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978 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Friday, June 28, 1946, at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak Draper Evans Mr. Carpenter, Secretary Mr. Hammond, Assistant Secretary Mr. Morrill, Special Adviser Mr. Thurston, Assistant to the Chairman Mr. Paulger, Director of the Division of Examinations Mr. Vest, General Counsel Mr. Thomas, Director of the Division of Research and Statistics Mr. Leonard, Director of the Division of Personnel Administration Mr. Bethea, Director of the Division of Administrative Services As stated in the minutes of the meeting of the Board of Gover4°1's of the Federal Reserve System held on June 27, 1946, Mr. Vardaman Was absent on official business. Chairman Eccles stated that Mr. Ransom probably would be away Washington during the month of July and that he planned to be absent for most of the next two weeks. In these circumstances, he suggested that the Board elect a member to act as Chairman pro tern whenthe Chairman was absent during that time. Accordingly, Mr. Szymczak was elected to serve as Chairman pro tern in the absence of the Chairman during the two weeks' period. There were then presented telegrams to Messrs. Treiber and kair, Secretaries of the Federal Reserve Banks of New York and 979 6/28/46 -2- Cleveland, Mr. Leach, President of the Federal Reserve Bank of Richmond, 11r. Dillard, Vice President of the Federal Reserve Bank of Chicago, Mr. Stewart, Secretary of the Federal Reserve Bank of St. Louis, Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, Mr. Woolley, Vice President and Cashier of the Federal Reserve Bank of Kansas City, Mr. Gilbert, President of the Federal Reserve Bank of Dallas, and Mr. Mange's, Vice President of the Federal Reserve Bank of San Francisco, stating that the Board approves the establishment without change by the Federal Reserve Banks of St. Louis and Kansas City on June 22, by the Federal Reserve Bank of San Francisco on June 25, and by the Federal 4serve Banks of New York, Cleveland, Richmond, Chicago, St. Louis, eapolis, and Dallas, on June 27, 1946, of the rates of discount and Pu rchase in their existing schedules. Approved unanimously. There was a discussion of the material to be included in the statement being prepared for submission to the National Labor Relations 13°ard in support of the position that the National Labor Relations Act Was not applicable to the Federal Reserve Banks, and Mr. Vest raised the question whether the matter should be taken up with the Treasury th the thought that the Secretary or Under Secretary of the Treasury W°111d want to express to the Labor Relations Board the views of that clePartment as to the importance of the fiscal agency operations concilleted by the Federal Reserve Banks and to concur in the position of the Board of Governors that the Federal Reserve Banks were not subject 980 —3— 6/28/46 to the National Labor Relations Act. This question was discussed, and it was agreed unanimously that a draft of statement on the matter should be prepared for informal submission to Secretary Snyder with a copy to Mr. Bartelt, Fiscal Assistant Secretary, and that Chairman Eccles would call Mr. Snyder on the telephone this afternoon and tell him that the statement would be sent over early next week and that he (Chairman Eccles) or in his absence Mr. Szymczak would like to discuss the matter with the Secretary as early as possible. In connection with the above matter, Chairman Eccles stated that, in accordance with the action taken at the meeting of the Board °4 June 25, 1946, he conferred on June 26 with Mr. Hutchings, International President of the Office Employes International Union, with l'espect to the efforts of the union to be designated as the bargaining agent for the employees of the Federal Reserve Bank of Dallas and had 8tated that, for the reasons which would be included in the statement to be submitted to the National Labor Relations Board, the Board of Governors was of the opinion that the National Labor Relations Act did lic3t apply to the Federal Reserve Banks. He also said that because of the meeting of the Board of Governors with the executive committee of the Federal Advisory Council there was not sufficient time to complete the conference and that he was to see Mr. Hutchings again. Before this meeting each member of the Board present was fur- a copy of a memorandum dated June 26, 1946, from the Personnel C°18naittee with respect to the action to be taken to increase salaries 981 6/28/46 of -4 - employees of the Board in conformity with the Federal Employees' Pay Act of 1946 which was to become effective on July 1, 1946. The Board's counsel had held in the past that in view of Section 10 of the Federal Reserve Act the provisions of such pay acts were not believed to be legally applicable to the Board, but as a matter of policy it had been the practice of the Board to follow them closely. The memorandum l'eeommended