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823 A meeting of the Board of Governors of the Federal Reserve SYstera was held in ;iashington on Tuesday, June 1, 1943, at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman aansom, Vice Chairman Szymczak McKee Draper Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistznit Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Dreibelbis, General Attorney Mr. Wyatt, General Counsel Before this meeting there had been circulated among the membel's of the Board a draft of statement, which had been prepared in response to an informal request of the Board, with respect to the cittties of directors of Federal Reserve Banks and their relation to the Board of Governors. The statement was discussed but no action was taken. At this point Mr. Hansen, Special Economic Adviser, Mr. Gardner, eonomist, and Mr. Knapp and Miss Bourneuf, Associate Economists, e'r the D. vision of Research and Statistics, joined the meeting. The discussion which was begun at the meeting of the Board on 14.Y 29 1, of the Keynes and White international stabilization plans 1748 e(Int rin and consideration was given particularly to the question whether 'a Of 001, at what point, there should be a limitation on the amount 1-ars that the United States might be required to supply as a retilte Or the operation of the plan finally adopted. Consideration was 824 6 /1/43 -2also given to suggestions made by Mr. Gardner (1) that in order to recillee the amount of additional bank reserves that might be created under the plan the countries which had gold be required to make their contribation to the fund in the form of gold rather than currency or securities' and. (2) that all countries that were members of the plan be recillired to buy and sell gold only through the fund. "ring the discussion Chairman E - ccles read from a memorandum l'eceived by him under date of May 26, 1943, from Mr. J. H. Riddle, 4°11°111-to Adviser to the Bankers Trust Company, New York, New York, contai niug an analysis of the Keynes and ahite plans and making certalla alternative suggestions with respect to the plans. Copies were d4tributed of a memorandum prepared in the Division of Research and 8tati5tics of essential points in a compromise stabilization plan, and coPrY of the memorandum has been placed in the Boardts files. The meeting recessed for luncheon and reconvened at 2:15 p.m. With th_ " t same attendance as at the close of the morning session. Mr. Hansen made a statement as to the possibility of inflation Ult flg J.rom large holdings of currency and deposits in the United States low as compared with national income and why, in his opinion, with 1°ng-term interest rates it was to be expected that the level of cash would be larger in comparison to national income than was the °48e in the 19201s. He also discussed the possibilities of inflation chlt'ing the conversion and the longer-term post-war period and expressed the opinion that there need not be rigorous limitations on the amount of 825 6/ 1/43 —3— d°11ars that the United States would be obligated to supply under the stabilization plan as finally adopted for the reason that it was hoped that t e plan would operate to establish a degree of equilibrium in the e• lshenge markets which would make limitations unnecessary. Mr. Gardner made his position clear that he was not suggesting th" s limitation be fixed beyond which the United States would not tillsh additional dollars under the plan but rather that provision 84°111d be made that after the amount of exchange that had been sup- by the United States had reached a stated figure the United States W°41(1 be given increased controls to correct the situation as the of dollar exchange supplied by it increased. The memorandum of essential points in a compromise stabilization laens c°Pies of which were distributed at the morning session, WEIS t44 reed and discussed, and Mr. Eansen suggested that it be discussed With lirr. Berle) Assistant SecrettLry of "State, and M. White, Director orMonetary Research of the Treasury Department. There was agreement on the Dkrt of the members of the Board present that the substance of the 441°1'shdttm should be discussed by the appropriate members of the staff "the Division of Research and Statistics with Mr. White with the statethat the members of the Board had reviewed the Keynes and White plans illti.41• 1"3 subject to further discussion, the points covered by the memo11%111 l'el/l'e2ented the present tentative suggestions of the members of he with the understanding that whatever plan was adopted it was he 1• c)sition of the Board that (1) it should be given power by Congress 826 6/1/43 -4t° °ffset the effects of the operations of the plan on the domestic credit s ituation and (2) provision should be made in the plan, as suggested 1, -Y Canadian representatives, that, as the amount of exchange fur"DY a member of the plan increased beyond a certain point, the Inetaber would have increased voting power in the control of the operations °t the plan. The-re was also agreement that after the contents of the had been discussed with Mr. White they should be presented to n. --r-Le2 and that, if during Chairman Eccles' contemplated absence for theext two weeks any meetings were called in connection with the plan Which members of the Board should be present, Messrs. Ransom and %Thiezak would represent the Board. sM Thereupon Messrs. Clayton, Thurston, Hansen, Gardner, and Knapp tues Bourneuf withdrew from the meeting. : th ', McKee referred to the consensus of the members of the Board that to logram to Transamerica Corporation, which was approved at the Illeetille of the Board on May 22, 1943, likely was the beginning of a e°111b8e Or action which would result in a hearing as provided by law at Whieh tilrIllasamerica Corporation would be afforded an opportunity to be 1114(1'4 laud to show cause why the permit issued by the Board to the Cor14)Z4"1°4 elith°rizing it to vote the stock which it owned and controlled eel*t"•4 banks should not be revoked, and he stated Vint he had dise141e4 With Mr. Dreibelbis the steps that should be taken by the Board 1111)rel3e ' r"ion for that eventuality and that he would like Mr. Dreibelbis t°°11t11110 his views on the manner in which the matter should be handled. 