Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, March 10, 1964, Volume 51, Part 3

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Minutes for

To:

Members of the Board

From:

Office of the Secretary

March 10, 1964

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, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.

Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane

dir

6 1

Minutes of the Board of Governors of the Federal Reserve System
on Tuesday, March 10, 1964.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

The Board met in the Board Room at 10:00 a.m.

Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mitchell
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Sherman, Secretary
Kenyon, Assistant Secretary
Bakke, Assistant Secretary
Young, Adviser to the Board and Director,
Division of International Finance
Fauver, Assistant to the Board
Hackley, General Counsel
Brill, Director, Division of Research
and Statistics
Farrell, Director, Division of Bank
Operations
Johnson, Director, Division of Personnel
Administration
Connell, Controller
Schwartz, Director, Division of Data
Processing
Hexter, Assistant General Counsel
Holland, Associate Director, Division of
Research and Statistics
Koch, Associate Director, Division of
Research and Statistics
Partee, Adviser, Division of Research and
Statistics
Leavitt, Assistant Director, Division of
Examinations
Langham, Assistant Director, Division of
Data Processing
Kakalec, Assistant to the Controller,
Office of the Controller

System membership for national banks.
a Memorandum from Mr. Brill, dated March

There had been distributed

9, 1964, to which was appended a

clraft letter to the Secretary of the Treasury calling attention to a
communication from the Comptroller of the Currency to all national banks,

77f;
3/1o/64

-2-

dated February 28, 1964, in which the Comptroller restated his view
that membership in the Federal Reserve System should be voluntary for
national banks, not only because membership is voluntary for State banks
but because the mandatory reserve requirements imposed on member banks
did not serve any useful function in maintaining bank liquidity and were
not necessary for the effective conduct of monetary policy.

The draft

letter to the Secretary of the Treasury, in addition to questioning the
Propriety of the Comptroller's communicating personal views in this manner
On matters that were the primary responsibility of other agencies, contained
an economic discussion of the function of bank reserves and the role of
reserve requirements in the effectuation of monetary policy.
Governor Balderston commented that when the Comptroller's letter
came to his attention he had felt that the Board should rebut the represent4tions contained therein, through whatever channels might be deemed
appropriate, and had asked the staff to prepare an appropriate document
for this purpose.

He observed that the staff draft appeared to be prefer-

4ble to a draft letter he himself had composed and distributed to the
Other members of the Board.
8taff

He expressed the opinion, however, that the

draft would be improved by the addition of a succinct summary

134ragraph, along with certain other modifications that he described.
Governor Balderston went on to say that he had been impressed
Iflth the tone and tenor of an alternative approach suggested by Governor
11°hertson, which might be preferable to that of the staff draft.

3/10/64

_3
Governor Robertson explained that after further consideration he

would now propose confining the letter to the Secretary of the Treasury
to a statement of the Board's feeling that it was inappropriate for the
Comptroller to speak out on this matter without prior consultation with
the Board.

He would, however, also prepare a separate paper, which might

be published in the Federal Reserve Bulletin, containing an economic
analysis of the need for mandatory required reserves as a fulcrum for
central banking operations.

He added, though, that in his view no re-

joinder should be made to the Comptroller's comments on this subject until
the Board was satisfied that its postion was unassailable and properly
stated.
Governor Daane expressed general concurrence with Governor
Robertson's approach.

He added the thought that something should be

done to correct the impression left with the recipients of the Comptroller's letter.
Governor Mitchell stated that he vould be inclined to ignore
the Comptroller's letter of February 28 and make no rebuttal, in view of
President Johnson's letter of March 2 to the Secretary of the Treasury,
and the Secretary's letter of March

3, calling for harmonious relations

between the Federal bank supervisory agencies.

