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546 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Friday, March 25, 1949. The Board net 14 the Board Room at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman pro tem. Szymczak Draper Vardaman Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Vest, General Counsel Bethea, Director of the Division of Administrative Services Mr. Millard, Director of the Division of Examinations Mr. Mr. Mr. Mr. Mr. Mr. Mr. Vardaman referred to a draft of letter to Mr. Davis, 4esident of the Federal Reserve Bank of St. Louis, prepared in l'esPonse to his letter of March 18, 1949, with respect to the retention by the Bank of Mr. Guy A. Thompson of the firm of Thompson, Mitchell, Thompson and Young as special counsel to advise on legal 0b1ems in connection with the lease on property upon which a part ' 131 °f the Federal Reserve Bank building is located. He stated that 41% Thompson was trustee for the Missouri Pacific Railroad, that 411. Dearmont, Chairman of the St. Louis Bank, was chief counsel fc)t the trustee but not a member of Mr. Thompson's law firm, and that the firm was of outstanding ability and he (Mr. Vardaman) e°111d not suggest any other attorney who would be better able to eetve the Bank. 3/25/49 -2Following a discussion, upon motion by Mr. Vardamn, the letter to Mr. Davis was approved unanimously in the following form with the understanding that if the Bank should request permission to extend beyond April 35, 1949, the temporary employment of Mr. Carstarphen, former general counsel of the Bank, the Board would not approve such extension: "This will acknowledge receipt of your letter of March 18, 1949 advising the Board that your Bank has retained Mr. Guy A. Thompson, of the firm of Thompson, Mitchell, Thompson and Young, as special counsel to advise on all the legal problems in connection with the lease on the property upon which a part of the Federal Reserve Bank is located. "It is noted that Mr. Thompson's fee is not expected at this time to exceed $2,500, but that in the event litigation or other extended work becomes necessary or desirable the fee might exceed such figure, in which case the Board's approval will be requested in accordance with the Board's letter S-1092 of February 28, 1949." Reference was made to a memorandum from Mr. Vest dated 1411rch 22, 1949 with respect to a request from the Bureau of the /41dget for a report on bills H.R. 2613 and S. 942, to establish iriticiPles and policies to govern generally the management of the eecutive branch of the Government. The memorandum outlined the elleral effect of the bills, their background, and the alternative eo ses that might be followed in preparing the requested report. During a discussion of the content of the Board's report, it/las suggested that the Board oppose the enactment of the legii of tion and that the staff be requested to prepare a draft rePort along the lines of the discussion for consideration by the toara. 548 3/25/49 -3Upon motion by Mr. Vardaman, this suggestion was approved unanimously. There were presented telegrams to the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Knsas City, Dallas, and San Francisco stating that the Board approves the establishment with°lit change by the Federal Reserve Bank of San Francisco on March 221 by the Federal Reserve Bank of St. Louis on March 23, by the Federal Reserve Banks of New York, Philadelphia, Cleveland, Rich4/11(1) Atlanta, Chicago, Minneapolis, Kansas City, and Dallas on 144rch 24, 1949, and by the Federal Reserve Bank of Boston today, (If the rates of discount and purchase in their existing schedules. Approved unanimously. Before this meeting there had been circulated among the rileMbers of the Board a memorandum dated March 161 1949, with tesPect to a proposed purchase, at a cost of $3,500, of chinare and incidental items described in an attachment to the memoMessrs. Eccles, Szymczak, and Vardaman had requested that tIle matter be considered at a meeting of the Board. Following a discussion, upon motion by Mr. Szymczak, it was agreed unanimously that the recommendation be disapproved with the understanding that in the future the Board member whose assignments included 549 3/25/49 -4the Board's building would be authorized to exercise his own judgment, within the limits of the amounts in the budget as approved by the Board, with respect to purchases of supplies and equipment for use in the Board's building. Mr. Bethea withdrew at this point and Messrs. YOling, As- scloiate Director of the Division of Research and Statistics, Solomon, Assistant General Comsel, and Wood, Economist in the Division of Research and Statistics, joined the meeting. There was presented a memorandum from Mr. Solomon dated March 18, 1949, with respect to an informal request from the Bureau Of the Budget for the Board's views concerning a proposed amendment to Section 24 of the Federal Reserve Act which would authorize national banks, subject to rules prescribed by the Comptroller of the Clarrency, to make loans on long-term leases on the same terms as they are now permitted to make loans on fee simple estates. The IlleMorandum had been circulated among the members of the Board and %ials on the docket for this meeting at Mr. Draper's request. Mr. Solomon stated that the