11473 and reading as follows: "At the joint meeting of the Presidents and the Board Of Governors on December 11, 1944, there was a discussion of the conclusion reached by the Presidents in their separate conference session that under existing conditions the Present limitation in the Federal Reserve Act on the amount that may be expended for branch buildings is unreasonable and that an appropriate modification of the law might be c°naidered as a relief to the Federal Reserve Banks concerned and as a part, even though a small one, of the preparation for high levels of employment and business activity r the war. During the meeting the suggestion was made u5r the P residents that the manner in which this problem „ashould be Board of approached legislatively should be left to the Governors. mat "The Board has given further consideration to this and has concluded that any request for legislation ter Should be withheld until after other legislation of interest ? the Federal Reserve System is disposed of. It is the mr tught of the Board that the needs of the branches can be during the war period by temporary measures and that n , e_Pace problem confronted by the Federal Reserve Banks C: be presented more effectively to Congress when the labor "-'1,materials situation is such as to warrant resumption ouinlding operations. snr It will be recalled that at the joint meeting Mr. 4r°ul stated that as between individual authorizations i„,„individual branches and an amendment which would elim4:7 1 the present restriction on branch buildings the genchai Preference of the Presidents would be for the latter. the IBIllan Eccles said that that was also the preference of time °arc'. It is not possible to determine finally at this Pownat form the legislation should take, but it is etit .1;.-e that it might be an amendment to raise the prescostJ-Imitation on the amount that may be expended for the the 'building proper.' If it should take this form it wo to 11,"" be helpful to the Board if it had information as nee, -.4 high the limitation should be to take care of the of the various branches. Therefore, the Board will ,a!te Z 4 132 1/26/45 —9— "appreciate receiving from the Federal Reserve Banks which have branches their views with respect to this matter." Approved unanimously. Letter to the Chairmen and Presidents of a31 of the Federal Re— serve Banks reading as follows: "Chairman Eccles has asked me to send to you a copy c) a letter dated January 20 received from J. U. Johnson, D1irector, Office of Defense Transportation and Chairman, ar Committee on Convention s, in regard to the procedure to m be followed in connection with the holding of group : Icit4be attended by more than 50 persons. I am copies of the enclosures referred to in Mr. estsc)ir81 4.?hnson1s letter. I have been asked to c 11 your atten— ynn particularly to the statement in Mr. Johnson's letter a at 'Although only meetings with more than 50 in attend— ,rice require a special permit the critical transportation nd hotel situation suggests that all Government meetings be Go he, -.1-u to an absolute minimum' and that 'the presence of verument personnel at non—government meetings frequently e, ,7rve5 as an excuse for the meeting to be considered as -in the war interest'. The Board believes that you will agree that it is Ire an17 e important that the Federal Reserve Banks establish the xample of cooperation with the Government in meeting t,_ Problem presented by the present critical transporta— "L°n and hotel situations." j Approved unanimously. Letters to the Secretary of State and Secretary of the Treasury Pl'ePared for the signature of Chairman Eccles in accordance with the "tieti taken at the meeting of the Board on January 19, 1945, and read— f°110w8: irpv, be v.. —“olosed is a memorandum, in which I feel you will raerr : 27 much interested, in regard to the ban on gold ship— ' to Argentina. The memorandum was prepared for me by 133 l'W45 —10- na member of our staff upon his recent return from a tech— r ioal mission to several of the Latin American central oanks. 'While the members of the Board are not in a position to evaluate points raised in the memorandum, they felt, as I did, that it should be passed along to you for your infor— ; a i°n, the subject being one in which the Board and the ,eQlsral Reserve System have a direct interest because it re— tes to shipments from the stock of gold held under earmark the Federal Reserve Bank of New York for the account of the Banco Central de la Republica Argentina." r Approved unanimously. Letter to Mr. L. C. Bertram, Assistant General Counsel, The Ameri„ Bankers Association, New New York, reading as follows: "Receipt is acknowledged of your letter of January 19 addressed to Chairman Eccles enclosing a draft of proposed ;greement to be used by banks in forming credit groups and vitktiag Whether, in the opinion of the Board, it complies h all applicable laws and regulations. wo,, "In the opinion of the Board the proposed agreement 01:4-44 not violate any provision of the Federal Reserve Act 4,of section 8 of the Clayton Act or of any regulation of '41e Board of Governors. sid "The draftors of the agreement have undoubtedly con— the possible application of the Federal antitrust The proposed agreement bears some similarity to a draft ad of agreement which was shown to us and which was later to-,' 43 ed by a group of banks in New City. We have been 0„ that that agreement was thought to be not in violation laws because the credit committee did not fix the i rate were of interest and because the terms of the agreement ti_e such that it was impossible to 'freeze out' any prospec— Ro ; e member who logicslly should be allowed to participate. ev You you will, of course, understand that the Board is not n a position to express an opinion on these questions." Approved unanimously. Thereupon the meeting adjourned.
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