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A meeting of the Federal Reserve Board was held in Tiashington on 111111'sday, July 27, 1933, at 10:30 a.m. PRESENT: Mr. Er. Mr. Mr. Mr. Mr. Mr. Black, Governor Hamlin Miller James Thomas Szymczak O'Connor Mr. Morrill, Secretary Carpenter, Assistant Secretary Mr. Wyatt, General Counsel Mr. Paulger, Chief, Division of Examinations Mr. Wilkes, Federal Reserve Examiner. Nr. The Board considered and acted upon the following matters: Telegram dated July 26, 1933, from the Chairman of the Federal Reserve lank of 3ostoa, advising that, at the meeting of the board of directors on that date, no change was made in the bank's existing schedule of re:tea 04. 1 discount and purchase. Without objection, noted with approval. Telegram dated July 25, 1933, from La'. Newton, Chairman of the Fedel ' 41 Reserve Bank of San Francisco, advising of the establishment by the ezecUtive commdttee of the bank on that date of a minimum buying rate of 1(7° ror the purchnse of bankers' acceptances, and of the following schedule effective buying rates on bankers' acceptances: 1 to 120 days 121 to 160 days Repurchase 1 1/4% 1% The minimum buying rate of l was approved and, there being no objection, the schedule of effective buying rates was noted with approval. tiemorandum dated July 25, 1933, from Lir. Wyatt, General Counsel, ttoolt renclinc; the appointment of Lir. Howard H. Hackley as a law clerk in 169 7/27/33 -2office, with salary at the rate of :..2,400 per annum, effective as of the date on which he reports for duty. Approved. Memoranda dated July 26, 1933, from Mr. Goldenweiser, Director of the Division of Research and Statistics, recommending that lass Nora V. 3. -der, an employee in the division who has undergone a second operation, be granted leave of absence, without pay, for an additional period of two 111°11ths from September 1, 1933, and that, because of the continued absence (31* lass Elder, the Board approve an extension for one month from September '1933, of the tenoorary a2pointent of Miss Clara F. Stewart, as drafts1 17c/ all in the division, with salary at the rate of :11,620 per annum. Approved. Reply on July 23, 1933, approved by six members of the Board, to letters dated ally 14 from Mr. Hoxton, Federal Reserve Agent at Pdchmond, ilicl°sing a memorandum from Governor Seay in which he states that none of the officers or employees of the Federal Reserve Bank of Richmond has any clilt Ide business connections but that four of the bank's employees do some e4tside work for the purpose of supplementing their salaries. The reply "ted that it is noted from Governor Seay's memorandum that Mr. T. Boyd Cl'°°ke, rece1vin3 teller at the Baltimore branch, acts as secretary of the -,-60n Loan and Savings Association of Baltimore, which, in view of Seay's statement referred to above, is understood to indicate that he serves in a clerical cap.-city rather than as an officer of the ()ciation. The reply also noted that the work done by the four amnloyees 1.11°t recorded by the directors of the Richmond bank as improper in any 7/27/33 -3- 178.Y, inasmuch as it is performed entirely after the working hours of the baalk and does not interfere in any way with the efficiency of the employees at the bank, and stated that it is assumed that the agent has also satistied himself that the particular activities do not involve any financial or other relations that might be embarrassing to the Federal reserve bank, blIt it will be appreciated if he will confirm this assumption. Approved. Letter dated July 26, 1933, to the Board of Directors of the ' leenbrier Valley Bank, Lewisburg, ;iest Virginia, approved by six members °t the Board, advising that the Board has amended its letter of -4:ay 10, 1933, to the bank advising of approval of its application for membership it the Federal Reserve System and for stock of the Federal Reserve Btank of ' ,4110nd, and the conditions of membership set forth therein, to read as et4ted in the Board's letter of July 26. Approved. Letter dated July 26, 1933, to the Organization Committee of the 1314,_ "..q. bank of St. Louis, St. Louis, ilissouri, approved by six members of the /3 statinr, that, subject to the conditions prescribed in the letter, "04rd approves the bank's application for membership in the Federal ReSYstem and for the number of shares of stock of the Federal Reserve 1344k °I' St. Louis to which it will be entitled upon the basis of its Q1131tal and surplus as of the date upon which its membership becomes "reet' axe. Approved. 