provision in question was part Of a Proposed amendment to the National Housing Act (Federal Housing Ministration legislation) which was sponsored by the Housing and 4°Me Finance Agency, that the Federal Housing Administration was 4°14 Permitted to insure loans of this type but that national banks liere not permitted to make such loans, and that the Comptroller of 550 -5- 3/25/19 the Currency had no Objection to the proposal which provided that such loans could be made by national banks under rules prescribed by the Comptroller of the Currency on a leasehold (1) under a lease for not less than 99 years which was renewable, or (2) under a lease having a period of not less than 50 years to run from the date the Mortgage or trust deed was executed. be Mr. Millard stated that he felt the legislation would desirable and that it was entirely practicable. Upon motion by Mr. Szymczak, Mr. Solomon was authorized manimously to inform the Budget Bureau that the Board favored the proposed amendment. Mr. Millard withdrew from the meeting at this time. dated March Mr. Carpenter read a letter from the President of the Budget 23) 1949, requesting that the Board send to the Bureau ed in the by APril 15, 1949 its comments upon the proposals contain l'ePort of the Commission on Organization of the Executive Branch of the Government covering the regulatory commissions as well as on l'ecommendations affecting the Board of Governors in other reports or the Commission. response There was a general discussion of the nature of the to ile made to the President's request and it was suggested that members 14 srs. Morrill and Thurston, in consultation with other " or the staff, prepare a draft of reply for consideration by the toard. 551 3/25/49 -6Upon motion by Mr. Vardaman, this suggestion was approved unanimously. Mr. Carpenter stated that the Board had received a request dated March 24, 1949 from the Budget Bureau for comments on a pro13°88,1 with respect to housing credit which had been prepared by the Housing and Home Finance Agency as a basis for discussion of 1°°eeible legislation and that a response was desired by tommorow if possible. Mr. Young stated that the proposal was in the form of a dl'aft of bill to mnke loans to non-profit corporations to assist 14 Providing housing for persons of moderate incomes somewhat above the incomes of those for whom public housing was proposed, that the bill, among other things, would provide for loans for a 13"iod of 6o years with no down payment, and that he felt some of the Proposals were objectionable in the light of the position the 130ard had taken on other housing legislation. Mr. Eccles suggested that the staff be requested to pre1:44'e a statement with respect to the proposed legislation for consideration at the meeting of the Board next Tuesday and that the 1311dget Bureau be informed by telephone that the Board had not been 4ble to consider the bill but that it expected to do so and to sub1711t comments within a few anys. He also suggested that if the ti 'fle of the consideration called for the submission of the 552 3/25/49 -7- Board's views before that time, the staff be authorized to express to the Bureau the informal views outlined during the discussion. Upon motion by Mr. Vardaman, Mr. Eccles' suggestions were approved unanimously. Secretary's Note: Following the meeting, upon checking with the Budget Bureau, it was found that an expression of the Board's views was urgently desired not later than Saturday noon, March 261 1949, and in accordance with the foregoing understanding, the staff's views were transmitted by Mr. Wood along the lines discussed at the meeting. At this point all of the members of the staff with the excePtion of Mr. Carpenter withdrew from the meeting. Mr. Szymczak referred to the informal discussion at the executive session of the Board on March 7, 1949, with respect to as- signments of subjects within the field of the Board's responsibilities to individual members of the Board for primary consideration. Ile stated that subsequent to that meeting he prepared the following tetorandum outlining his views relating to the matters considered that time. He added that he was bringing the matter up at this tillte, not with the thought that there would be any action in the sb eence of three members of the Board, but to place his views bethe other members of the Board and to suggest that a decision be reached as to changes in the assignments before summer absences of the members of the Board began: 553 3/25/49 -8- "(1) Board Member assignments should be allocated on a more equitable basis. The purpose of such equitable distribution is to give each Board Member sufficient time to prepare recommendations for Board consideration. This will expedite action at Board meetings. Present assignments give certain Board Members too much, and other Board Members not enough to do; "(2) Board Member assignments should rotate so far as possible every two years. Assignments could be so arranged that the alternate Board Member could gradually take over the assignments of the Board Member to whom he is an alternate. This would provide for proper continuity; "(3) All correspondence, conferences, etc. within the scope of a Board Member's assignments should be referred initially to that Board Member. All discussions, at