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CCI OD i•my J(T3 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Thursday, July 1, 1954. PRESENT: Mr. Vardaman, Acting Chairman Mr. Mills Mr. Robertson Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Memoranda from appropriate individuals concerned recommending personnel actions as follows: APpointment, effective upon the date of assuming duties Name and title Rebie A. Windsor, Elevator Operator Division Type of appointment Administrative Services Basic annual salary Temporary (six months) *2,560 §.1.11Ery increases, effective July 4, 1954 Name and title Division Office of the Secretam Rannah W. Nielsen, File Clerk Basic annual salary To From $3,190 $3,270 4,830 4,955 3,030 3,110 7,240 7,440 International Finance Margaret R. Garber, Statistical Assistant Examinations Jean Callovini, Stenographer J. F. Clark, Federal_ Reserve Examiner 7/1/54 -2- §..1-2.12y increases, effective July 4 )1954, (continued) Name and title Division Basic annual salary From To Administrative Services Ruth M. Flowers, Charwoman William H. Gardner, Chauffeur William Hyde, Sergeant Oda R. Johnson, Clerk-Stenographer Hiram J. Roush, Guard Howard W. Stull, Chauffeur 2,420 $2,490 3,230 3,310 3,600 3,680 3,415 3,495 2,990 3,070 3,310 3,390 .§..L122.17_211322ment incident to intra-divisional transfer Thomas G. Cook, Division of Administrative Services. Adjustment la basic annual salary from 53,454 to $3,310, effective July 1, 1954, incident to his intra-divisional transfer from the position of Assistant Foreman of Laborers to the position of Guard, effective the same date. Leavs without pay Shirley S. Corbin, Elevator Operator, Division of Administrative Services. From June 15, 1954, through December 31, 1954. Approved unanimously. Memorandum dated June 24, 1954, from the Division of 1- ersonne1 Administration recommending that Gardner L. Boothe, II, Administrator, Office of Defense Loans, be granted an advance of 26 days' sick leave beginning July 2, 1954, in accordance with the Board's Leave Regulations; that upon the expiration of the advanced sick leave on August 10, Mr. Boothe be placed on annual leave until the end of August; and that consideration be given at that time to whether he 989 7/1/54 -3- should make application for disability retirement or should continue to be carried on annual leave. Approved unanimously. Letter to Mr. Wiltse, Vice President, Federal Reserve Bank Of New York, reading as follows: In accordance with the request contained in your letter of June 23, 1954, the Board of Governors approves the designation of the following as special assistant examiners for the Federal Reserve Bank of New York: David H. Hopton Henry 0. Robinson Theodore J. T. Short Walter R. Welliver Approved unanimously. Letter to Mr. Armistead, Vice President, Federal Reserve Bank of Richmond, reading as follows: This will acknowledge receipt of your letter of June 23, 1954, requesting that the Board of Governors approve the designation of Truett Evans Allen as a Special assistant examiner for the Federal Reserve Bank Of Richmond. It is noted that Mr. Allen is indebted to the Bank of Commerce and Trusts, Richmond, Virginia, (a State member bank) in the amount of $200, which is being curtailed by monthly instalments and will be paid in full by February 1, 1955. The Board approves the designation of Truett Evans Allen as a special assistant examiner for the Federal Reserve Bank of Richmond with the understanding that he will not participate in any examination of the Bank of Commerce and Trusts, Richmond, Virginia, until his indebtedness to the bank has been liquidated or otherwise eliminated. Approved unanimously. 990 _14._ 7/1/54 Letter to Mr. Earhart, President, Federal Reserve Bank of San Francisco, reading as follows: Receipt is acknowledged of your letter of June 25, 1954, advising that the Board of Directors of your Bank has concluded that the Bank should assume its own risks of loss from fire and allied causes, and consequently voted to discontinue purchased insurance coverage against such risks. You advise that it is the intention to have such change become effective at the end of the year, the termination date of the existing policies. The Board of Governors has no objection to the discontinuance of the Purchase of insurance covering fire and allied risks, in accordance with the action taken by the Board of Directors of your Bank. Approved unanimously. Letter to Mr. Walter Kennedy, President, Alabama Bankers Association, 1004 First National Bank Building, Montgomery, AlabqmP, reading as follows: In your letter of June 231 1954, you state that the reduction in reserve requirements of member banks authorized by the Board of Governors on June 211 1954 is not uniform as between central reserve city banks, reserve city banks, and country banks, and you inquire as to the reasons for the different amounts of the reduction as well as the reasons for differences in effective dates. A copy of the Board's statement for the press regarding this action is enclosed. You will note that the reduction on time deposits was one percentage point at all member banks. This reduction was effective at country banks on June 161 the beginning of the semi-monthly reserve computation period for such banks; while it was effective at central reserve and reserve city banks on June 24, the beginning of the weekly reserve computation period for such banks. With respect to net demand deposits, the amount of the reduction in terms of percentage points of reserve requirements was the same--one percentage point--at reserve city banks and at country banks, and the effective dates were the beginning 991 7/1/54 -5- of the respective reserve computation periods beginning nearest the end of July. An additional reduction of one percentage point was authorized for central reserve city banks effective June 24. It is assumed that it is this additional percentage point reduction and its earlier effective date that prompts your letter, since otherwise the reductions were the same in terms of percentage points for the various classes of banks, and the effective dates were those nearest the beginning of the reserve computation periods for the respective banks affected. As you are aware, the law requires that banks be classed according to whether they are in "central reserve city", "reserve city", or "other" locations. The law also provides for basic differentials in the reserve requirements of the three classes of cities, relatively larger reserves being specified for banks in central reserve and reserve cities. In adjusting reserve requirements, the Board considers the effects of various amounts of change in terms of the quantity of reserves to be released, as well as the relative position of banks in the various groups of cities into which they are classed according to the law. In addition, some weight mustbe given to the relative equities inthat volved and to the proportionate changes in requirements detime on point will result. For example, one percentage is at posits is proportionately much more where the level deposits demand 6 per cent than one percentage point on net y, where the level is at 13 or 19 or 22 per cent. Similarl the level where one percentage point on net demand deposits is 13 per cent is substantially more proportionately than reone percentage point on net demand deposits where the actual the quirement is 22 per cent. As an illustration, required reduction in the aggregate dollar amount of reserves banks under country against net demand and time deposits of the while cent, the reduction announced June 21 is 9.6 per of reserves amount actual reduction in the aggregate dollar at central rerequired against net demand and time deposits serve city banks is 9.4 per cent. the Board must In arriving at any decision of this sort on the basis decision weigh the various factors and make its and credit monetary of of what seems most appropriate in terms also must attempt policy as well as in terms of equity. It to make the effective dates of changes coincide to the extent practicable with the times when more or less reserves are likely to be appropriate in terms of pressures in the money market or demand for credit at banks located away from the Principal money markets. 992 7/1/54 -6- It is hoped that this letter will provide at least a partial answer to the questions raised by your inquiry. Perhaps it should be added that there is no precise mathematical way of determining the most suitable level of reserve requirements within the limits permitted by existing law, and a measure of judgment must be used by the Board in determining what changes seem appropriate at any given time. Should you wish to discuss this general question further, please feel free to talk with Mr. Bryan, President of the Federal Reserve Bank of Atlanta, to whom a copy of your letter as well as of this response is being mailed. Approved unanimously.
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