Further, he did not

consider the staff draft letter convincing.
There followed an extended discussion of the relationship of
Illandatory reserve requirements to bank liquidity and the execution of
111°fletary policy, during the course of which various views were expressed.

t 1

3/1o/64

-4Chairman Martin then commented that he would favor adopting

Governor Robertson's approach of a temperate letter to the Secretary of
the Treasury dealing only with the appropriateness of the Comptroller's
letter of February 28, citing this as an example of the type of problem
that might fall within the spirit of President Johnson's letter of
March 2 to the Secretary of the Treasury concerning relations between
the Federal bank supervisory agencies and pointing out that it was
distributed to all national banks without prior consultation with the
Board.

He added that he doubted whether the Board should attempt at

this time to deal with the questions raised by the Comptroller, as they
related to
the question of liquidity.

However, a paper dealing with the

Unction of mandatory reserve requirements as a fulcrum for monetary
should be prepared for the Board's consideration as to possible
Use.

It was thereupon agreed that the staff would undertake to prepare
4 revised draft letter, taking into account the comments made at this

Illeeting, and that a staff study of the reserve question would be made
'
l ith a view to possible publication of an article in some future issue
°r the Federal Reserve Bulletin.
Prospective director vacancies.

There had been distributed a

1°eMcrandum dated March 2, 1964, from Mr. Fauver listing the names of
r°11r Class C directors of Federal Reserve Banks and nine branch directors
Ii

would appear not to be eligible, under the Board's rotation policy,

.

f

3/10/64

-5-

for reappointment after expiration of their present terms of office at
the end of this year.
Mr. Fauver explained that his purpose in submitting the memorandum at this time was to allow the Board more leeway than had been the
case at times in the past to consider the problem of locating successors
to these directors.
After discussion it was agreed, at Chairman Martin's suggestion,
that each Board member would give thought to names of possible candidates
to replace the directors whose terms were expiring and that the matter
vould be brought up for further consideration at a Board meeting early

in June.
Mr. Hexter then withdrew from the meeting.
Reorganization of banking statistics function (Item No. 1).
There had been distributed a memorandum dated March

6, 1964,

prepared

jointly by the Divisions of Bank Operations, Data Processing, and Research
and Statistics, routed via the Office of the Controller and the Division
clf Personnel Administration, wherein a plan for reorganization of the
Board's banking statistics function was presented. (A copy of the memorandum is attached as Item No. 1.) This plan, the preparation of which
had previously been authorized informally by the Board, was intended
(1) to provide more sharply focused economic leadership in the collection
c)f banking statistics; (2) to create a more efficient and flexible organization for the processing of banking statistical series, including all
feasible computer applications; and (3) to develop an enhanced

Oti

3/1o/64

-6-

capacity for data assembly, statistical operations, and presentation,
looking toward the enlarged scope for analysis being created by theoretical and technical advances in the field.

To accomplish this objective,

the plan proposed that the functions and personnel of the Current Series
and Call Report Sections of the Division of Bank Operations be redistributed
among the Division of Data Processing, the Division of Research and
Statistics, and other sections of the Division of Bank Operations.
There ensued a discussion concerning the extent to which electronic
data processing of statistical series might be expected to reduce personnel
requirements, during the course of which it was pointed out that while a
reduction in the clerical force required for series currently being
compiled might be expected, the ultimate impact on personnel requirements
could not be accurately predicted because of the larger opportunities
afforded by use of the computer for the collection of new series.
There was also discussion, initiated by Governor Mitchell, concerning means for effecting better coordination between the Board and
the Reserve Banks in regard to the processing of statistical series in
order to maximize the efficient and economic usage of the System's
electronic equipment.

Governor Robertson observed that staff-level

efforts to achieve such coordination might be aided if the Board were
to discuss this matter with the Reserve Bank Presidents, and Mr. Brill
Indicated that some recommendations might be forthcoming as the result
cf an intensified effort that was to be made by the Research Division to

3/1o/64

-7-

obtain better first-hand knowledge of the research programs at the
respective Reserve Banks.
The reorganization plan for the banking statistics function was
then approved unanimously as submitted, to be effective March 15, 1964.
The meeting then adjourned.
Secretary's Note: Pursuant to recommendations
contained in memoranda from appropriate
individuals concerned, Governor Shepardson
today approved on behalf of the Board the
following actions relating to the Board's
staff:
,
482P22,intments
Rosemary A. Darlington as Summer Research Assistant, Division of
International Finance, with basic annual salary at the rate of $5,795,
effective the date of entrance upon duty.
Olive M. Willard as Cafeteria Helper, Division of Administrative
Services, with basic pay at the rate of $1.80 per hour when actually
eMPloyed, effective the date of entrance upon duty.
increasesL_effective March 15, 1964