7127/33 -4Reply to a memorandum dated June 50, 193'6, from the Comptroller of the Currency, recommending approval of the application of the Central Ne•tional Bank, Lynn, Massachusetts, for permission to reduce its capital stook from .)400,030 to ,,;200,000, the funds released through the reduction to be used to eliminate estimated losses and depreciation. The reply stated that the Board approves the proposed reduction subject to certain conditions set forth in the reply. Approved. Reply to letters dated July 18 and 21, 1965, from Mr. Wood, Federal ae3e1ve Agent at St. Louis, in regard to the ownership by the MercantileC°1:Talerce Bank and Trust Company of the stock of the Mercantile-Commerce Nationa.1 Bank in St. Louis. The reply noted that Lir. Mitchell, attorney l'c'r the Mercantile-Commerce Bank and Trust CoraJany, expected to go to ''"-Lncton shortly and. to discuss the matter ',nth Er. Wyatt, General CO411881 for the Board, and that Lir. Hemingway, President of the L:ercantile and Trust Company, wished to arrange a conference in Washington to (118ctle3 the matter, immediately after the American Bankers' Convention W11 TS c" 15 to be held September 4-7, inclusive. The reply also stated that, there are any aspects of the matter as to which Mr. Hemingway feels that tile 13clard should be infoTmed, it will be glad to hear him, and wishes to be Iciviz3ed in advance of his call so that it may arrange to see him; and that EIPPears from the agent's letters that he has informed Messrs. Mitchell liaminDvay as to the contents of the Board's letter of July 11, and since, Stated in that letter, it is the feeling of the Board that the trust Y should dispose of all of the stock of the national bank now held. by 7/27/33 -5- it, in such a manner that it will retain no interest therein, and that such disposition should be accomplished completely not later than December 15, 19339 it is suggested that the agent emphasize to them the importance of without delay such action as nay be necessary to accomplish this PlIrPose. Approved. Letter dated July 26, 1933, to Er. Case, Federal Reserve Agent at NeW York approved by seven members of the Board, inclosing a copy of a letter addressed to the Board under date of July 14, 1933, by Messrs. lioralower, Miller, Miller FL Boston of New York City, and copies of the illelosures therewith, with regard to the proposed organization of a corporati°11 under section 25(a) of the Federal, Reserve Act, together with a copy or the Board's reply thereto. The letter stated that it will be appreciated 11' the Federal reserve agent's office will consult with Messrs. Hornblower, LAller Boston, or with the officers of the American :,:anufacturers --vort Association, which is referred to in the papers inclosed, with a to ascertaining and reporting to the Board who will be members of the boa,, '" er directors and executive officers of the proposed corporation, in 'That countries it is expected to operate, and, specifically and in some detail as to the character and type of the business and functions which it la ulltemplated the corporation will perfoliu. ' The letter also requested /hat th --e agent investigate and report to the Board as to the character and -1a1 responsibility of each of the persons who are expected to be qualificaor executive officers of the corporation and as to his tio.ta to participate in the managament or operation of a corporation organ- 7/27/33 -6_ ized under section 25(a) of the Federal Reserve Act; that, inasmuch as it aPPears that the organization of the proposed corporation has been directed by -the board of directors of the Americanl:anufacturers Export 44e0ciation, and the organization cotirlittee has been appointed by the Pl'esident of the Association, the rel)ort submitted to the Board on this subject include a statement as to the nature and financial responsibility of the American "Lenufacturers Export Association and as to the character of lte management; that the 3oard be advised whether, in the opinion of the ezeoutive comittee of the Federal Reserve Bank of New York, based upon the rmation obtained, there is a reasonable chance for the successful °Peration of a corporation engaged in business of the kind contemplated, and Whether it would be in the public interest for the Board to approve the al"ticles of association and organization certificate of this proposed corporatiOn The rely to the letter dated July l, l9j'3, from Hornblower, 141 the Boston, also approved by seven members of the Board, stated that Board has given careful consideration to the request made by the °Ileanizers of the proposed corporation for the title "Central Bank for eiZn Trade"; that it will be observed, however, that section IV of the Regulation I: provides that no corporation organized under section 25(.