The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
921 A meeting of the Board of Governors of the Federal Reserve %%tem . with the executive committee of the Federal Advisory Council was held, 421 the offices of the Board of Governors in Washington on Wednesday, 114 7 1944, at 12:00 noon. PRESENT: Mr. Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Smead, Director of the Division of Bank Operations Mr. Dreibelbis, General Attorney Mr. Leonard, Director of the Division of Personnel Administration Mr. Wyatt, General Counsel Mr. Pollard, Assistant Director of the Division of Examinations Messrs. Edward E. Brown, Charles E. Spencer, Jr., John C. Traphagen, William F. Kurtz, and Robert V. Fleming, members of the executive committee of the Federal Advisory Council. Mr. Walter Lichtenstein, Secretary of the Federal Advisory Council \tete Mr k4 riot c Pre pr°wn stated that inasmuch as Messrs. Ransom and Szymczak sent at the meeting of the Federal Advisory Council with the ' t y. , i.d, 1944, he wanted to reiterate the position taken by the N14. ell at that time with respect 4 . to its being furnished information contt k,. legis .. -qql iti_ latdlon proposed by the Board. It was felt, he said, that qki4 reltlation could be given to the members of the Council in confirici that they were entitled to it under the provisions of the 922 6/7/44 Psderel Reserve Act. he also said that the members of the Council felt itell strongly about the matter, that they could not let it rest without determination, that the Gouncil could not function satisfactorily unless hhadthe ellsa the information, and that it was hoped that the Board would dis— matter and meet the views of the Council regarding it. r. Ransom stated that he had read the minutes of the meeting of the Board vvith the on May 15 and that his personal feeling about Council the tatter referred to by Mr. Brown was that, for the reasons stated at that meeting it would be a definite advantage to the Board to obtain the 4chrlee and the be opinions of the members of the uouncil on legislation which Board was sponsoring. He said that the position of the Council would considered at a meeting of the Board of Governors when all of the mem, ters Were present and a decision reached, and that he would be bound by th4t decision. He felt that the statutory right of the Council was not 11111.°1Ved bu't that the question was the much more important one of the 4341 and the Council understanding each other and working together in a c:16111(111 coals e. He did not doubt that the Council, which was created by (/11gress for definite purposes, would treat as confidential any matters Nt nature which the Board might wish to put before it. 16 'Brown then referred to the amendment to section 13b of the Rap erv"t Act which had recently been introduced in Congress at the clIteq 4,44e °I 'the Board and stated that some of the Federal Reserve Banks had %le Ilegeleti°n8 as to changes in the bill, one Federal Reserve Bank having ktt41eted , 11 it 8 representative on the Federal Advisory Council to bring the P at this meeting. 923 6/7/44 _3Mr. Draper explained that the Federal Reserve Banks had been asked ela gestions before the bill was introduced, that suqgestions were % 11 1Lch ohairnwm eri reof not incorporated in the bill, and that Mr. Sproul, who was the Presidents' Conference, had been informed by letter that itvm -s not anticipated that the bill would be given active considerati°4 at arrir +4 to cii3c11''-ole in the near future, so that there would be an opportunity 88 the auggestions at the next Presidents' Conference. the? k 4r. Kurtz stated that there had been a discussion of the bill at eral Rese,v e Bank of Philadelphia last week and that President Williams 41. the position that the bill should be amended to provide (1) that lt139nli -1110n, which would be made available by the bill, be turned over to he thepe ederal Reserve Banks instead of the Board of Governors and (2) that dere, *L "serve Banks be authorized to guarantee loans up to 100 per 4. 4d t !rake direct loans. too Nd 4 the discussion which ensued, the menbers of the executive committhe c °Ilneil indicated that they would be opposed to authorizing the 488erve Banks to make direct loans. 4r. riv, oab ' 131"in stated that following the meeting of the Council with the dolluaz 15 the Council voted to support the Board's position on the Itthe 18 48 -fltroduced, and that 14,Nta °ard to amend the bill in th e if there were any disposition on the part response to the suggestions of the Presi- Reserve Banks the Council would like to be informed. 41's Ransom stated that he understood that the questions raised by 14811te had been considered before the bill was introduced, that it 924 —4— had been decided that, they should not be incorporated in the b111, and that 11'. did riot 'glow of any thi8 inclination on the part of the members of the Board time to favor any chances in the bill. On the question whether the Board or the Reserve Banks should re— q've the $1:39 which would be made available by the bill, Mr. Fiero— ested that, it would be better for the Board tn continue as a polio.ir— ``Ikit'i body rather than as an operatinF body. Mr. Kurtz expressed the oppo— stt °Pinion, and sug7ested that the Reserve Banks would adont a more liberal 11°113r if th.e whole fund were available to insure losses than if the fund divided among the Banks and each Bank had to pay its own losses. tfr. acKe e inquired (1) whether the attitude of the Council with re— 4ect to the a mendment to section 131) would be the same if there were no 4gialati n Pending, and (2) how it would be possible to get the Government °t busi e " if its powers continued to be enlarged by legislation of The resoonse was that it was expected, as had been stated pre— 11°1Y, that if the amendment were enacted the Federal Reserve Banks cenld frorn the field when the need was past, but that that would not be aal tNe, —ncy ttel that organieed to provide for the specifie need. Mr. Brown the Council favored the amendment as the best available solution situation in which it was apparent that some legislation for of zalc-121:7 credit available to small business would be enacted. 