174me and title

Division

Basic annual salary
To
From

Board Members' Offices
Athens J. Messick, Secretary
to Mr. Mitchell

$ 8,690

$ 8,970

4,850

5,010

4,215

1+,355

Office of the Secretary
arY L. Scott, Indexing
and Reference Assistant
Legal
ph

.
Yllis Mulcahy, Assistant
Legal File Clerk

-8-

3/1o/64
Salary increases

effective March 15, 1964 (continued)

Dtvision

Name and title

Basic annual salary
To
From

Research and Statistics
Edward R. Fry, Economist

$10,310

$10,640

6,285

6,14-60

8,180

8,410

6,575

6,770

3,305

3,410

4,145

4,250

5,490

5,650

International Finance
Katherine Hichborn,
Secretary
Examinations
Joseph B. Dunn, Assistant
Federal Reserve Examiner
Personnel Administration
Sudelle Rice, Employee
Development Technician
Administrative Services
Joseph c. Stratton, Jr.,
Messenger
Charlie H. Ward, Laborer
Data Processing
Louise Lewis Hiller, Data
Control Clerk
Salary increase

effective March 29, 1964

Charles P. Brown, Operator (Duplicating Devices), Division of
Administrative Services, from $4,638 to s4,888 per annum.

Ct. 1,

Secretary)

ON,

Item No. 1
3/10/64
March 6, 1964.
To;
PROm:

Board of Governors

SUBJECT:

1 Divisions of Bank Operations
,.)
Data Processing
Research and Statistics

THROUGH:

Reorganization of

Banking Statistics Function.

Office of the Controller and the
Division of Personnel Administration

This memorandum sets forth a proposed reorganization of the
lloard'Q

banking

statistics

function, pursuant to an informal understand-

ing reached by the Board authorizing the preparation of such a reorganization plan.
The purposes of the proposed reorganization are:
1.

To provide more sharply focused economic leadership in
the collection of banking statistics;

2.

to create a more efficient and flexible organization
for the processing of banking statistical series,
:including all feasible computer applications; and

3.

to develop an enhanced capacity for data assembly,
statistical operations, and presentation, looking
toward the enlarged scope for analysis that is being
created by theoretical and technical advances in the
field.

In reorganizing the staff to serve these purposes, particular
consi
deration has also been given t
1.

The need to preserve continuity of operations without
diminution in quality of performance; and

T.
Board of Governors

2.

the personal capabilities and performance of the
individual employees affected.

Recommendation
It is proposed that the functions now being performed in the
Current Series Section and the Call Report Section of the Division of
Bank Operations be largely reallocated to the Division of Data Processing,
and also to the Division of Research and Statistics and other sections of
Bank Operations.

.
1212S,42.21212

Data Processing would be vested immediately with full responibilitY for the implementation of the banking series and surveys authorized

by the
Board.

It is expected that in due course Data Processing will be

given similar responsibilities with respect to other financial series and
aurveYa undertaken by the Board.
40cessing

Series presently to be handled by Data

include call reports, reports of income and dividends and operat-

ing ratios, all-bank series, consolidated statement for the monetary system,
bank4
'ng structure statistics, weekly reporting member bank data and other
lsted weekly and daily data including Federal Funds transactions, reports
°f dePosits, borrowings, and reserves of member banks, the daily and weekly
state_
ments of factors affecting reserves, and the weekly summary of condition
cf Reserve
Banks.

