The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for June 27, 1958
To:
Members of the Board
From:
Office of the Secretary
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard
to the minutes, it will be appreciated if you will
advise the Secretary's Office. Otherwise, if you
were present at the meeting, please initial in column A below to indicate that you approve the minutes.
If you were not present, please initial in column B
below to indicate that you have seen the minutes.
A
Chm. Martin
Gov. Szymczak
Gov. Vardaman
Gov. Mills
Gov. Robertson
2L-7
Gov. Balderston
x c"cri3
Gov. Shepardson
x
1902
Minutes of the Board of Governors of the Federal Reserve System
The Board met in the Board Room at 10:00 a.m.
on Friday, June 27, 1958.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Vardaman
Mills
Robertson
Shepardson
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Carpenter, Secretary
Kenyon, Assistant Secretary
Thomas, Economic Adviser to the Board
Young, Director, Division of Research and
Statistics
Hackley, General Counsel
Masters, Director, Division of Examinations
Molony, Special Assistant to the Board
Shay, Legislative Counsel
Hostrup, Assistant Director, Division of
Examinations
Goodman, Assistant Director, Division of
Examinations
Items circulated to the Board.
The following items, which had
been circulated to the members of the Board and copies of which are
attached to these minutes under the respective item numbers indicated,
were approved unanimously:
Item No.
Letter to The First National City Bank of New York,
1
New York, New York, approving the establishment of
an additional branch in Montevideo, Uruguay. (For
transmittal through the Federal Reserve Bank of New
York)
Letter to Fidelity-Philadelphia Trust Company,
Philadelphia, Pennsylvania, approving the establishment
Of a branch in Abington, Pennsylvania, and an additional
investment in bank premises incident to a proposed
Merger of Abington Bank & Trust Company into the applicant
bank. (For transmittal through the Federal Reserve Bank
of Philadelphia)
2
19O
6/27/58
-2Item No.
Letter to the Comptroller of the Currency recommending
favorable consideration of an application to organize
(With a
a national bank in Fort Lauderdale, Florida.
copy to the Federal Reserve Bank of Atlanta)
3
Letter to Mr. B. S. Stevenson, Columbus, Ohio, concerning
disclosure of information about common trust funds.
14.
Elevator work at Los Angeles Branch (Item No. 5).
The Federal
Reserve Bank of San Francisco had requested, in a letter dated June 13,
1958, authority to install a third passenger elevator in the Los Angeles
Branch building and integrate the three elevators in a fully automatic
control system.
In order to reduce costs, the third passenger elevator was
omitted when the addition to the branch building was constructed in 1953,
although the shaft was built and fitted with doors.
However, growth of
branch operations, together with increased elevator traffic resulting
from rental of space on the fourth floor of the building to two tenants,
had made the existing elevator service inadequate.
Proposals for the work now contemplated had been Obtained from
three companies as follows: Westinghouse Electric Company ($132,177);
Otis Elevator Company ($106,990); and Elevator Maintenance Co., Ltd.
($80,140).
After studying the three quotations, the Reserve Bank's
Board of Directors approved the proposal of the Otis Elevator Company
at its meeting on June 11, 1958, because: (1) the present elevators had
been manufactured and instralled by Otis and it appeared desirable to have
that company add the third elevator and perform the conversion of the three
1904
_3_
6/27/58
elevators to an integrated system in order to retain the responsibility
of one company for the complete job; (2) this would assure that replacement parts and service would be readily available when needed; (3) the
Bank's experience with Otis elevators at the head office and all of the
branches had been satisfactory; (4) Elevator Maintenance Co., Ltd.,
purchases components from several manufacturers and its installations
therefore are not comparable to those of Westinghouse and Otis, which
are designed and manufactured to function as a unit; and (5) there had
been a somewhat mixed response to the Bank's inquiries regarding the
reliability of installations by Elevator Maintenance Co., Ltd.
In a memorandum dated June 20, 1958, which had been circulated
to the members of the Board, the Division of Bank Operations expressed
the view that the reasons given for accepting the second low bid were
Persuasive.