Board Meetings or otherwise, on matters relating to these assignments should be avoided unless and until that Board Member can be present. Telephone calls and callers on matters related to the assignment of a Board Member should be referred at once to that Board Member. In other words, the Board Member should be placed in a Position, so far as possible, of having all the informalisessignmentat all times, to avoid pertailIn -------duplication, confusion, and poor organization; "(4) Board Member assignments, so far as possible, Should be related to each other in order to avoid, as much as possible, overlapping and possible conflict; "(5) It should be clearly understood by all Board Members that assignments are on a functional basis rather than on a departmental or sectional basis. "Apropos the last point, I had taken up, several months ago, with Chairman McCabe and Governor Evans, the question of .1:211earch in the international field, which seems directly to relate to the assignments I have had for the last year. Under !Y assignments, 90 per cent of the work is in the research 11.eld. At one point I thought Mr. Evans and I had an underof, and an agreement on this matter. I find, howthat Governor Evans apparently changed his mind, though 14,, has not told me so. At any rate, nothing further was done about it. I brought this up at the meeting and it seemed that 11 the Board Members agreed with my understanding of my as! 6ignments. Therefore, I hope that this will be corrected .1!.1.21271. 1 .11Ether delay. This is very important because 554 3/25/49 -9- "the International Section is a part of the Research Division which Mr. Evans construes to be under his direct supervision. :Yisits and Speeches "As to visits by the Board Members to Federal Reserve Banks and Branches, I think it is contemplated in the law, and it certainly is in the interest of the Federal Reserve System that each Board Member visit the Federal Reserve Banks and Branches as often as possible without unnecessary overlapping and duplication by other Board Members. The desired goal, it seems to me, is to have each Board Member visit all the Federal Reserve Banks within a period of two Years -- that means half should be visited in one year, and the other half the following year, so far as possible. "As to speeches made by Board Members, I think that, too, is most desirable as long as it is done properly and . Since the personality and background of each . .0-111ELatEly Board Member is different, I think it should be left to the discretion of each Board Member as to what he should and how, when, and where he should say it, so long as he does not overstep the bounds of good judgment and good °rganization, and so long as he is not inconsistent with the policies of the Board and the System. Any other course could be construed as an attempt to muzzle Board Members in their endeavor to meet their responsibility as they see ' It., Following elaboration by Mr. Szymczak for some of the statecontained in his memorandum, Mr. Vardaman stated that followthe assignments to members of the Board at the meeting of the Bo. .., -ru on May 14, 1948, he expressed to Chairman McCabe some disIlatiefaction with the assignments, that the matter was discussed illrormally from time to time thereafter, and that the suggestion 13*8 made by the Chairman that further changes await the appoint' of new members of the executive committee of the Federal °lien Market Committee and the Personnel Committee of the Board 565 3/25/49 -10- fo2' terms beginning March 1, 1949. However, he said, when the mat- ter came up at the meeting of the Board on February 24, 1949, it /las proposed that changes in the assignments be considered at a later meeting. He added that while the question of assignments /las discussed in executive session on March 7, 1949, no action /las taken and it was understood that there would be a further discussion at a later meeting, and that in a subsequent conversation Chairman McCabe stated that the matter would be taken up as scHon as he returned to Washington. Following a general discussion, it was unanimously agreed that, inasmuch as Messrs. Eccles, Szymczak, and Vardaman were planning to be away and Mr. Eccles would not return until April 25, there should be no action to change the existing assignments until after that date, and that the Secretary be requested to put the subject on the agenda for the first meeting after April 25, 1949, for discussion and for such action as would distribute the assignments on a basis which would be satisfactory to the majority if not all of the members of the Board. In reaching this agreement it was understood that if any member of the Board was absent when specific proposals were made for changes in assignments, the matter would be discussed with him by telephone or otherwise and he would be given an opportunity to express his views before action on the changes was taken by the Board. Minutes of actions taken by the Board of Governors of the 4cieral Reserve System on March 23, 1949, were approved unanimously. 