that salaries of the Board's employees be increased in con— formity with the provisions of the Pay Act by 14 per cent or $250 in each case, whichever was the greater, except that no salary would be itcreased above the rate of $10,000 per annum or above the maximum of the applicable salary scale as increased to conform to the Pay Act. If this recommendation were approved the 21 employees in the following er°uPs would not receive any increase or would receive an increase of lees than 14 per cent: (1) Employees whose present salaries were in excess of the new maximum salaries for their positions and who would receive no increase: Present Salary New Maximum for Grade $5,810 $4,902.00 Clerk—Stenographer-Legal 3,640 3,397.20 Secretary--R & S 3,640 3,397.20 F.R. Examiner--Exams. 8,225 6,862.80* Clerk—Stenographer-Legal 3,420 3,397.20 Title and Division C. S. DYer, Sara A. Ilicks, L. C. 11°e11, J. C. Stone, A. H. Asst. F.R. Examiner-Exams. * If the position were classified. 982 6/28/46 5(2) Assistant Federal Reserve Examiners obtained for temporary oeriods from Federal Reserve Banks who would receive no increase: Name Present Salary Title Robinson, D. C. Asst. F.R. Examiner$4,190 Schumacher, V. P. Asst. F.R. Examiner 5,000* New Maximum for Grade $4,525.80 3,773.40 * The Federal Reserve Bank of Chicago reimburses the Board for $2,000 of this salary. (3) Name ---..... Employees who would receive increases in the amount shown below (to the new maximums of their positions) but less than 14 per cent of their present salaries: Increase to new max. Present New max. Amount % of presTitle and ent salary Salary for grade Division Paber, Philip D. Laborer—Adm. Services $1,800 42,020.00 4220.00 12.2 Gardner, William Chauffeur—Adm. 1,920 Services 2,168.28 248.28 12.9 11°I'leY, Michael Laborer—Adm. Services 1,800 2,020.00 220.00 12.2 Cook--Adm. Services 1,920 2,168.28 248.28 12.9 M. Under Clerk-Bank Ops. 1,920 2,168.28 248.28 12.9 Jesse D. Messenger--R & S 1,920 2,168.28 248.28 12.9 Messenger-R &S 2,020 2,168.28 148.28 7.3 F.R. Examiner-5,390 Exams. 5,905.20 515.20 9.5 Asst. to Di-rector--R & S 5,905.20 515.20 9.5 Emma Skitm Carl Carter A. Beverly George E. Le ,e4, Marie tutler 5,390 983 6/28/46 -6- Title and Division Name Moore, A. A. Reeves D. Dorothy Supr.,Settlement & Currency Section--Bank Ops.$4,300 Iilek, J. J. 4,525.80 $225.80 5.2 Sec. to Mr.Young 3,310 3,397.20 87.20 2.6 3,090 3,397.20 307.20 9.9 Opr.,Duplicating Devices--Adm. 1,960 Services 2,168.28 208.28 10.6 Supply Clerk-Adm. Services 2,394.00 228.00 10.5 S tewart, Phyllis Sec. to Mr. E. Nelson--Adm, Services T ruehart, Lynwood Increase to new max. Present New max. Amount % of present salary Salary for grade 2,166 The recommendation of the Personnel Committee also contemplated: 1. That the increases will apply to: (a) The salary as of June 30, 1946, plus any individual increase approved prior to July 1, 1946, to become effective as of that date; and (b) The salary of any employee whose appointment was approved prior to July 1, 1946, but which does not become effective before that date. 2. That in conformity with the Pay Act specifically increasing the rates of employees in Civil Service grades CPC-9 and 10, the salaries of the Board's two mechanics coming within the comparable grade, Messrs. Lindamood and Glotfelty, shall be increased U220 each, i.e., to $3,530 and $3,420, respectively, and that the 14 per cent increase shall apply to the salaries as so adjusted. 3. That the salary of the substitute maid, Amy French, be increased from $5.55 to $6.50 per day. 4. That recommendation will be submitted later with respect to the salary of the substitute nurse in view of questions currently under consideration with respect to the classification of nurses. 984 6/28/46 5. That in the case of one charwoman, Mrs. Boyd, who at her request is working a 7-hour day instead of an 8-hour day, her salary will continue to be computed on the present basis of 7/8 of the full time salary, which basic salary would now be increased to conform with the Pay Act. 6. That the increases shall not be considered as applying to the fees paid to the three consultants, Drs. Goldenweiser, Hansen, and Haberler. The memorandum contained the further statement that the Personnel Committee intended to give further consideration as a personnel matter to the cases of the five employees who would be receiving salaries in exCess of the new maximums for their respective grades. The recommendation of the Personnel Committee was approved unanimously. At this point Messrs. Wilkes and Sloan, Federal Reserve Exam- iners, entered the room and Mr. Bethea withdrew. Mr. Paulger stated that sometime ago applications were received fl'om the Seattle Trust & Savings Bank, Seattle, Washington, for permissic3n to establish branches at Burien City and between 180th and 185th Streets on Aurora Avenue outside the city limits of Seattle, Washington, and that President Clerk of the Federal Reserve Bank of San Francisco, Who Was