Submitted with the memorandum was a proposed telegram to
the San Francisco Reserve Bank which would authorize the Bank to proceed
with the work and accept the bid of the Otis Elevator Company.
The reasons underlying the proposal of the Reserve Bank to accept
the second low bid were reviewed by the Board and the opinion was expressed
that no objection should be interposed to going forward with the work on
that basis since, in the judgment of the Bank's directors, acceptance of
the bid of the Otis Elevator Company was advisable in order to assure
Proper installation and maintenance of the integrated automatic elevator
system.
Accordingly, unanimous approval was given to the telegram to the
San Francisco Reserve Bank of which a copy is attached hereto as Item No. 5.
190.
6/27/58
Mr. Goodman then withdrew from the meeting.
Discount rates.
The Board approved unanimously telegrams to the
Federal Reserve Banks of New York, Cleveland, Richmond) Chicago) St. Louis,
Minneapolis, and Dallas approving the establishment without change by those
Banks on June 26,
1958, of the rates on discounts and advances in their
existing schedules.
Personnel matter at Philadelphia Bank (Item No.
6). Under date
of May 20, 1958, the Secretary of the Board received a letter from John M.
Rusnak, an employee of the Federal Reserve Bank of Philadelphia, requesting
that he visit the Bank "as there is much to be discussed about conditions
here at the bank pertaining to the guard force, and other things in
general."
Subsequently, the matter was taken up with President Bopp of
the Philadelphia Bank who, in a letter dated June 11, 1958, furnished a
detailed statement regarding Mr. Rusnak's alleged grievances and a copy
of a letter which had been written to Mr. Rusnak under date of March 12,
1958, by Vice President Wilgus following extended discussions with the
employee.
The information from the Reserve Bank indicated that the
situation about which Mr. Rusnak complained had been appropriately and
reasonably handled.
However, in order to clear the record there had been
circulated to the members of the Board a draft of possible acknowledgment
of Mr. Rusnak's letter.
When the file was in circulation) Governor Robertson
attached to it a note raising the question whether any reply was necessary;
If it was, he suggested that the letter be phrased as a letter from the
Board rather than from the Secretary personally.
6/27/58
-5In discussion, agreement was expressed with the view that, to
the extent possible, the preferable course was to leave matters of
personnel administration to the Reserve Bank concerned.
In this par-
ticular case, it was agreed that the Philadelphia Bank had handled the
situation properly and effectively.
It was suggested, therefore, that
the decision on whether to send the proposed reply to Mt. Rusnak rest
on the wishes of President Bopp.
There being agreement with this
suggestion, it was understood that the Secretary would get in touch with
Mr. Bopp to ascertain whether he felt that it would be helpful if a reply
were made by the Board to Mt. Rusnak's letter.
Secretary's Note: After the meeting, the Secretary
talked with President Bopp, who expressed the opinion
that it would be appropriate and helpful to the Bank
If a reply were made by the Board to Mr. Rusnak.
Accordingly, the letter of which a copy is attached
as Item No. 6 was sent to Mr. Rusnak, with a copy to
Mr. Bopp.
Request of Otto Bremer Company (Item No. 7).
For the reasons
stated in a memorandum from Mt. Hackley dated Jane 26, 1958, copies of
'which had been distributed to the members of the Board, unanimous approval
was given to an order extending from June 30 to August 30, 1958, the time
for Otto Bremer Company to submit to the Hearing Examiner proposed findings,
conclusions, and supporting brief in connection with the hearing under
section 4(c)(6) of the Bank Holding Company Act with respect to Otto
Bremer Company's applications for determinations concerning certain nonbanking subsidiaries.
No.
7.
A copy of the approved order is attached as Item
1907
-6-
6/27/58
Request from Congressman Sheehan (Item No.
8). Pursuant to the
understanding at the meeting yesterday, there had. been distributed to the
members of the Board copies of a revised draft of letter to Congressman
Sheehan of Illinois with reference to his request for the names and
locations of companies that would be affected by a definition of bank
holding companies based upon 25 per cent control of the stock of one or
more banks.