% Of the Federal Reserve Act will be permitted to have the word "bank" ‘ € 1 Part- of its title, except that the Board may permit the use of this word 111 the title of a corporation which is closely affiliated with one or more ' - 8 end is organized or operated for the purpose of transacting the foreign b84kirlg business of such bank or banks; that it does not seem to the Board, Oi the information submitted, that the proposed corporation is closely e'l'riliated with one or more banks and is to be organized for the purpose of -7- 7/27/33 transacting the foreign banking business of a bank within the meaning of RegIllation 1.,; and that the title which has been requested for the proposed c°I*Poration, therefore, does not appear to meet the requirements of the 13°ard's regulation on this subject and accordingly, it is suggested that consideration be given to some other title or titles which would be suitable 1'°1 the proposed corporation and would conform to the provisions of the ' legulation. The reply also noted from a letter from the American I:anufac- tIll'ers Export Association that the purpose of the proposed corporation will be to coordinate all financial transactions in respect to intermediate and 1°4g-term export credits and to provide a central instrumentality for such 11111P°ses; stated that in order that the Board may be fully advised in consia ell-rig the question whether it will approve the articles of association 411c1 organization certificate which have been submitted, it wishes to be illr01141ed in some detail and specifically as to the business and functions Which it is contemplated the corporation will perform; and that it is reIlle8ted that Messrs. Hornblower, Miller, Killer & Boston submit to the 130Etr,„ a definite statement of the character and type of business which it is 7,— v1:0Posed will be carried on by the corporation, stating what powers conel ' I'ed by section 25(a) of the Federal Reserve Act it is expected will be el'oised by the corporation and in what manner. The reply further re- (14e ted that the 3oard be advised specifically in what foreign countries, other than Buenos Aires, Argentina, the organizers of the corporation e zDeQi. . its business to be carried on; as to who are expected to be members 't ti A board of directors and executive officers of the proposed corporatieri ' aild as to the experience of each of them in business similar in kind 175 7/27/33 -8- to that in which the corporation Plans to engage and as to his qualifications to participate in the management or operation of the business of the ProPosed corporation. Approved. Reply to a letter dated July 17, 1933, from Ill'. Austin, Chairman of the Federal Reserve Bank of Philadelphia, written in response to the B°ard's telegram of July LI, with regard to the temporary employees who were Placed on the payroll of the Federal Reserve Bank of Philadelphia in "cordance with the bank'sshare-the-work plan which vias discontinued as of 1, 1930. The reply stated that it is noted that the temporary employees halie been distributed in the various departments of the bank where they will be emPloyed during the vacation period in order that the work of the bank 71111 not be interrupted; that at the conclusion of that period the services o lb the employees who are not retained permanently to fill vacancies caused bY death or resignation of the present employees of the bank or otherwise, ill be discontinued; and that it is understood from I.:r. Austin's letter t14It no change was made on ally 1, 193, as a result of the discontinuance Of t he share-the-work plan, in the salaries of temporary employees. Approved, Hr. Hamlin voting "no". L.x. Hamlin stated in explanation of his vote that, in view of all the circumstances, he is opposed to the discontinuance of the services of the temporary employees who were taken on at the Philadelphia bank in accordance with the share-the-work plan. The Secretary presented a letter dated July 17, 1933, from Governor 18°n of the Federal Reserve Bank of New York, replying to the Board's letu, -- of Ally 11 with reard to the discontinuance at the Hew York bank of eluIre-the-work plan and the retention as regular employees of the 7/27/33 -9- 1 Persona originally employed on a temporary basis in accordance with the 8hare-the-work plan. The letter stated that the reason for the retention c)f the temporary employees was that the directors felt that the dismissal Of employees at the present time would be contrary to the public interest elld in order to avoid this the bank was entirely justified in carrying ternVorarily on its staff a smn11 surplus of employees; that the number of e4Pl0yees in excess of the present requirements during the summer vacation Period may be estimated at 70, of Which approximately 35 are in the clerical etaff and approximately 35 in the building operating force; that at the end or the vacation period the number of excess clerical workers would be il icreased to about 50; that it is anticipated that within a comparatively alaort the clerical employees will be absorbed by the increased volume Or Work or separation from the force due to normal labor turnover; that the cees clerical employees are in the larger departments where the work can ' e) he so distributed as to avoid unnecessary waste or idleness; and that the l'etention of the employees in the building operating force will be provided by a somewhat shorter working day. The letter also stated that there is leason to anticipate an increase in the volume of work of the character 11° ' 0rmed by the employees in the building operating