concerned about the increase in the number of banking offices gt national banks in relation to State banks in the district, had suggested that the Federal bank supervisory agencies in Washington issue instructions to their respective representatives in the Twelfth Federal Reserve District on the policy to be followed in the future with respect 985 6/28/46 -8-- to the chartering of new banks and the opening of additional branches. Mr. Paulger said that he had discussed the matter with Mr. Sailor, Chief of the Division of Examinations of the Federal Deposit Insurance Corporation, and Mr. Folger, Chief National Bank Examiner for the Office of the Comptroller of the Currency, who agreed that the representatives of the three supervisory agencies should confer with each Other and the State Bank Supervisor in the case of each new application and should then send their recommendations to Washington, but that this Procedure had not been satisfactory to Mr. Clerk, and that apparently What he desired was a directive from the three Federal agencies to their respective representatives in the District to confer in each instance and determine whether the new banking office should be a new tational bank, a new State bank, or a branch of a national bank or State bank, as the case might be. Mr. Paulger went on to say that the Office of the Comptroller °f the Currency and the Federal Deposit Insurance Corporation were not to issue such instructions and that it was not believed that 811°11 an arrangement would be satisfactory. He added that, although there had been a long exchange of correspondence with Mr. Clerk about the matter, Mr. Clerk had insisted on some such arrangement being made. P°11awing receipt from Mr. Clerk, Mr. Paulger said, of a letter dated j/ine 21, 1946, with further reference to the two branches of the 986 6/28/46 -9- Seattle Trust & Savings Bank, he took the matter up with Messrs. Sailor and Polger again and wired Mr. Clerk stating that the two offices saw no objection to the establishment of the two branches and asking for his recommendation, and that Mr. Clerk had replied by wire as follows: "Are we to assume that the three Federal agencies have agreed upon a procedure wherein future applications for branches of national bank, of State member bank, or of nonmember insured bank, or applications for charters for new national banks andewlications for insurance for new State banks will be subject in each instance to joint consideration of the three Federal agencies and bank commissioner of the State affected and that Comptroller and Federal Deposit Insurance Corporation have so advised field representative and instructed them to cooperate?" Mr. Paulger made the further statement that the matter had been discussed with Mr. Vardaman before he left the city and that he favored aPProving the applications of the Seattle Trust & Savings Bank for the establishment of the two new branches in accordance with our usual elastom in handling such matters. The members of the Board were in agreement that the arrangement Proposed by Mr. Clerk was not a satisfactory one, that it would not be Possible for the three Federal bank supervisory agencies in Washington to adopt a policy such as Mr. Clerk had suggested, and that each 11313lication should be considered as it was received on the basis of the facts involved and considered in the light of the recommendations of the State Bank Supervisor and the local representatives of the three 987 6/28/46 -10- Federal agencies. At the conclusion of the discussion, the following letter to the Federal Reserve Bank of San Francisco with respect to the establishment by the Seattle Trust & Savings Bank of the two branches was approved unanimously and Mr. Vardaman was to be requested, upon his return from New York, to talk to Mr. Clerk over the telephone for the purpose of working out the matter of procedure on the basis of the views expressed by the Board at this meeting: "Reference is made to your letter of April 13, 1946, and subsequent correspondence regarding the request of the Seattle Trust and Savings Bank, Seattle, Washington, for approval of the establishment of branches at Burien City, Washington, and between 180th and 185th Streets on Aurora Avenue, outside the City limits of Seattle. "While no recommendation has been submitted by the Reserve Bank the Board of Governors has noted the condition and management of the applying bank, the approval of the State Superintendent of Banks and the favorable recommendation of the examiner for the Reserve Bank who investigated the matter. It is also advised that the Comptroller of the Currency and the Federal Deposit Insurance Corporation will interpose no objection to the establishment of the branches as proposed. In the circumstances, the Board approves the establishment and Operation of branches in Burien City, Washington, and between 180th and 185th Streets on Aurora Avenue, outside the City of Seattle, by the Seattle Trust and Savings