Governor Szymczak said he had learned from Congressman Sheehan
that the request was made on behalf of a constituent and that whatever
response the Board might make would be satisfactory to Mr. Sheehan.
There followed a discussion during which agreement was expressed
with certain editorial changes in the latest draft of letter which were
proposed by Mr. Molony.
In the course of this discussion Governor Mills
reiterated his previously expressed view that the basic consideration in
a decision not to supply the requested information was the fact that a
large part of the data sent to the Senate Banking and Currency Committee
in
1955 was drawn from confidential sources; namely, reports of bank
examinations made by the Federal Reserve Banks and by the other Federal
bank supervisory agencies.
This, he felt, must be borne in mind if the
constituent should renew his request and the Board should again be confronted
With the question.
Thereupon, unanimous approval was given to a letter to Congressman
Sheehan in the form attached as Item No.
8.
19
6/27/58
Mr. Hostrup then withdrew from the meeting.
Report on H.R. 12785 (Item No. 9).
At yesterday's meeting,
the staff was requested to prepare in final form a letter to the House
Committee on Government Operations concerning H.R. 12785, a bill to
amend the Employment Act of 19)16.
After this had been done, certain
questions were raised which appeared to require further consideration,
With the result that copies of the proposed letter were distributed to
the members of the Board.
These questions, along with others raised at this meeting, were
considered by the Board, following which unanimous approval was given to
a letter to the Chairman of the House Committee on Government Operations
in the form attached as Item No. 9, with the understanding that a copy
would be sent to the Bureau of the Budget as a matter of information.
The meeting then adjourned.
Secretary's Notes: Pursuant to the recommendation
contained in a memorandum dated June 24, 1958, from
Mt. Young, Director, Division of Research and
Statistics, Governor Shepardson approved on behalf
of the Board on June 26, 1958, continuation of the
employment of Carl T. Arlt as Economist in that
Division for as long as he is available to the Board.
It was understood that Mt. Arlt probably would be
available until on or about September 1, 1959.
Governor Shepardson today approved on behalf of the
Board the following items:
190,
6/27/58
Memorandum from Mr. Young, Director, Division of Research and
Statistics, dated June 23, 1958, recommending that the services of Mrs.
Gertrude Weiss, whose reappointment as Consultant was approved by the
Board on January 30, 1958, be utilized for further work relating to
evaluation of the consumer finances surveys, including appraisal of
possible interim consumer surveys as well as work related to the preparation of a statistical "base book" concerning consumer surveys. A copy
of the memorandum is attached as Item No. 10.
Memorandum dated June 26, 1958, from Mr. Connell, Controller,
recommending that Board employees driving privately-owned automobiles
to the relocation site during Operation Alert 1958 be allowed reimbursement for normal automobile storage charges at the relocation site.
Letter to the Federal Reserve Bank of Boston approving the
designation of Richard Charles Keith as special assistant examiner.
copy of the letter is attached as Item No. U.
A
19_10
BOARD OF GOVERNORS
OF THE
Item No. 1
6/27/58
FEDERAL. RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
J.9.0
TO THE BOARD
*
t‘
kt***
June 27, 1958
The First National City Bank of New York,
55 'Wall Street,
New York, New York.
dentlemen:
The Board of Governors of the Federal Reserve System
authorizes The First National City Bank of New York, New York,
New York, pursuant to the provisions of Section 25 of the
Federal Reserve Act, to establish an additional branch in the
City of Montevideo, Uruguay, to be situated in the Pocitos
District of Montevideo, on Avenida Brasil between the streets
of Brito del Pino and Zubillagal and to operate and maintain
such branch subject to the provisions of such Section; upon
condition that, unless the branch is actually established and
opened for business on or before June 1, 1959, all rights
granted hereby shall be deemed to have been abandoned and the
authority hereby granted shall automatically terminate on such
date. This authorization is made with the understanding that
the approval of the appropriate Uruguayan authorities will be
obtained prior to the establishment of the branch.