force and the eliminaticia or the surplus of employees of this class will be accomplished only as e lleelllt of the usual labor turnover and may be expected to take longer ' 4411 the absorption of the excess of clerical employees, and that as employt4ellt conditions improve it is hoped that it may be Possible to expedite the el7b„, -"-Lnation of the excess employees by assisting some of them to find other 13°s ions 177 7/27/33 -10Consideration of the matter was deferred until determination of the action to be taken by the Federal reserve banks in connection with the blanket code which has been submitted by the National Recovery Administration for acceptance by the banks. In connection with the above natter L1r. Tames stated that, in his °Pinion, the Board should give careful consideration to the conditions under WIlich the Board's staff is now working in order that, in connection with the € 1‘138.tlY increased activities of the Board and the resulting additional work ' be ing placed on the members of the staff, arrangements may be made to Prevent the present personnel being too heavily burdened. There was then presented the following letter dated ally 14, 1933, tt'orar. Owen D. Young, Deputy Chairman of the Federal Reserve BanTh of I:ew York: "Er. Herbert Case, Chairman of the Board of Directors of the Federal Reserve Bank of New York, is on vacation, and in his absence, I am acting as Chairman under your appointment as Deputy. "At the meeting of our Directors yesterday, a letter from the Federal Reserve Board, dated July 11, was presented and road, and pursuant to its suggestions, our board reviewed carefully the salaries of all senior officers of the bank "in the light of the varying responsibilities of these officers and the quality and extent of services that each individual is now renderin7, in his particular capacity." "The board believed that this request called first for a very objective appraisal of the services of each individual senior officer to the bank without taking into consideration in the initial appraisal the age, length of service, or other similar question involved in the establishment and maintenance of morale of an operating organization. "Dealing with the senior officers on this purely objective we appraised the value of their services to the bank at somewhat less, due to the character of the institution, than the market for positions of similar responsibility. The 4PPraisal is as follows: George L. Harrison, Governor W. R. Burgess, Deputy Governor I. E. Crane, Deputy Governor 475,000.00 35,000.00 30,000.00 178 7/27/33 -11"A. E. W. L. L. W. R. S. R. F. Giibart, Deputy Governor Kenzel, Deputy Governor Logan, Deputy Governor JL Gen'l Counsel Rounds, Deputy Governor Sailer, Deputy Governor $25,000.00 25,000.00 25,000.00 35,000.00 30,000.00 "These appraisals were considered conservative and were unanimous. In general, it was the view of the board that no person after serving an initiatory period should be made a deputy governor unless his services to the bank, and generally speaking, in the market were worth .)25,000.00 per year. "Now as to the practical application of these objective appraisals, our board wishes to make the following comments: "1st. As to the salary of Governor Harrison. Our board has felt for some years that the salary of Governor Harrison was inadequate. Uore than three years ago, our board recommended that the salary of Governor Harrison be raised to .A0,000.00 as the first step in a fairer recognition of the value of his services. For Your convenience, I enclose copy of a letter which I then wrote to Governor Young under date of February 10, 1930, on that subject Since that time, Governor Harrison has increased in age and experience. As a matter of fact, the problems which he has had to meet during the past two years has given him an experience which long service in less critical times would not afford. I believe Your board shares with ours the view that during that period Governor Harrison has rendered literally invaluable service to ?ur bank and to the country. He has grown not only in experience out in influence here. He is accepted not only willingly but enthusiastically by our entire financial community, by the heads Of great institutions, and by all their officers and directors, as a leader worthy to head the Federal Reserve Bank of New York representing the Federal Reserve System here. He is a leader whom they are proud to follow. Several new members have come on to °ur board since the recomnendation three years ago, and it may interest you to know that a suggestion was made by one of our newer merbers that the Governor's salary Should be increased prior tc the receipt of your letter. I mention this only because the Present appraisal reflects not only the continuing views of the Older members of the board but also those of the new members who were not familiar with our earlier recommendation. Our board unanimously l'ecomnends that this increase go into