Bank, Seattle, Washington, with the understanding that Counsel for the Reserve Bank will review and satisfy himself as to the legality of all steps taken to establish the branches." In accordance with the action taken at the meeting of the Board °4 May 7, 1946, additional information had been obtained in connection with the application of the Bank of America National Trust & Savings Association of San Francisco to establish branches at Manila, Philippine Islands, and Shanghai, China, as follows: 988 6/28/46 -11- "(1) A letter dated June 5 had been received from High Commissioner McNutt which contained a comprehensive review of the banking needs of the Philippines and a recommendation for approval of the application to establish a branch at Manila. "(2) While the State Department had not formally replied to the Board's letter asking for an expression of its views, a draft of a proposed reply has been cleared informally by representatives of the Department which would state that the establishment of direct banking relations between the West Coast and China and the Philippines would appear likely to further the commerce of the United States and that the Department perceived no objection to the approval of the applications. "(3) Examiner Goodman's memorandum of May 13 expressed the view that the establishment of the proposed Manila branch should be helpful to the Philippines and the commerce of the United States. "(4) The Federal Reserve Bank of San Francisco had transmitted with a letter dated May 18 additional data of a satisfactory nature from Bank of America in support of its applications to establish the two branches. "(5) Chairman Martin and Vice Chairman Gaston of the Export-Import Bank had expressed the opinion informally that the opening of the branches should receive positive encouramient." Mr. Paulger also reported that he had telephoned Deputy Comptroller of the Currency Upham informing him that the Board had asked for and obtained the information referred to above relating to the establishment of the proposed branches, and that Mr. Upham voiced no O bjection to a favorable consideration of the applications and stated that he would inform the Comptroller of the Currency of the substance (311 the conversation. Chairman Eccles stated that this matter had been discussed by 989 6/28/46 -12- same of the members of the Board at luncheon on June 26 at which time Mr. Vardaman stated that, on the basis of the additional information that had been obtained, if the other members of the Board favored approval of the applications he would join in such approval. The applications were discussed in the light of the experience of other American banks with foreign branches, after which, upon motion by Mr. Szymczak, the following orders were adopted by unanimous vote, with the understanding that they would be sent to the Federal Reserve Bank of San Francisco for delivery to Bank of America National Trust & Savings Association, and that the Comptroller of the Currency would be advised by letter of the Board's action: "ORDER June 28, 1946 "IiiiREREAS Bank of America National Trust and Savings Association, San Francisco, California, has made application to the Board of Governors of the Federal Reserve System, pursuant to the provisions of section 25 of the Federal Reserve Act, for permission to establish a branch at Manila, Commonwealth of the Philippines; and "WHEREAS it appears that the said bank may properly be authorized to establish a branch at Manila, Commonwealth of the Philippines; "NOW, THEREFORE, IT IS ORDERED that Bank of America National Trust and Savings Association, San Francisco, California, be and it hereby is authorized to establish a branch at Manila, Commonwealth of the Philippines, upon the condition that unless the branch hereby authorized is actually established and opened for business on or before July 1, 1947, and the Board of Governors of the Federal Reserve System advised in writing that the branch has been so established and opened for business, all rights hereby granted as to such branch shall be deemed to have been abandoned and the authority hereby granted as to it shall automatically terminate; but, if the branch shall have been established and opened for business on or before said date and the Board of Governors of the Federal Reserve System shall have been so advised in writing, the said bank may operate and maintain the same subject to the provisions of section 25 of the Federal Reserve Act." 990 6/28/46 -13"ORDER June 28, 1946 "WHEREAS Bank of America National Trust and Savings Association, San Francisco, California, has made application to the Board of Governors of the Federal Reserve System, pursuant to the provisions of section 25 of the Federal Reserve Act, for permission to establish a branch at Shanghai, China; and "WHEREAS it appears that the said bank may properly be authorized to establish a branch at Shanghai, China; "NOW, THERLF0hE IT IS ORDERED that Bank of America National Trust and Savings