Please advise the Board of Governors in writing,
through the Federal Reserve Bank of New York, (1) when the
establishment of the branch has been approved by the authorities
in Uruguay and (2) when the branch is established and opened for
business. It is understood that no change will be wade in the
location of such branch without the prior approval of the Poard
of Governors.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
IC
BOARD OF GOVERNORS
OF THE
044 Q01., 4t,
•—•si7a.
*44A0\
tt
FEDERAL RESERVE SYSTEM
I ft
14 17
lv 4
4,#
Item No. 2
6/27/58
WASHINGTON 25. D. C.
ADORE
1.1
a0
OFFICIAL CORRESPONDENCE
TO THE BOARD
`*.do
401444g. wtt.4,0
-000o**
June 27, 1958
Board of Directors,
Fidelity-Philadelphia Trust Company,
Philadelphia, Pennsylvania.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of Philadelphia, the Board of Governors
approves the establishment of a branch at the Northeast corner, Old York and Susquehanna Roads, Abington, Pennsylvania,
by Fidelity-Philadelphia Trust Company, Philadelphia,
Pennsylvania. This consent is given provided
a.
the merger with Abington Dank & Trust Company,
Abington, Pennsylvania, is effected substantially
in accordance with the terms of the Joint Plan of
Merger dated May 12, 1958;
b.
shares of stock acquired from dissenting shareholders are disposed of within six months after
date of acquisition;
c.
the branch is established within six months from
the date of this letter; and
d.
that formal approval of the State authorities is
obtained.
The Board of Governors also approves, under the provisions of Section 24A of the Federal Reserve Act, an additional
investment in banking premises of not to exceed $45,000.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
BOARD OF GOVERNORS
OF THE
OVVAIi,•,:v
FEDERAL RESERVE SYSTEM
001,1fo
'
1°,1cz
WASHINGTON 25. D. C.
Item No. 3
6/27/58
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
u4
-'11
ti tjtxt,
:***
June 27, 1958
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Dear Mr. Comptroller:
Reference is made to a letter from your office dated March 13,
1958, enclosing copies of an application to organize a national bank at
Fort Lauderdale, Florida, and requesting a recommendation as to whether
or not the application should be approved.
A report of investigation of the application made by an examiner for the Federal Reserve Bank of Atlanta indicates that a capital
structure of $750,000, instead of $500,000 as shown in the application,
will be provided for the bank and this revised amount of capital is regardcd as adequate. The earnings prospects of the institution are reasonably favorable, and the proposed management is satisfactory. It is
reported that although there does not appear to be a dire need at the
momqnt for a bank in this immediate community, it is believed that the
need will develop in the future and that the present lack of banking
facilities causes a severe inconvenience to a great many people. The
Board of Governors recommends favorable consideration of the application.
The Board's Division of Examinations will be glad to discuss
any aspects of this case with representatives of your office if you so
desire.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 4
6/27/58
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
June 271 1958
Mr. B. S. Stevenson,
College of Commerce and Administration,
The Ohio State University,
Columbus 10, Ohio.
Dear Mr. Stevenson:
This will acknowledge your letter of May 30, 1958,
in which you discuss a proposed dissertation on common trust
funds. A part of the dissertation includes a study of investments and trends of income, and for the purpose of obtaining
information, you have applied to banks and trust companies
operating such funds for copies of their annual audit reports.
Some trust companies have refused to send such reports apparently on the ground that Regulation F does not permit such a
disclosure of information about common trust funds.
You are undoubtedly familiar with the provisions of
section 17(a) of Regulation F which provide in part that "a
bank...Ehall not advertise or publicize the earnings realized
on any Common Trust Fund or the value of the assets thereof."
Moreover, section 17(c)(3) provides in respect to reports of
audit that "the bank shall not publish or authorize the publication of any such report or the information contained
therein."
Common trust funds have been established by law for
the collective investment of funds of certain fiduciary accounts
administered by banks and trust companies. Special income Lax
provisions (Section 584 of the Internal Revenue Code) exempt
common trust funds from taxation provided they are established
and maintained in strict conformity with the provisions of :ection 17 of the Board's Regulation F, and every safeguard has
been employed to prevent such funds from being used as investment trusts for other than strictly fiduciary purposes. Accordingly, the public dissemination of information about common trust
funds has been restricted to protect the special purposes and uses
of such funds.
