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767 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Thursday, June 26, 1941, at 10:30 PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Paulger, Chief of the Division of Examinations Mr. Smead, Chief of the Division of Bank Operations Mr. Leonard, Assistant Chief of the Division of Examinations Mr. Dreibelbis, Assistant General Counsel d H. Williams, Dean There was presented a letter to Mr. Alfre Of the Wharton School of Finance and Commerce, University of PennsylIrania, Philadelphia, Pennsylvania, reading as follows: dent of the "In view of your appointment as Presi tive July effec Federal Reserve Bank of Philadelphia, n natio as of that 1, 1941, the Board accepts your resig chairman of the date as Class C director and deputy Bank tendered in your letter of June 24." Approved unanimously. tOn behalf of the Personnel Commi tive effec tee, Mr. Szymczak moved that July 1, 1941, Warren F. Whittier, Class Bank C director of the Federal Reserve y Deput nted of Philadelphia, be appoi nder the remai Chairman of the Bank for of the current year to succeed Mr. Williams. Carried unanimously. 768 -2- 6/26/41 from Mr. Carpenter read a memorandum dated June 4, 1941, Hr. Szymczak suggesting that the Board consider, and if practicable the President and adopt, at least tentatively, maximum salaries for and stating that First Vice President of each Federal Reserve Bank, w would be made of after such maximum salaries had been fixed a revie ve Banks and suggested Other official positions at the Federal Reser be submitted to the Board maximum salaries for such positions would for consideration. ies suggested The memorandum compared the salar by the Balderston salary study, which had been made at the direction salaries of Presidents of the Chairmen's Conference, with the present tive maximum salaries and First Vice Presidents and with the tenta 1939 and suggested that for these positions fixed by the Board in Balderston report be considered certain questions presented by the by the Board. of the questions raised There followed a general discussion in Mr. Szymczak's memorandum and of the basis upon which maximum salPresidents might be estabaries for the Presidents and First Vice lished. discussion, At the conclusion of the was agreed it zak, Szymc upon motion by Mr. for the ies salar unanimously that maximum PresVice First and positions of President d shoul Banks ve Reser ident at the Federal ws, follo as Board be established by the the Board's with the understanding (1) that now being ies salar t affec action would not dents Vice Presi First paid Presidents and um salaries the maxim of which were in excess 769 6/26/41 -3but that the Board would not approve any further increases in these salaries, (2) that in all other cases these maxima represented rates beyond which the Board would not be willing to go and, therefore, that such salaries should not be fixed for new appointees as Presidents or First Vice r serPresidents at the beginning of thei that ated nstr demo vice or until they had (3) and d, ifie such salaries were just that Mr. Szymczak would submit to the Board for consideration at a later date r ofsuggested maximum salaries for othe rve Rese ral ficial positions at the Fede Banks: Federal Reserve Bank President First Vice President Richmond, Atlanta, St. Louis Minneapolis, Kansas City, and Dallas 000 1 4''20, 815,000 Boston, Philadelphia, Cleveland, and San Francisco 825,000 818,000 Chicago 830,000 !t22,500 New York N6,000 $34,000 on, In connection with the above acti prehave Mr. Szymczak was requested to d a pared for consideration by the Boar undraft of letter which would be sent rman der confidential cover to the Chai sing him of each Federal Reserve Bank advi of the of the establishment by the Board of s maximum salaries for the position the at t iden President and First Vice Pres h whic Bank and the considerations upon the the Board's action in establishing maximum salaries was based. Mr. Szymczak then moved that, at the of directors appropriate time, the board 6/26/41 -4of the Federal Reserve Bank of Richmond be advised that the Board was not willing to approve the salary fixed by the directors at the rate of $25,000 per annum for Mr. Leach as President of the Bank but approves for him a salary at the rate of 21,000 per annum for the year ending May 31, 1942, if fixed by the directors of the Bank at that rate. Carried unanimously, with the understanding that advice of this action would be included in the letter to Chairman Lassiter advising him of the Board's action in fixing maximum salaries for the President and First Vice President of the Richmond Bank. dated June 3, Consideration was then given to a memorandum a request from 1941, from Mr. Clayton submitting, in response to received from Mr. Chairman Eccles, a draft of reply to the letter under date of May 23, 1941, Morgenthau, Secretary of the Treasury, on the subject of bank holding companies, which reply was discussed at the meetings of the Board on May 27 and 28, 1941. There was fur- ther discussion of the question whether, in the light of events leadularly the request of the ing up to Mr. Morgenthau's letter and partic President of the United States that the Treasury, the Board of Goverand the Comptroller nors, the Federal Deposit Insurance Corporation, of the Currency, work out a program with respect to bank holding comfor. Panies, further action by the Board was called All of the members of the Board indicated that they had reached the conclu be adshould sion that a further letter dressed to Mr. aorgenthau in response to his letter of Vay 23 and the Secretary . 