Association, San Francisco, California, be and it hereby is authorized to establish a branch at Shanghai, China, upon the condition that unless the branch hereby authorized is actually established and opened for business on or before July 1, 1947, and the Board of Governors of the Federal Reserve System advised in writing that the branch has been so established and opened for business, all rights hereby granted as to such branch shall be deemed to have been abandoned and the authority hereby granted as to it shall automatically terminate; but, if the branch shall have been established and opened for business on or before said date and the Board of Governors of the Federal Reserve System shall have been so advised in vxiting, the said bank may Operate and maintain the same subject to the provisions of section 25 of the Federal Reserve Act." Messrs. Paulger, Leonard, Wilkes, and Sloan withdrew from the Meeting at this point. Unanimous approval was then given to the following telegrams to Mr. Knoke, Vice President of the Federal Reserve Bank of New York: "In compliance with the request in your telegram of June 27 the Board approves the opening and maintenance of an account on your books for and in the name of the Banco de Guatemala subject to the usual terms and conditions upon Which you maintain accounts for foreign central banks. It is understood that you will in due course offer participation in this account to the other Federal Reserve Banks." "In compliance with the request in your telegram of June 27 the Board approves the opening and maintenance of an account on your books for the Bank of Siam subject to the 991 6/28/46 -14- Usual terms and conditions upon which you maintain accounts for foreign central banks. It is understood that you will offer participation in this account to the other Federal Reserve Banks." " Chairman Eccles stated that, in accordance with the understanding at the meetings of the Board on February 1 and June 18, 1946, he told Mr. Leland, when he was in Washington on the latter date, of the views of the Board with respect to his continuing as Chairman and Federal Reserve Agent at the Federal Reserve Bank of Chicago and stated that the Board did not plan to redesignate him as Chairman and Federal Reserve Agent after the expiration of his present designation on December 31, 1946. He also said that he advised Mr. Leland that the Board had come to the conclusion that, inasmuch as men in his position in the academic field should have complete freedom to express views which might be in conflict with the views of the System, members of faculties of universities should not be designated as Chairmen and Pederal Reserve Agents at the Federal Reserve Banks, particularly when their specialty was the field of money and banking or fiscal and financial matters, as there was too much opportunity for conflict between their academic activities and their positions at the Federal Reserve Banks. He added that Mr. Leland did not say what he proposed to do or whether he would resign as Class C director and Chairman and Federal Reserve Agent. Chairman Eccles then referred to the action taken at the meeting of the Board on June 18, 1946, in connection with the blanket 992 6/28/46 -15- participation agreement program of the Reconstruction Finance Corporation and stated that he had discussed the matter with Mr. Snyder who said that he was opposed to the Corporation's program, but that it was the least undesirable of the available alternatives, and that it was expected that the activity would shortly be substantially curtailed. Chairman Eccles also mentioned that Mr. Bernstein, Acting Chief of the Research Division of the International Monetary Fund, had called to say that the Fund planned to have about one-third of its staff consist of American citizens, that it was hoped that these individuals could be the very best qualified individuals available, and that the Fund would like to employ Messrs. Gardner and Triffin and Miss Bourneuf from the Board's Division of Research and Statistics and Possibly three others from the staff of the Board and the Federal Reserve Banks. Chairman Eccles said he told Mr. Bernstein why it would be preferable for the Fund to look to the State and Treasury Departments for personnel, as those departments had had large numbers of people engaged in war work that was being terminated, whereas the Board had a small staff which it should retain in view of the important responsibilities of the National Advisory Council of which the Chairman of the 131°ard of Governors was a member. Mr. Thomas said that he and Mr. Knapp, Assistant Director of the Division of Research and Statistics, had been discussing the matter a.nd that it was felt that the Board might feel obligated to let Miss 804rneuf go to the staff of the Fund. He also stated that it was 993 6/28/46 —16— expected that the International Bank for Reconstruction and Development would ask for Mr. Dembitz, Economist in the Board's Division of