effect immediately. "2nd. As to the increases in salaries of Burgess, Logan, and 11°und8, our board recommends that they be made immediately effective. As to the salary of T. E. Crane. We have fixed the objective valuation of Er. Crane's services at 30,000.00 and ask aPproval from your board of that amount. In view of the fact, however, that this would represent a very large percentage increase in Lir. Crane's salary, our board would ask for the privilege of :Dreading the authorized increase through this year and next, the actual increase to take olace when and as it seem most helpful to 179 7/27/33 -12- "The bank in the judgment of our board. "4th. As to the salary of L. if. Sailer. Our objective appraisal of the services of Lr. Sailer is .)30,000.00 per year. Ina%. Sailer's salary is and has been for several years(i>40,000.00 per year. Notwithstanding this difference between the present appraisal and the present rate, a large najority of our board feel very strongly that it would be unwise, in view of Mr. Sailer's long, faithful, and effective service, to reduce his salary now. Mr. Sailer is 62 years old. He and Er. Kenzel have the record of longest service of any of the officers of the barl-. Lir. Sailer's duties particularly have thrown him in very close contact with the entire personnel of the bank, and as I say, a majority of our directors feel that to decrease his salary now might well have a harmful effect on the morale of the bank. It would undoubtedly impair the spirit and effectiveness of Er. Sailer himself, who is still doing his work effectively and efficiently. If the pension plan now under consideration is adopted, ijr. Sailer could be retired under the plan at a relatively early date, and would be retired in any event, as we understand it, at the age of 65. A minority of our board feel that an adequate explanation could be made to lir. Sailer which would conserve his morale and that of the bank, and under such circumstances, the minority feel that in fairness to the bank and to the other officers his salary should be reduced to the aPpraisal. The recommendation of the board, acting by a majority, is that the salary of Er. Sailer be continued at 40,000.00 "5th. As to the salary of Edwin R. Kenzel. Here something Of the same considerations apply as in the case of Mr. Sailer. 4 majority of the board feel, notwithstanding the appraisal is q>25,000.00 and the present rate 40,000.00 there should be no reduction. Lii. Kenzel has slightly longer service than Lr. Sailer, and is a year or two younger. His contact with the outside market particularly for bills is very valuable, and because Of his long experience and wide acquaintance, it would be bill difficult to duplicate the service. The importance of the and , diminished has bank the to know, Market, however, as you that in part accounted for our objective appraisal being lower than the salary. In addition to the reasons which we have stated in the case of Er. Sailer affecting morale, there is also some risk that if Er. Kenzel's salary were reduced, it might impair his allowance under the pension fund which, in a sense, would be a double and continuing penalty, and therefore, emphasize the Sailer's, injustice of the reduction. In this case, as in T.Lr. be mainsalary the that recommend would a majority of the board tained at 40,000.00 submit to "Governor Harrison will, in the regular course, of the tions Yo4 the action of our board based on the recomenda of salaries of nts senior officers of the bank as to readjustme some to as board, the JUnior officers. While the members of it, of Junior officers, have a basis for individual judgment, 7/27/33 -13- "course, must be obvious to you that as a rule the board is guided by the recommendations of the senior officers. "I apologize for the length of this letter. It reflects, I think, the careful consideration which our board has given to the request contained in your letter of July 11, and we sincerely hope that our recommendations may appeal to and be favorably acted upon by your board." ezd the following letter dated July 14, 1933, from Governor Harrison of the Pederal Reserve Dank of New York: "Our directors at their meeting yesterday afternoon read and considered the Federal Reserve Board's letter of July 11 asking them to review carefully the salaries of all the senior officers Of the bank in the light of their varying responsibilities. hr. Young, acting chairman of the board, was requested to convey to You the directors' views with respect to the salaries of all Officers above the rank of assistant deputy governor. "While it is not clear that the Board's letter of July 11 specifically contemplated that the directors should express their views with respect to the salaries of all the officers of the bank, regardless of rank, nevertheless the directors felt that it would be appropriate, in connection with a review of the salaries of the high ranking officers, and in view of the general purpose of the Board's