Work on these and other series is intended to include

the a ppraisal of alternative approaches; the statistical design of report
forms

and selection of respondents; data collection; manual and machine

11°ce8

2ing of data; all activities relating to the maintenance of statistical

erieQ
-2 Including quality control measures and correspondence incident thereto;

Board of Governors

To:

3

the publication of statistical results; and the performance of ad hoc
st atistical jobs relating to the series being handled.
Research and
The present responsibility of the Division of
St atistics for content of series would be expanded to encompass full
su bstantive responsibility for the content and analysis of banking
r

eports.

report
This is intended to include substantive design of

specOb jectives, correspondence relating to the substance of results,
ification of tabulations needed for analysis, and the actual analysis
of

the results.
certain functions
The Division of Bank Operations would retain

that involve Reserve Bank operations and the regulation of member banks.
These

Reserve Banks; the
include the daily balance sheets of the Federal

Par List;
al location of securities of the System Open Market Account; the
and waivers
the classification of reserve cities and reserve city banks;
Of reserve deficiency and reduced reserves.
of discussion
The functions included within the entire area
are shown in Exhibit A.

Ass.
---14nment of Personnel
cs function a subTo perform the reorganized financial statisti
st antial reshuffle of personnel would be involved.

The proposed change

25 positions in the
entails the transfer to Data Processing of 20 of the
tw° bank statistics sections of Bank Operations.

The two sections would

Chief
Ilt(Imptly be integrated into one, with elimination of one Section
P°sirion and one Technical Assistant.
4

20

Thereafter, as soon as feasible,

one of the
t°P-level statistician-economist would be recruited into
Statistics program in
positions to coordinate the entire financial

To:

Board of Governors

86

- 4 -

areas of
Data Processing, including activities already underway in the
along with the bank
sample design and consumer credit and finances data
s

the Division of Bank Operations.
tatistics activities to be transferred from

the retirement of an
Within one year, that position would be offset by
Assistant Director in Bank Operations.
in that the effort to
Some strain may appear in Data Processing
difficulties.
s treamline the present operation may have transitional

A

Data Processing
Technical Assistant would be loaned by Bank Operations to
could be found.
t° facilitate the transition until a suitable successor
Operations partly to
Four positions are being retained in Bank
to undertake new
Perform the functions that will be retained and partly
expansion in Reassignments stemming from realignment of work to permit
"Bank surveys.
set

established
In addition, two new positions would be

and assigned to the expanded survey work.

One of these would be for the

Technical Assistant to be loaned to Data Processing.
banking series design
In order to carry the enhanced burden of
additional position in the
and analysis contemplated under the proposal an
appears necessary.
bivision of Research and Statistics for a bank data analyst
shifts are outlined in the
The details of these proposed personnel
at tached Exhibit B.
described will work out
Whether the reorganization scheme herein
sat isfactorily can only be judged in actual practice.

A number of adaptations

and its operations have
MaY well prove necessary after it has been in effect
been reviewed.

such subsequent adapThe most that can be expected is that

by careful planning
tations will have been minimized - not eliminated beforehand.

To: Board of Governors

5

respect to office
It is not proposed to make any changes with
sPac

at this time.
this proposal
The underlying discussions in connection with

were carried forward in consultation with the Controller and the Director
f the Division of Personnel Administration and this memorandum has been
su bmitted to them for review.
collaboration with
The Division of Personnel Administration, in

the Office of the Controller and the Division of Bank Operations, has
positions in
discussed work responsibilities with the incumbents of the
to
the two Sections (Current Series and Call Report) whose functions are
be relocated.

of minor imporIt was found that, other than for changes

ent the duties of the
tance, the current job descriptions fairly repres
A ositions.

these positions
The Division of Personnel Administration found

and the incumto be adequately classified in their present salary grades
bents qualified to perform their duties.
nization herein
In expressing his concurrence with the reorga
pay
Proposed the Controller suggests that it be made effective the first
reallocate
Period following Board approval, and that he be authorized to
411 unexpended budget balances of the Sections involved.

EXHIBIT A

Banking Statistics Work
Functions Involved in the Reorganization of

Function

Research

Bank Operations

Data

Processing

1. Reports of condition
of member and other banks, including call reports, semimonthly all-bank series, consolidated condition statement
for banks and the monetary
system, and biennial survey
of deposit distribution of
counties.