Re— search and Statistics. Mr. Szymczak said that Mr. Triffin had been offered a position on the staff of the International Monetary Fund in charge of exchange controls and that he would like to accept the offer. There was discussion of the desirability of giving leave of absence to any members of the Board's staff who were employed by the Fund or Bank, and it was the consensus that if any of them left the Boardts staff it should be on a basis of resignation, which would re— lieve the Board of any obligation to take them back later in the event their positions were filled and there was no place on the Board's staff for them. No conclusions were reached. At this point Messrs. Hammond, Vest, and Thomas withdrew from the meeting, and the action with respect to each of the matters herein— after referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the l'ederal Reserve System held on June 27, 1946, were approved unanimously. Memorandum dated June 26, 1946, from Mr. Bethea, Director of the Division of Administrative Services, recommending that the appoint— ment of Mrs. Naomi Robertson, cafeteria helper in that Division, be ex— tended on a temporary basis for a period of two months, without change her present salary of $1,440 per annum, effective July 2, 1946, excePt for such salary increase as may be granted effective July 1 to 994 6/28/46 -17- conform with the 1946 Pay Act. The memorandum also stated that it was not Contemplated that Mrs. Robertson would became a member of the Federal Reserve retirement system during the period of her temporary employment. Approved unanimously. Letter for the signature of Chairman Eccles to Er. Ruml, Chair' Ilan of the Federal Reserve Bank of New York, prepared in accordance with the action taken at the meeting of the Board on June 4, 1946, and reading as follows: "This is to acknowledge your letter of May 16 with further reference to the arrangement under which Dr. Williams has served as a part-time Vice President of the Federal Reserve Bank of New The Board does not accept the conclusion reflected in your letter to the effect that the Board's only legal obligation or authority is confined to Passing upon the amount of salary which the directors of the New York Bank propose to pay to an officer. "Your letter states that the directors of the Federal Reserve Bank of New York feel 'that a serious matter of Principle' is involved in this Board's decision not to continue to approve the payment of salary to Dr. Williams, on the basis of his part-time service as a Vice President. As the Board has made clear in previous correspondence on this subject, this decision is based on a fundamental principle, namely, that in an institution having the public character of the Federal Reserve System, salaried officers of the Federal Reserve Banks should not have a divided allegiance, partly to the Federal Reserve Banks by which they are employed and partly to outside institutions or enterprises. This principle is basic in this matter. The Board believes that what the directors of the New York Bank are asserting is not a question of principle but one of Prerogative. thile the Board does not believe that any useful purpose can be served by undertaking to debate, by letter or otherwise, such a question of prerogative, the Board cannot let this challenge go unanswered as a matter of record. In the Board's opinion, its statutory obligation to approve the compensation of officers and employees of the Federal Reserve Banks is not, and cannot reasonably be construed as being, so narrow as to preclude the Board from taking into 995 6/28/46 -18- "account not merely the amount of salary but the position and the terms and conditions pertaining thereto under which it is Proposed to pay the compensation. Any other construction would render the duty of approving compensation a mere gesture and a meaningless procedure. "To take an extreme case, suppose that the directors and Chief Executive Officer should conclude that 'the best economic advice they can get in the best way they can get it' is to engage on a part-time basis the services of an individual who 18, and intends to continue to be at the same time, a dealer in Government securities or the manager of the bond portfolio of an insurance company or of some other private institution. It would hardly be reasonable to contend that the Board's duty with reference to the compensation to be paid to such an Individual should be abridged to the point of disregarding the manifest impropriety of such a part-time arrangement. If the Board's obligation were to be construed so narrowly, other Provisions of the organic act of the Federal Reserve System would have to be entirely disregarded, particularly the provisions relative to the Board's responsibility for exercising general supervision over the Federal Reserve Banks, for removal, for cause, of officers of Federal Reserve Banks, and for making all rules and regulations necessary to enable the Board effectively to perform