letter, carefully to review all official salaries, including those of the assistant deputy governors and managers. "Accordingly, they requested me to report to you that, subject to the approval of the Federal Reserve Board, they had voted to take the following adjustments in the salaries of some of the officers below the rank of deputy governor, effective as of July 15, 1933, and to say to you that they would appreciate your consideration of these salaries at this time with a view to eliminating Inaladjustments within the different grades: .;14,000; Present salary $13,000 "Mr. Charles H. Coe assistant deputy governor ilay M. Gidney 18,000 20,000; assistant deputy governor lir. James L. Rice 11,000 12,000; assistant deputy governor Mr. Allan Sproul 11 15,000 18,000; assistant deputy governor secretary and 11 5,000 6,000; Mr. Donald J. Cameron department foreign manager, 6,000 7,000; lhr. Edward O. Douglas manager, bill department 1? 5,500 6,000; Er. Arthur Phelan manager, discount department Er. William H. Dillistin 15,000 assistant federal reserve agent 16,000; Mr. Harold V. Roelse 8,000 10,000; manager, reports department and assistant secretary 11Lt.5 7 AL 7,27/33 -14- "In considering the salary of Ex. Tames E. Rice, assistant deputy governor, our directors were of the opinion that a fair appraisal of Mr. Rice and the responsibility of his office would justify a salary of 44,000. It was the opinion of the directors, however, that it would be preferable to increase Rice's salary from .)11,000 to 42,000, effective as of July 15, 1933, having in mind that through future adjustments his salary might be raised to the proposed sum of $14,000. The directors voted to make no change at this time in the salaries of any of the other officers of the bank except as may be reported in the separate letter being addressed to you by 1:r. Young." Lai. Hamlin, as Chairman of the Committee on District No. 2, stated that he and Er. James, the other member of the committee, had considered the letters from Mr. Young and Governor Harrison and had reached the conthat no salary in the Federal Reserve System should be in excess of the rate of „50,000 per annum, that there is no necessity at this time for 1ereasing the salaries of the officers of the Federal Reserve Min% of New YorkI and that the whole matter can properly be considered when the year341ary adjustments are made for all Federal reserve banks. 1,:r. James stated that he would be opposed to increases in the "141'ies of officers of the Federal Reserve Bank of New York unless such increases are to be considered a part of a nationnl campaign to raise 441aries. the the New the A discussion ensued, at the conclusion of which Secretary was requested to prepare a letter to Deputy Chairman of the Federal Reserve Bank of York in accordance with suggestions made during discussion. Miller, as a member of the Committee on District No. 7, reported that, "e had talked to Er. Simnson, Deputy Chairman of the Federal Reserve 4* Or Chicago, over the telephone and, in accordance with the action by the Board at the meeting on July 25, 1933, had advised Er. Simpson 182 7/27/53 -15- th8t the Board felt the salary Paid to the Governor of the Federal Reserve 8ank of Chicago Should not be increased, and that Mr. Simpson had stated that it would be satisfactory to the bank's directors. Mr. Miller also ac,vised with regard to the payment of LI% I:cDougal's salary he had informed that Lir. Simpson that the Board would approve the payment of salary for the l'emainder of the current year, whereupon Mr. Simpson had stated that it was the intention of the board of directors of the bank to request approval of the Payment of salary to Mr. McDougal to the end of next year. Mr. Miller ackled that he had advised Mr. Simpson that he would present that recommendation to the Board at the earliest opportunity, although he personally did llot think favorably of it. After discussion, Mr. Miller was requested to advise 'Ir. Simpson that the Board would not be willing to approve the payment of salary to Governor McDougal beyond the end of the current year. Governor Black stated that, having Governor M.cDougal's case in mind he had read the report of the Pension Committee of the Governors' Conference 641(1 had asked Mr. James, as chairman of the committee on salaries and cal)ellditures, to consider the report with the idea of putting it into force as possible in order that situations arising in Federal reserve haw, StMilar to that of Governor McDougal could be provided for. Mr. James stated that he had given consideration to the matter and 11,4a asked Deputy Governor Kenzel, Chairman of the Pension Committee, and the Co mmittee's actuary to come to Washington for a discussion of the . tQatt„ Be stated, however, that he felt that, because of the present con- 1t "h of the investment market and the small return to insurance companies thA Irpes of investments made by them, the present is an inopportune 7/27/33 -16- title to request bids from insurance companies covering a pension plan for Federal reserve banks; and that while the rates quoted by the Insurance ecmPanies under such a plan would perhaps be attractive to the older emPloYees, participation in the plan would cost younger employees more than regUlar insurance and he questioned whether a Federal reserve bank or the Board has authority to male the pension feature a mandatory part of the contract of employment. 