19141
Mr. B. S. Stevenson
The Board, therefore, has not sought to encourage
privately-prepared comparative studies of common trust funds
because of possible disadvantageous use of such studies in
competitive practices. However, we are enclosing copies of
recently made surveys by the Board in the field of common
trust fund administration which may be of assistance to you.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter
Secretary.
Enclosures-3
1915
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
Item No.
6/27/58
June 27, 1958
Nhngels - San Francisco
Reurlet June 132 Board interpoaos no objection to acceptance
of bid of Otis Elevator Company and the expenditure of
approximately 4107,000 to install new passenger elevator
in Los Angeles building and integrate the three elevators
in a completely automatic control system.
(Signed) S. R. Carpenter
Carpenter
5
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
44
0
*44)
6
6/27/58
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
*,44.onst
June 27, 1958
Mr. John M. Rusnak,
Guards' Department,
c/o Federal Reserve Bank
of Philadelphia,
925 Chestnut Street,
Philadelphia 1, Pennsylvania.
Dear Mr. Rusnak:
This letter is in acknowledgment of yours of
May 20, 1958; in which you invite me to come to the Federal
Reserve Bank of Philadelphia to look into conditions there
pertaining to the guard force.
The Board has been in touch with the management of
Bark
the
which has furnished a record of the situation about
which you complain, including a copy of the letter addressed
to you tnder date of March 12. Since it is apparent that
the situation about which you complain has been appropriately
and reasonably handled by the senior officers who have responsibility for the management policies of the Bank, no
purpose would be served by a representative of the Board
of Governors going to Philadelphia to look further into
the matter.
Very truly yours,
(Signed) S R. Carpenter
S. R. Carpenter,
Secretary.
Item No. 7
6/27/58
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FrIERAL RESERVE SYSTEM
WASHINGTON, D. C.
DOCKET NUMBERS
BHC - 29) 31-33, 35
IN THE MATTER OF
THE APPLICATIONS OF
OTTO BREMER COMPANY
ORDER EXTENDING TIME ITHIN VHICH AP2LICANT
MAY SUBMIT TO HEARING EXAMINER PROPOSED FINDINGS
AND CONCLUSIONS, AND SUPPORTINO BRIEF
Additional time having been requested by the Applicant)
Otto Bremer Company, within which to submit to the Hearing Examiner
proposed findings and conclusions, and supporting brief, and it
appearing to the Board that such request should be granted, it is
hereby ORDERED that the time within which the Applicant may file
such proposed findings and conclusions, and supporting brief, be,
and the same hereby is, extended to and including August 30, 1958.
This 27thday of June 1958.
By order of the Board of Governors.
7
)
)
/
(SEAL)
Wahiilgton, D. C.
/C
V'
/2
S. 4./uarpenter,
Secretary.
191)".:1
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
8
6/27/58
WAS
OFFICE OF THE CHAIRMAN
June 27, 1958
The Honorable Timothy P. Sheehan,
House of Representatives,
Washington 25, D. C.
Dear Mr. Sheehan:
Your letter of June 17 to Governor Szymczak requesting the
names and locations of companies that would be affected by a definition
of bank holding companies based upon 25 per cent control of the stock
of one or more banks has been considered by the Board.
As stated in Governor Szymczak's letter to you of June 9, a
tabulation of 163 companies that would fall within such a one-bank definition of a bank holding company was furnished to the Senate Banking and
Currency Comnittee in 1955 in connection with hearings on bank holding
company legislation. As recognized in your letter, that tabulation was
little more than a rough estimate, since complete information as to ownership of bank stocks by corporations was not readily available. Because
Of changed circumstances since 1955, it is certain that some of the
comPanies involved would not now be bank holding companies even if the law
were amended to cover one-bank situations; and, on the other hand, it is
quite likely that there would be a number of companies not included in
the 1955 list that would now fall within such an amended definitio
n.
For these reasons, the Board believes that it would be misleading and
Perhaps unfair to disclose at this time the names of the companies that
formed the basis for the 1955 tabulation.