its functions. The Board, as the agency of Congress charged with these responsibilities, must exercise its best judgment even though it may disagree with your board of directors. To do otherwise would amount to an abdication of the Board's explicit statutory responsibilities. "It seems to the Board unfortunate, to say the least, that a question of prerogative should be injected into this case, which should be determined on a reasonable basis either by having Dr. Williams employed as a full-time officer of the Bank as the Board has repeatedly suggested or, if that is Impossible, then to have Dr. Williams retained in a consultative capacity on a per diem basis, under which he would not serve as an officer of the Bank but could, of course, be designated as an economic adviser or given some similar designation that would not lead to confusion or misunderstanding as to his relationship with the Bank and the System. "The Board cannot accept the opinion expressed in your letter that any obligation has been created in the case of Dr. Williams which stands in the way of these alternatives. The Board's position has been well known both to you and to the President of the Bank for some time past and the fact that the situation has not been corrected has been due solely to the delay on the part of the Bank in presenting to the Board a satisfactory solution. 996 6/28/46 -19— "The Board has heretofore deferred final action in the hope that the Bank would succeed in working out an arrangement along the lines repeatedly stated during the past five years in communications on this subject. We do not believe that any useful purpose would be served by a further discussion of the question of policy and principle involved in the position which the Board has taken. Approved unanimously. Letter to Mr. Wiltse, Vice President of the Federal Reserve Bank of New York, reading as follows: "Reference is made to your letter of June 26, 1946, submitting the request of the Manufacturers and Traders Trust Company, Buffalo, New York, for permission to establish a branch at Cheektowaga, New York. "In view of your recommendation, the Board of Governors approves the establishment and operation of a branch in Cheektowaga, New York, by the Manufacturers and Traders Trust Company, Buffalo, New York, provided evidence of the formal approval of the appropriate State authorities is submitted and with the understanding that Counsel for the Reserve Bank will review and satisfy himself as to the legality of all steps taken to establish the branch." Approved unanimously. Letter to "Roswell State Bank," Roswell, New Mexico, reading as f ollows: "The Board is glad to learn that you have completed all arrangements for the admission of your bank to membership in the Federal Reserve System and takes pleasure in transmitting herewith a formal certificate of your membership. "It will be appreciated if you will acknowledge receipt of this certificate." Approved unanimously. Telegram to the Presidents of all the Federal Reserve Banks, l'eading as follows: 997 6/28/46 -20- "Proviso added to section 8(a) of RegulationW by Amendment No. 20 does not make inapplicable section 12(b) of the regulation. Consequently, a credit to repair a house and in addition to install a listed article cannot exceed cost of repairs plus amount equal to cost of listed article minus down payment required thereon by the regulation, and instalments in which credit is payable must be sufficiently large to repay balance of cost of listed article within 12 months. Cost of listed article would include installation charges if any." Approved unanimously. Letter to Mr. Gary M. Underhill, Executive Director of the 14)Pris Plan Bankers Association, Washington, D. C., reading as follows: "Replying to your letter of May 23, 1946, which relates to Regulation W and reiterates certain questions raised in Your letter of May 1, 1946 because they were not explicitly answered in our letter of May 22, 1946, we are still of the opinion upon which our reply was based that these questions do not logically arise from the relevant provisions of the regulation. "It has been and still is the view of the Board, as you know, that a blanket exemption of credits to veterans from the Federal consumer credit regulations would not only be against the best interests of the whole country but Particularly against the best interests of the veterans themselves. We fail to see how it is incongruous with this general position for the Board to recognize the essential difference in the situation created by a special act of Congress or a law enacted by a State which provides a guarantee for servicemen's loans within certain limitations and requirements and therefore falls far short of leaving lenders free to make such loans without control. On this basis, the regulation is non-discriminatory because Federal and State government-guaranteed loans receive the same treatment." Approved unanimously. Thereupon the .meeting Secretary.
@FedFRASER