811bzit Be stated that it is the plan of the committee to a questionnaire to the larger life insurance companies and have them 1113rait Proposals for consideration, and that if there is no objection on the Part of the Board such action will be taken promptly. After a discussion, the committee on salaries and expenditures was requested to proceed in accordance with 1:.r. James' suggestion. There was then presented a draft of a letter to Ll.r. Case, Federal Re "I've Agent at New York, referring to Assistant Federal Reserve Agent . bill iatin's letter of July 12, 1933, transmitting the application of the °(111tY Trust Company, New York, New York, for permission to acquire the -ees of the Lawyers Trust Company, New York, New York, a nonmember, /141*811snt to a condition of membership prescribed by the Board at the time or its Eutraiss The letter stated that the Board has reviewed the infor- 144ti011 submitted; that it does not appear from the information submitted that th --e proposed acquisition will result in any material change in the eeller --44- character of the business of, or in the scope of the functions P A elleieu- by, the County Trust Company within the meaning of the conditions which it was admitted to meillership in the Federal Reserve System; thni, --- the Board, therefore, pursuant to the recommendation of the agent's 181 7/27/33 -17- office, interposes no objection to the County Trust Company assuminL; the liabilities of the Lawyers Trust Company and accuiring certain of its Usets, all as set forth in the report of Y.bArdle and 1.IcArdle, Accountants, dated. June 30, 1933, in accordance with the terms of the plan of merger dated July 11, 1933. Er. Lorrill stated that a memorandum prepared in the TiSOfl of -xaminations under date of July 26 with regard to the proposed "tion of the County Trust Company indicates that the acquisition by the tI'Ll-st company of certain assets and liabilities of the Lawyers Trust 0°101Pany will not result in any material change in the general character °I' the business of the member trust company or in the functions exercised bY it and would not be in violation of the conditions under which the trust e°ZPany was admitted to membership in the Federal Reserve System; and that °°11asel had agreed with these conclusions. Approved. At this point i.:essrs. Paulgur and Wilkes left the meeting. There was then presented a telegram dated July 26, 1933, from Er. Chairnan of the Federal Reserve Bank of Boston, stating that at the 1hlO eting of the board of directors on that date it was voted, subject to t, "e approval of the Federal Reserve Board, to authorize the Governor of the i) 111-, to accept, for and on behalf of the bank, the so-called blanket eocle . Issued by the National Recovery Administration pursuant to the National recovery Act. In connection with the above, Morrill stated that Deputy Governor 11' of the Federal Reserve Bank of Cleveland, had called La7. Sine ad on thet lePhone yesterday and had stated that the ouestion of the adoption 185 7/27/33 -18- or the code had been considered at the Cleveland bank; that no action had been taken, it being felt that the matter should first be considered by the Board; and that acceptance of the code would disturb the bank's plans for the termination of the share-the-work plan and the restoration of the salaries which were in effect before the adoption of the share-the-work Plan. Governor Black stated that Deputy Governor Burgess of the Federal Reserve Bank of New York had advised him over the telephone that the New Ibrk bank was considering the acceptance of the code; that the main difficulty in the minds of the directors was with regard to the classificati(xa of some of the employees under the code; and that if they were brought lilt° the code classification, it would cost the bank approximately 080,000 1 " Year. Governor Black also reviewed, for the information of the other mem116413 or the Board, discussions which he had had recently with Lir. Robert 11.1 aming and other representatives of the American Bankers, Association, 4114 7ith the National Recovery Administration, with regard to the applicat1411 Of the code to banks and their acceptance of the code. 14.4 He stated the National Recovery Administrator and the President of the United 48:tes have taken the position that the National Industrial Recovery Act ' e414es to banks; that Mr. Flaning is of the opinion that the banks should Illecliately evidence their cooperation and express a willingness to abide the aPirit of