556 3/25/49 -11Memoranda from heads of the divisions indicated below, tscommending appointments to the staff in those divisions, effective as of the dates upon which the appointees enter upon the Performance of their duties after having passed the usual physical examination: Nte of Memo. Name 12SEARCH AND STATISTICS 3 22 9 Mrs. Francesca K. Frost 8 OPERATIONS Mrs. Pearle E. Randour 3 23 9 Title Clerk-stenographer Salary Duration of Appointment $2,724 Temporary Indefinite 2,724 Temporary Indefinite Clerk Approved unanimously. Memorandum dated March 24, 1949, from Mr. Millard, Direc'of the Division of Examinations, recommending that, effective t°1 48 (31" the date upon which he enters upon the performance of his citifies after having passed the usual physical examination, Thomas la' Abernathy be appointed as an Assistant Federal Reserve Examiner, /iith basic salary at the rate of $3,351 per annum, and with official head-quarters at Washington, D. C. By unanimous vote, Thomas B. Abernathy was appointed an examiner to examine Federal Reserve Banks, member banks of the Federal Reserve System, and corporations operating under the provisions of sections 25 and 25(a) of the Federal Reserve Act, for all purposes of the Federal Reserve Act and of all other acts of Congress pertaining to examinations made by, for, or under the direction of the Board of Governors of the Federal Reserve 55 3/25/49 -12System, and has designated him as an Assistant Federal Reserve Examiner, with official headquarters at Washington, D. C., with basic salary at the rate of $3,351 per annum, effective as of the date upon which he enters upon the performance of his duties. Memorandum dated March 24, 1949, from Mr. Bethea, Direc- tor. of the Division of Administrative Services, recommending that the resignation of Mrs. Marie S. AllemAn, a stenographer in that tilTision be accepted to be effective, in accordance with her request, at the close of business on March 31, 1949, with the underStanding that proper payment would be made for annual leave remainto her credit as of that date. Approved unanimously. Letter to Mr. Lunding, Deputy Chairman at the Federal Resel'Ire Bank of Chicago, reading as follows: "The Board of Governors approves the payment of salaries to the following officers of the Federal Reserve Bank of Chicago and the Detroit Branch for the Period April 1, 1949 to March 31, 1950, inclusive, at the rates indicated, which are the rates fixed by the Executive Committee of the Board of Directors as re, ported in your letter of March 18, 1949: Name Annual Salary Title C. S. Young -35,000 President Charles B. Dunn 20,000 First Vice President Neil B. Dawes 14,500 Vice President and Secretary Wilford R. Diercks 13,500 Vice President John K. Langum 12,500 Vice President Otto J. Netterstrom 17,000 Vice President Arthur L. Olson Vice President 16,500 Alfred Vice President 18,000 Sihler WillJ T. A 4.1am W. Turner Vice President 13,000 ' Illan M. Black Cashier 12,500 558 3/25/49 -13- "Name Title Paul C. Hodge General Counsel Walter A. Hopkins Assistant Vice President Assistant Vice President Laurence H. Jones Mark A. Lies Assistant Vice President Assistant Vice President Prank A. Lindsten Louis G. Meyer Assistant Vice President Ingolf J. Petersen Assistant Vice President P. L. Purrington Assistant Vice President R. Fred Wilson Assistant Vice President Walter B. Garver Senior Economist Walter E. Hoadley, Jr. Senior Economist George W. Mitchell Senior Economist John J. Endres Auditor Arthur M. Gustayson Assistant Auditor Assistant Counsel Orville C. Barton C. P. Van Zante Chief Examiner Assistant Cashier Edward D. Bristow Phil C. Carroll Assistant Cashier Assistant Cashier and Edward A. Heath Assistant Secretary Assistant Cashier Herbert H. Conklin Clarence T. Laibly Assistant Cashier Assistant Cashier Harold J. Newman Carl M. Saltnes Assistant Cashier Eimer F. Shirey Assistant Cashier Bruce L. Smyth Assistant Cashier Russel A. Swaney Assistant Cashier Ernest C. Harris* Harlan J. Chalfont Rarold L. Diehl Richard W. Bloomfield Arthur J. Wiegandt Detroit Branch Vice President Manager Cashier Assistant Cashier Assistant Cashier Annual Salary $12,500 10,500 9,500 11,000 11,000 11,000 9,000 10,500 9,000 9,200 9,400 9,000 13,000 8,000 8,000 9,000 7,000 8,5oo 9,000 7,600 9,500 9,500 8,5oo 7,000 61800 7,600 19,000 13,000 9,000 9,000 81000 President Head Office assigned to Detroit Branch." Approved, Mr. Vardaman voting "no" because he was opposed to any increase in salaries of officers of the Federal Reserve Banks at this time. Messrs. McCabe and Clayton were present when the salaries as stated in the above letter were discussed informally by the Board and stated at that time that they would vote to approve. 3/25/49 Letter to Mr. Gidney, President of the Federal Reserve Bark Of Cleveland, reading as follows: "This will acknowledge your letter of March 14, 1949, concerning the purchase of land adjacent to the building of your Bank's Pittsburgh Branch. You state that your directors believe it would be desirable to ascertain whether the Pennsylvania Railroad would be willing to sell an additional parcel of land immediately adjacent to the 50 feet the purchase of which was authorized in the Board's telegram of March 15, 1949, and you ask for an expression of the Board's views on the proposal. The Board sees no objection to your Bank's making inquiries and obtaining a price for the adjacent frontage on Grant Street up to an additional 50 feet." Approved unanimously. APProved: Chairman pro .tem.
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