827 6/ 1/43 -5Mx. Dreibelbis said that it would be necessary to set out in any 1113tice of hearing to the Corporation the issues which would be involved it the hearing and upon which the Board would act in the light of the offered at the hearing, and that, therefore, the preparation of the not. Ice of the hearing would require the organization and preparation Or --"‘ the necessary material as fully and as completely as for the hearille s t was his suggestion that the hearing be held before a trial ex- to be selected later, rather than before the full Board. also It was his s uggestion that in preparing and offering evidence it would be 4'131-1 ' e-131e to associate a lawyer who was thoroughly familiar with court eald the essentials of a proper record in such proceeding and 174 COuld devote his full attention to the particular matter so that the Zesillt s of the hearing could be properly presented to the Board for a deeisio_. 11 In these circumstances, it was his feeling that the Board elliPloY promptly a well-qualified practicing lawyer who was the essentials of an adequate record who, working lth would imediately begin to organize and prepare the Ilece88e/7 data and luaterial which would be involved if notice should be t° rr/ ' EuaswiLerice. Corporation, and that it should be understood that 141e1' Wa8 employed would have to have adequate assistance froy, the iji'c'181°11 °I' Examinations and the Board's clerical staff. There was a discussion of the men who might be considered by the Board for employment for the purpose outlined by Mr. Dreibelbis, and he was authorized to invite Mr. Neth Leachman of Dallas, Texas, to come to Washington 6/1/43 -6to discuss the matter, with the understanding that the Board would reimburse him for the necessary actual traveling expenses incurred by him on the trip. At this point Messrs. Dreibelbis and Wyatt withdrew from the rtieetine) and the action stated with respect to each of the matters herer referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Fed'eaerve System held on May 31, 1943, were approved unanimously. liemoranda from Mr. Goldenweiser, director of the Division of ReEleare, and Statistics, recommendinE, approval of the following increases basic • salaries of employees in that Division: 1412ats or Salary Increase To From Designation Name 141Y 24 19/..1 6,200 5,600 3 -1 Susan Burr Litchfield Senior Economist 141'Y 26, 4,000 4,600 ! tit Wendell E. Thorne 27, 1943 Associate Economist Frank R. Garfield 6,400 7,000 Senior Economist 27, 3-943 Leroy M. Piser 6,400 7,000 Chief, Government 114Y 29 1 Securities Section -4-943 29, 1943 Roland I. Robinson 6,000 6,500 Senior Economist David M. Kennedy 5,000 5,600 Assistant Chief, Government Securities Section Approved unanimously, effective Sune 1, 1943. liemorandum aweneth dated May 28, 1943, from Mr. Idorrill, recommending that rues Crawford be transferred from the position of elevator °Ileratoz to that of telephone operator in the Secretary's Office on a 1411111611e/it basis, and that her basic salary be increased from c`i l,200 to 41 ' 440 per ann effective June 1, 1943. Approved unanimously. 829 611/43 -7Telegram to Mr. Lassiter, Chairman of the Federal Reserve Bank c)f nichmond, reading as follows: "Walden's letter May 24. Board approves appointment Adolph C. Wienert as Federal Reserve Agent's Representative "Baltimore Branch with salary at the rate of $3,420 per ! Italun in the event it becomes necessary to replace Li.. Zircel. This approval is given with understanding that Mr. "isnert will be placed upon Agent's pay roll and be solely responsible to him or during vacancy in office of Agent to Assistant Federal Reserve Agent, and to Board of Governors Proper performance of duties. When not engaged in per;:3,rMance of his duties as Federal Reserve Agent's Representhe may, with approval of Federal Reserve Agent (or, iL3n Ills absence, of Assistant Federal Reserve Agent) and :11ell I.71 Managing Director, perform such work for Branch as not be inconsistent with his duties as Federal Reserve 0;entts Representative. Wienert should execute usual oath 402ffice and surety bond in amount of $10,000 and he should bond has upon performance of duties as representative until itn- -as been examined by your Counsel to determine whether 84 execution complies fully with the rules printed on reverse form of bond following which bond should be for--e` t to Board promptly for approval. Please advise effect. e date of Wienert's appointment and Zirckel's resignation, as to action, if any, we should take with respect to reasIting bonding company from liability under Zirckel's bond xedera]. Reserve Agent's Representative." X Approved unanimously. Letter to Mr. Hodge, Assistant Counsel of the Federal Reserve Of Chicago, reading as follows: relai7hank you for your letter of May 26 and enclosures 11011-14g to the settlement of the case of Hager Music ellc; 3e) Grand Rapids, Michigan, under Regulation W. be ; - °811res are beta read with. interest, and you areThe:, to blesZlici::re. lt:d on the successful handling of a very trou- Approved unaimously. 830 6/1/43 -8- Thereupon the meeting adjourned. _ Assistant Secretary.
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