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357 A meeting of the Board of Governors of the Federal Reserve 48tara yes held in Washington on Tuesday, March 14, 1939, at 2:30 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Draper Mr. Bethea, Assistant Secretary Mr. 2mead, Chief of the Division of Bank Operations Mr. Harrison, President of the Federal Reserve Bank of New York This meting was called for the purpose of discussing with Rarrieon the salary situation at the New York Bank and particularly the r ecammendations for salary increases which had been submitted to beccirne effective January 1, 1939. The meeting had originally been "lecillled for 11:00 a.m. on March 13, but had been postponed. Mr. Szymczak, at the suggestion of the Chairman, explained the '-eesons which prompted the Board to adopt the new procedure for the c°11eideration of changes in officers' salaries of which the Presidellts had been advised in the Board's letter of December 28, 1938 (a.. 138), and asked Mr. Harrison to state his views with respect thereto 411c1 t° emPlify the information submitted in support of the salary recions which had been made by his Board of Directors. Be also ell gested that Mr. Harrison discuss any other questions relating to 3': 78 3/14/39 -2- tlus subject which he would like to take up at this time. Mr. Harrison stated that he was glad to have the opportunity to meet with the Board for the purpose of reviewing the salary situation the Bank. Be said that he understood the difficulty which Ilfronted the Board in having all twelve Reserve banks submit salary l'ecc)Thrfiendations at one time and that one possible solution would be to a different Reserve bank submit its recommendations each month that the Board could consider the salaries of one bank each month thr0 11Ehout the year. Speaking for his own institution, he said that he thought it was desirable to continue to consider the bank as a 1144 in formulating salary recommendations in order that proper con"elbation may be given to the division of duties and responsibilities Ilthin the bank and to the relationship of the various officers in the °rEanization. He then outlined the procedure followed by the Bank in (letilin€ with the salary question. Mr. Harrison pointed out that, on the basis of total resources 0 ,',16,500,000,000 the New York Bank was the largest bank in the " 17er ' 1401.1a. Be said there were thirty nine officers and about 2,260 en- vloy, --es' or 8 ratio of about I to 60. After allowing for the fact at 111 °Perations of the Reserve bank differ materially from those of e'e°11111 cial bank with branches, he stated that in his opinion this 134)t a bad ratio. He pointed out that, while at one time the of- staff of the New York Bank had been down to thirty-two, it was 3114/39 the Practice of the Bank to regard all Assistant Counsel and, in fact, PraeticallY everyone receiving ;05,000 per annum or over, as officers. Ile added that little, if any, reduction in salary expenses would accrue frout reducing the number of officers under these circumstances as they woluA " rmain on the payroll in unofficial capacities. He also indicated tilElt salaries of employees, as well as those of junior officers, were PrtletleallY at the market rate for persons having comparable qualificati°11 " He stated that when you 0_:ot beyond junior officers there was a di.Spa between salaries paid in the Reserve bank and those paid by collira"eial banks and that the higher up you went the Frester this dislity became. l ePt clo,_ id Mat He said that the management of the New York Bank had Watch of the aggregate salary liability of the institution as a matter of fact, he felt that an unduly conservative l icY had been followed with respect to replacements follovving deaths Etci ' esiEnations during the last few years. He also said that he had -'4Etde . lt a Point to confer with the Board's examiners following each eXcb,4_ . --faction and ask for suggestions as to improvements which might be ticde 11 the organization and as to their views with regard to officers i711 P1°Yses. In response to a query by Mr. Szymczak, Mr. Harrison qe-s-ued that he did not think the officers of the New York Bank were worked although he did indicate there were periods when the ofetaff was under pressure. Chairman Eccles and the other members of the Board interrupted 14, I'lson frequently to ask questions with respect to various 360 3/14/39 —4— Phases of the problem and to elicit additional information regarding the basis for the recmmendations which had been submitted by his IlDetzd Of Directors for increases in officers' salaries. Mr. Harrison diae4ssed the individual qualifications, duties and responsibilities or officers on behalf of whom such recannendations had been made, e)cePt in the cases of the three officers in the group who received the highest salaries, i.e., Messrs. Sproul, Rounds and Knoke. At Mr. Harrison's suggestion and with the concurrence of the nienibers of the Board, the meeting then went into executive session reqs the purpose of discussing the three recommendations referred to ' s ra. Bethea and Snead withdrew from the meeting. At the conclusion of the discussion in executive session, the illating adjourned. Assi stant Secretary. Chaiiman.
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