the code; that the New York Clearing House Association was tiletecord with that idea and was prepared to take action tomorrow to that treet; and that telegrams had been sent by Mr. Fleming to the members of 186 7/27/33 -19- the Administration Council of the American Bankers' Association asking for their views on the question and ten members had replied that they were in t horough accord with the suggestion that the banks accept the code. Governor 131ack added that he is concerned most by the fact that the National Iildustrial Recovery Act provides for the principle of collective bargaining; that if tha acceptance of the code should result in the unionizing of em1310Yees of banks throughout the country it would be difficult to say what the result would be; but that in his opinion the banks cannot afford not to j°in in this movement as it has been made a part of the recovery program in Which everyone is called unon to participate. Governor Black also stated that Mr. Fleming and other representatilres of the Americnn Bankers' Association have an appointment today at 11°0a with General Hamnond of the National R - ecovery Administration for a 4aclIssion of the difficulties which are presented to the banks in e°111ect1on with the acceptance of the code and that if the Board has no h jection he would like to participate in that conference. After a discussion, during which consideration was also given to the possibility of a separate code for Federal reserve banks and to the question whether the National Industrial Recovery Act applies to Federal reserve bAnks, the Governor was authorized to attend the conference referred to by him and was requested to report to the Board the matters considered at the conference, following which further consideration will be given to the telegram received from the Chairman of the Federal Reserve Bank of Boston. Governor Black then called attention to the fact that the permit to the ?edcral Reserve Bank of New York to export gold in order to prevent a in the exchange price of sterling above 4.86 expires tomorrow and he 187 7/27/33 -20- stated that yesterday with Under Secretary of the Treasury Acheson he had called on the President of the United States and discussed the matter with him, and that the President might desire that the permit be continued for two weeks longer. The discussion, Governor Black stated, was also with re- gard to preventing sterling from rising above 4.80 and that the President stated that he desired to consider this entire matter further and would inform Mr. Acheson with regard to his wishes in the matter today. Governor Black also stated that he had made no recommendation to the President in the matter but had inquired as to his wishes and that Mr. Acheson had suggested 4.80 as the maximum price for sterling as being somewhat more in line with present sterling quotations. Governor Black also reported that Under Secretary of the Treasury 4cheson had. discussed with him the question of according gold mining e°Q13anies the right to dispose of their product by establishing a free cold obtain market or the right of exportation in order that they might the matWorld prices; that Mr. Acheson had. requested an opinion regarding t'lr; that at the request of Governor Black, Mr. Goldenweiser had. written 4 Memorandum on the matter; but that Mr. Acheson had stated yesterday that it had been decided to afford the companies the right of exportation; and that in these circumstances Mr. Goldenweiseris memorandum would not be slibmitted. At this point Mr. Goldenweiser joined the meeting. with regard to open Reference was made to the proposed regulation the recent meeting of the 'relcet operations and to the changes suggested at raa 188 7/27/33 -21- Pederal Open Market Committee with the Federal Reserve Board. Certain Other suggestions were also discussed, at the conclusion of which it was Utderstood that the regulation, revised in accordance with the discussion, Ilrotild be submitted for further consideration at a meeting of the Board toznorrow. Reports of Standing Comnittee dated July 26 and 27, 1933, reamIllandIng approval of the following changes in stock at Federal reserve banks: 4g, t aF ORIGINAL Stock: Shares ' 4ecallercia1 National Bank of Chattanooga, Tenn. 450 450 38 38 219 219 , - ications for SURRENDER . of Stock: 4.!44.113.ct No. 7. st National Bank, McGregor, Iowa. (V.L.Abs. by ' Marquette Savings Bank, Marquette, Iowa, nonMember, which bank through change in title and location is now the First State Savings Bank, McGregor, Iowa.) ketr • 'aecatel National Bank, Springfield, Missouri. (Insolvent) 1)113 National Bank, Mt. Calm, Texas. (V.L.Suc. ci., bY First National Bank in Mt. Calm) "4 tiY. i;ational Bank, Wichita Falls, Texas. (V.L. 811o. by City National Bank in Wichita Falls.) at National Bank, The Dalles, Oregon. (Insolvent) 36 600 636 180 Total 180 1,073 Approved. Thereupon the meeting adjourned. Appzoveti
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