Substantive design of report
contents.
Substantive correspondence
relating to report contents
and results.
Specification of needed
tabulations.
Analysis of results.

Statistical design of
report forms and
respondent selection.
Collection of data.
Manual and machine
processing of data.
Maintenance of statistical series, including
quality control.
Correspondence relative
to maintenance of series.
Publication of statistical results.
Ad hoc statistical jobs.

2. Reports of income and
dividends of banks, and related
annual operating ratios.

Same as 1.

Same as I.

3. Banking structure
statistics of banks, branches,
and facilities.

Same as 1.

Same as 1.

4. Reports of condition
of weekly reporting member
banks and related changes in
commercial and industrial
loans, weekly series of money
market banks, and daily series
of Federal funds purchases
and sales.

Same as 1.

Same as 1.

5. Reports of deposits,
reserves, and borrowings of
member banks, and estimates
of vault cash and required
reserves.

Same as 1.

Same as 1.

Function

6.

Bank Operations

Bank debits.

7. Daily balance sheets
of the Federal Reserve Banks.

Par list.

Data Processing

•

Same as 1.

Same as 1.

Same as 1, plus writing
weekly text.

Same as 1 except that
"and respondent selection" is dropped.

Continues as a Bank
Operations responsibility, with substantive consultation
with Research and
Examinations.

8. Daily and weekly
statements of factors affecting reserves and weekly summary
of condition of the Reserve
Banks.
9.

Research

Continues as a Bank
Operations function.

10. Allocation of securities in System Open Market
Account.

Continues as a Bank
Operations function.

11. Classification of
reserve cities and reserve
city banks and waivers of
reserve deficiencies and reduced reserves.

Continues as a Bank
Operations function
with consultation
with Research.

Eic1516S, B

Personnel Shifts

Present - Bank Ops.
Conkling
O'Rourke

Asst. Dir.
Secretary

Transitional
Data Proc.
Bank Ops.
Conkling 1/
O'Rourke

Veenstra
Cava
Franzoni
Solodow
Ball
Roberts
Barlow
Jonsberg
Shuster
Gifford
Innocenti

Sect. Chief
Secretary
Tech. Asst.
Analyst
Supervisor
Stat. Asst.
Stat. Asst.
Analyst
Stat. Clerk
Stat. Clerk
Stat. Clerk

Collier
Wolfe
Ring
Omohundro
Randour
Jackson
Clark
Renucci
Bierly
Unman
Vacancy (Black)
Nobilio

Sect. Chief
Secretary
Tech. Asst.
Analyst
Supervisor
Stat. Asst.
Stat. Clerk
Stat. Clerk
Stat. Clerk
Stat. Clerk
Stat. Clerk
Clerk-Typist

Collier 4/

25

7

Total

New pos. 2/
(Franzoni)

New pos.2/(Ring5/)
Omohundro

Bank Ops,

Ultimate
Data Proc.

Research

Secretary 4/
Vacancy •6/

Vacancy 6/

Veenstra
Cava

Veenstra
Cava

Solodow
Ball
Roberts
Barlow
Jonsberg
Shuster
Vacancy 3/
Innocenti

New pos. 2/
(Franzoni)

New pos.6/
(vacancy)

Solodow
Ball
Roberts
Barlow
Jonsberg
Shuster
Vacancy
Innocenti

Collier 4/
Wolfe
Vacancy

New pos.2/(Ring)
Omohundro

Wolfe
Vacancy
Randour
Jacksan
Clark
Renucci
Bierly
Litman

Randour
Jackson
Clark
Renucci
Bierly
Litman
Vacancy

Vacancy

Nobilio

Nobilio
20

6

20

if Ad hoc assignments pending retirement.
2/ Assigned to expanded Reserve Bank survey work.
in Mr. Kiley's Section.
3/ Present incumbent (Mrs. Gifford) would be reassigned to an existing vacancy
4/ Partly new assignments.
n period.
5/ Temporarily loaned to Data Processing for shake-dow
man.
l"
16/ To be filled by a "top-leve

1