34r. 8 n then stated thet Mr. Ransom had asked that the members of committee submit any suggestions that tey ml irht hnve with re— to the or the international monetary fund and the international 925 6/7/44 _.5 balat for reconstruction and development. He added that he was in the posict haying accepted appointment as a member of the American delegation te the international conference which had been called to consider these plans 11c13 therefore, wa.s unable to express strong views, but that the views exN8sed during the meetinmight be helpful to him. Mr• Ransorn stated that the decisions reached with respect to the 1°41'8'17 fund and the investment bank were matters of great importance and ttiterest to the System. He referred to the meeting which was held yesterday with rtiernbers of the Board and representatives of the Federal Reserve Banks, asMr. Brown who had been invited in his capacity as President of the eclkleil, and said that, if the members of the executive committee would 114te% later to exoress any that they might have on the matter, that views be satisfactoryto the Board. provided it were borne in mind that any 84°48 made should be submitted before the end of the month as the matM:4tht crYste1ljze very tiltett rapidly in the period before the convening of the 4ticnal c onference on July 1thi 11 the ensuing discussion, it was understood that if the members of tokl ettive Coftimittee had any views to express they would be sent to the bet°t'e the end of June. koelelletererice was made to Mr. Brown's selection asa member of the Ameri- 'ti°11 to the international conference, and he stated that he under°4 th ' he was appointed as a representative of the commercial banks and, N3 Wa8 t'q not bound to express either the views of the Board or the Fed- eauncil. Mr. Szymczak suggested that Mr. Brown could not divorce 926 6/744 -6- ht from his position as President of th Council, that with him and IlailThan. Eccles as members of the dele-ation their actions would commit the SYste7,1 certain .extent, and that he System might not be free to 70 beto p Congres8 and oppose any action for which they had voted. Mr. McKee, h°'':etr.r, Was of the on that in the absence of further developments, if th opinWe asked by Congress for P reoort on the pronosed legislation 14 c''prirlecti on with the monetary fund or the international hank. it wonid be tee tc) eY :nrPsF; an ()ninon. lAr• Ransom said that personally he would re7ard himself as being esPPeti from • raising any essential objection before a Con7ressional committee With re.spect to a plan for which Messrs. Eccles and Brown had voted as memthe A merican delegation because it would be in the interest of the have expressed its views befor thet reason he the situation reached that stage. felt it was most essential that before the plan became 14htqa.ized to that extent the views of the members of th Board and the ,11°111d be made available. %^. Brown eYpressed the thought that if an individual were opposed to /1 it woilld be difficult to work for changes in the plan without ultif;etti ng in the position of favoring the final outcome, and that for 0 easo there were individuals who felt that the plan could be defeated and Were not to have any part in the current discussions. }Ar. 8zymezak stated that the Federal Reserve System was very much inin the tt) Whole matter and should either keep in touch with it all alaag ' .11c1 try to , et its suggestions accepted while the plan was being cj 3 or out of the discussions and be prepared to make sug7estions 9,27 6/7/44 -7Ilherlerlabling legislation was before Congress. He did not feel, howelp.r, that t4theeurastances the latter course would be a feasible one. At the conclusion of the discussion of the plans for the international kori et'arY tiven F1emin7 stated that Mr. Leonard of the Board's staff had ma c°RY of the letter received under date of June 6, 1944) from the Chair f the War Manpoer Commission in which it was stated that the onkicia: elr of comnercial and savings banks had been added to the list of trades ices that might be granted locally needed designations by the reff.kral 4144N directors without further action by the War Manpower Commission. There was a discussion of how the action of the Commission should be 41'11t to the attention of banks throughout the country and whether the let"1.1e. Chairman of the Commission should be published in the next issue 'NPederal Reserve Bulletin. It was stated that the next issue of the not come out until July and that a more expeditious method of Nbitcat* 1° woUld be desirable. Mr. Fleming stated that undoubtedly the Arneriq144n Of Association would undertake to notify its members, and at the conthe d iscussion the method of publication was left to be worked out piendrie 4r, prown lt and Leonard. stated that in the absence of objection hr the Board the ex- th thec°111rrattee Would suggest that its July and August meetin s be cancelled, 7t4 0 Ilhderstanding that the committee or the Council would meet upon call °141cil °r the Board of Governors. t%cl to this arrangement. There was no objection on the nart 928 -8- Thereupon the meetinc. adjourned. - ini412.1Y‘A,‘ ice Cha3rman.
@FedFRASER