I am sure that you will appreciate the awkward problems that
might be created by the release of information, based partly upon confidential sources, which would be clearly inaccurate and incomplete at the
Present time. If, however, need for current information on this subject
Should develop in the future in connection with Congressional consideration of amendment of present law to cover ono-bank situations, as recommended in the Board's Report to Congress of May 7, 1958, the Board will
undertake at that time to prepare for Congress an up-to-date tabulation
With respect to known companies that would be covered by such a definitio
n.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
WM. McC. Martin, Jr.
191.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
Item No.
9
6/27/58
OFFICE OF THE CHAIRMAN
June 271 1958
The Honorable William L. Dawson, Chairman,
Committee on Government Operations,
House of Representatives,
Washington, :D. C.
Dear Mr. Dawson:
This letter is in response to yours of June 7 in which
you ask for comment on H. R. 12785, a bill "To amend the Employment Act of 1946 to provide for the inclusion of recommendations
concerning monetary policies in the President's program, and to
bring to bear an informed public opinion upon proposed inflationary price increases."
Earlier this year the Board was asked to report on
S. 2824, a bill "To amend the Employment Act of 1946 to make the
stabilization of the cost of living one of the explicit and primary aims of Federal economic policy." The Board took the position that, while the goal of price stability is now implicit in
the Employment Act, it would favor an amendment which would make
it explicit that national economic policy is concerned with preserving the purchasing power of the dollar. The Board still favors
this broader approach to the problem of general price stability.
We doubt the desirability and workability of an approach based
on Presidential requests for voluntary restraint of price and
wage increases.
The Board is, of course, especially concerned with
those aspects of H. R. 12785 that relate to monetary and credit
Policies. The proposed bill would require the inclusion of monetary
and credit policies in (1) the President's review of the economic
Program, and (2) in the program recommended by him for carrying
out the policy declared by the Employment Act (which the Board of
Governors interprets to mean that the President would be required
to make specific recommendations as to the monetary and credit policies that should be followed as part of the recommended program).
The Board recognizes the meritorious intent of a requirement that the President set forth a review of monetary and credit
matters and an appraisal of their contribution to the attainment er
the objectives of the Act. It questions, however,the need for such
BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
The Honorable William L. Dawson
-2
an amendment to the law since every Economic Report submitted to date
has included a discussion not only of past monetary and credit developments, but also of actions taken by the monetary authorities.
It is the view of the Board that a further requirement that
the President shall include in his reports specific recommendations
as to the monetary and credit policies to be followed in the future
would be undesirable. Some instruments of national economic policy,
such as fiscal policy, housing policy, and agricultural policy, are
by their nature adaptable only slowly over a period of time to changing economic conditions. They lend themselves much more readily to
longer-term recommendations. Monetary and credit policy, on the
other hand, is the most flexible of the instruments of national
economic policy, and it would lose this highly important advantage
if it were tied into a program of longer-term recommendations.
Decisions in the area of monetary and credit policy are
the responsibility of the Board of Governors of the Federal Reserve
System, entrusted to it pursuant to the Constitutional powers of
Congress in this field. A mandate to the Executive in other legislation to make recommendations in the field of monetary and credit
policy would conflict with the statutory relationship of the Federal
Reserve System to the Congress and the independent performance of the
duties that are entrusted to its administration.
Moreover, the System is enjoined by the Federal Reserve
Act to keep the use of bank credit for speculation in securities,
real estate, and commodities under close and constant surveillance.
Any procedu.ee for advance recommendations with regard to monetar
y
and credit policy, such as proposed in this bill, would run the
danger of stmulating speculative tendencies in the use of bank
credit, with unstabilizing effects converging at times on the Government securities market. The risk of speculative repercussions would
be high whether the Presidential recommendation were interpreted
by
the securities, real estate, or commodity markets to be inflati
onary
or deflationary in potential effects.