711, 6/26/41 —5— was requested to have prepared for consideration a draft of letter along lines suggested during the discussion. Mr. Ransom stated that the National Association of Supervisors of State Banks had invited Chairman Eccles to address the annual convention of the Association at St. Paul on September 25, that Chairman Eccles had replied that it would not be possible for him to arrange his Program to accept the invitation, that the Association then requested that he (Mr. Ransom) or some other member of the Board address the confore from accepting vention, and that, although he had refrained hereto he was inclined similar invitations and was reluctant to accept now, tO make an exception as this was a possible means of establishing closer relations between the Board and the members of the Association. In the event he attended and spoke at the convention, Mr. Ransom said, he would like to have authority from the Board to say to the Association that at some convenient time in the future the Board of Governors would be glad to meet with members of the Association in Washington for a one ing problems of mutual or two-day conference for the purpose of discuss interest and that if the Association desired to accept the invitation the Board would be glad to appoint a committee to work with a committee °I. the Association on arrangements for the conference. All of the other members of the Mr. Board concurred in the opinion that tion Ransom should address the conven and the authority requested by him in that connection was granted by unanimous vote. —6— 6/26/41 ened at 2:45 p.m. with The meeting then recessed and reconv the same attendance as at the morning session except that Mr. Dreibelbis was not present and Mr. Vest, Assistant General Counsel, was in at— tendance. taken by the Commissioners Mr. Wyatt referred to the position building was subject to of the District of Columbia that the Board's entitled to the free use of water taxation and that the Board was not ly the developments in from the District mains, and he reviewed brief to the letter received by the connection with the matter leading up from Mr. Keech, Corporation Board under date of January 13, 1941, the Commissioners would not be Counsel, in which it was stated that the Attorney General on the question. willing to abide by a decision of been introduced in the House of Mr. Wyatt stated that a bill had just Steagall which would exempt the Home Representatives by Congressman the District of Columbia from Owners' Loan Corporation building in presented whether the Board should taxation and that the question was to its building. He ask for legislation granting a similar exemption such a procedure for the reason added that he would recommend against clearly exempt from taxation at that, in his opinion, the building is fic legislation on the the present time and an attempt to obtain speci Point would only confuse the matter. He made the further statement r was not settled by the that he had been advised that if the matte taxes were date of the next advertisement of property on which the advertised, probably in December, delinquent, the building would be 773 -7- 6/26/41 ent the d and would be offered for sale in January, which woul pres in a position of having its question whether the Board desired to be that, if the Board wished, it building advertised in this manner, and nts against the building could institute a suit to quash the assessme O' to enjoin the District Commissioners from advertising the property for sale or from collecting the assessed taxes. The whole question it was pointed out, by could be raised effectively in another way, the District turning off the water supply to the building. rman Eccles suggested that In the discussion which ensued Chai on open to the Board: (1) to there were three possible courses of acti the building from taxation, (2) ask Congress for legislation exempting and (3) to take no action to institute a suit to settle the matter, sale or the water supply to the until the building was advertised for building was shut off. ussion At the conclusion of the disc no that d move of the matter, Mr. Ransom and ss unle d action be taken by the Boar rtised for sale until the building is adve be shut off, in or the water supply is to be authorized to which event Counsel would as might be institute such legal steps settlement of necessary to bring about a the matter. by the Mr. Ransom's motion was put the with sly, chair and carried unanimou by n take ons acti understanding that all y orit auth this the Legal Division under sub— and , with would be in consultation Ransom. ject to approval by, Mr. from the meeting. At this point Mr. Vest withdrew 74 -8- 6/26/41 taken at Reference was then made by Mr. McKee to the action the meetings of the Board on April 11 and 17, 1941, in requesting n s that a statement be prepared, setting forth the Board' positio with in the System, for respect to the admission of banks to membership use by the Board in the event it should decide to take up with Mr. Insurance Corporation, the Crowley, Chairman of the Federal Deposit 19, 1941, to President Matters referred to in his letter of March ng to the activiYoung of the Federal Reserve Bank of Chicago relati member banks to join ties of the Federal Reserve Banks in encouraging the Federal Reserve System. the letter was not adMr. McKee stated that, inasmuch as questions involved was dressed to the Board as such, one of the m reply made by Mr. Young on Whether any reply, other than the interi whether it should be sent March 22, 1941, should be made and, if so, by the Board or by Mr. Young as President of the Chicago Bank. ed the feeling on the part A discussion of the matter disclos should not be allowed to of the members of the Board that the matter he should address a rest on Mr. Young's reply of March 22 but that state briefly the opinion second letter to Mr. Crowley which would aging membership in that the System's policy with respect to encour the Federal Reserve System was justified in the light of the legislae Act relating to tive history of the provisions of the Federal Reserv membership. .75 -9- 6/26/41 Mr. Ransom moved that the Division of Examinations be requested to prepare a draft of letter as outlined above and that, upon approval by Mr. McKee, it be transmitted to Mr. Young with the suggestion that it be sent by him to Mr. Crowley. Carried unanimously. Wyatt, Smead, Paulger, and Messrs. Bethea, Carpenter, Clayton, Leonard then left the room. issued by the Civil SerAttention was called to the circular vice Commission under date of May 16, 1941 (No. 260), transmitting a copy of Standard Form 47 which had been adopted for obtaining affidavits from government employees as to their membership in subversive organizations. reference was made also to In connection with this matter the executive order issued by the President on June 12, 1941, requirin the executive Civil Service ing the fingerprinting of all employees the Federal Bureau of InWhose fingerprints are not now on file in they are employed. vestigation or in the agency in which and The two matters were discussed the Board's it was voted unanimously that with the organization should fall in line government executive departments and other the proviagencies that were subject to ring that sions of the Hatch Act, by requi same form the te each of its employees execu was required as n of affidavit or affirmatio and s agencies, tment of employees in such depar n to obtai taken and that steps should be r's staff finge Board from each member of the and that, form, prints on an appropriate when obtained, such fingerprint records should be filed by the Secretary with the Federal Bureau of Investigation. -10- 6/26/41 Mr. Morrill was requested to work out the necessary details, including appropriate forms, and to take the necessary steps to arrange for obtaining the affidavits and fingerprint records referred to. In this connection it was agreed that the members of the Board should take the lead in executing such affidavits and filing their fingerprints. The action stated with respect to each of the matters hereinafter referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on June 25, 1941, were approved unanimously. Letter to Mr. Hays, Vice President of the Federal Reserve sank of Cleveland, reading as follows: "The Board of Governors approves the changes in the personnel classification plan of the Federal Reserve Bank of Cleveland as requested in your letter of June 20, 1941." Approved unanimously. Telegram to the Chairmen of all Federal Reserve Banks reading as follows: "Board of Governors approves payment of regular semiannual dividend by your Bank on June 30, 1941." Approved unanimously. nt of the Federal ReLetter to Mr. Leedy, First Vice Preside t3erVe : Bank of Kansas City, reading as follows "Referring to your June 14 letter, it is noted that at its meeting on June 12, 1941, the Board of Directors _777 6/26/41 -11- "of your Bank authorized the Discount Committee to waive with Nathe commitment fee for advances in connection tional Defense work." Approved unanimously. Thereupon the meeting adjourned. e retary. Approved: Chairman.
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