In the field of monetary and credit policy, the present
Process of decision-making in the Federal Reserve System rests upon
a constant flow of factual information with respect
to the shifting
forces which affect the trend and levels of production, employment,
credit, money and prices. Decisions are made on the basis of continuous objective judgments about the strength and balance of the
forces of demand and supply in the market with a high degree of responsiveness to changes in the economic situation. There is the fullest possible disclosure by the System of the information
on which its
decisions are based.
EICIARD
Dr GOVERNOR'
OF THE FEDERAL RESERVE SYSTEM
The Honorable William L. Dawson
-3-
For example, as a means of keeping the Executive establishment, the Congress, and the public informed about current monetary
developments, the System publishes weekly a most complete financial
statement, as well as a compilation of loans, investments, and deposits of banks in leading cities, and each month it issues to the
press a national summary of business conditions. The Federal Reserve
Bulletin and Chart Book, which are published monthly and are available to each member of Congress, regularly include articles and detailed additional statistical information about the System's operations and about economic trends. The Board's Annual Report, submitted
to the Congress in the spring of each year, includes a comprehensive
review of its operations and actions during the preceding year as
well as a full policy record which discloses the reasons at the time
for the policy actions that were taken.
In summary, the Board believes that the proposed change
In procedure for monetary and credit policy formation could only
serve to reduce the effectiveness of such policy as an instrument
for furthering the objectives of the Employment Act. The Board,
therefore, would not favor enactment of H. R. 12785.
Sincerely yours,
(Signed) Wm. MCC. Martin, Jr.
WM. McC. Martin, Jr.
19
'1922
BOARD OF GOVERNORS
Or THE
FEDERAL RESERVE SYSTEM
iffice Correspondence
oard of Governors
Item No. 10
6/27/58
Date June 23, 1958
Subject: ConsultaDt _Appointment
‘
11.---Ea1ph A. Young
solims
Mr. GertrndA WrittiRR
Mrs. Gertrude Weiss, formerly Chief, Household Economics
Research Branch, Department of Agriculture, was reappointed as a
Consultant effective as of January 11 1956 and until December 311
1958 for continuance of her work in connection with evaluation of
the Consumer Finances Surveys. Compensation was fixed at the rate
of $50 per day for each day worked for the Board here in Washington
or outside the city. (See memorandum from Ralph A. Young to Board
of Governors, subject "Reappointment of Mrs. Gertrude Weiss as a
Consultant, dated January 261 1958.)
In the memorandum referred to above, it was stated that we
expected Mrs. Weiss would work about 72 consultant days from date of
memorandum and until about May 3, 1956. Mrs. Weiss has actually
worked about 65 days to date and has about finished the original
assignments.
It is recommended that Mrs. Weiss' services be utilized
under terms of the consultant appointment referred to above and for
further work related to evaluation of the Consumer Finances Surveys,
and including appraisal of possible interim consumer surveys as well
as work related to preparation of a statistical "base book" concerning consumer surveys. It is expected that Mrs. Weiss might work
approximately 80 consultant days between June 12 and December 311 1958.
Charges for Mrs. Weiss' work woad be made against the
Special Project Budget -- Evaluation of Consumer Finances Survey.
This would result in an overexpenditure of the funds provided for
consultant fees and expenses under the budget concerned but an
expected underexpenditure of the funds provided for Survey Field
Studies under the same budget should offset the overage.
In view of the contributions to the Board's work made by
Hrs. Weiss since her original appointment as a Consultant in October
1957 we plan to propose, by means of an appropriate memorandum later
this year, the continuance of Mrs. Weiss' consultant appointment
through 1959.
'"6=
_922,
BOARD OF GOVERNORS
OF THE
Item No. 11
6/27/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADORE:SS OrrICIAL CORRESPONDENCE
TO THE BOARD
June 27, 1958
Mr. 13, F. Groot, Vice President,
Federal Reserve aank of Boston,
Boston 6, Massachusetts.
Dear Yr. Groot:
In accordance with the request contained in
your letter of June 24, 195('), the Board approves the
designation of Richard Charles Keith as the Special
Assistant Examiner for the Federal Reserve Bank of
r.osbon for the purpose of participating in the examination of State member banks only.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
@FedFRASER