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488 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Wednesday, March 31, 1948. The Board met in the Board Room at 12:00 noon. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman pro tem. Szymczak Draper Evans Clayton Mt. Sherman, Assistant Secretary Mt. Thurston, Assistant to the Board Mt. Thomas, Director of the Division of Research and Statistics Mt. Vest, General Counsel Mt. Solomon, Assistant Counsel d a teleChairman Eccles stated that this morning he receive to the Presiphone call from Mr. Clark M. Clifford, Special Counsel the Budget had dent, who said that he had learned that the Bureau of not yet received a report from the Board on H. R. 4790, a bill to res, that he duce individual income tax payments and for other purpose the bill for the Presi(Mr. Clifford) was writing a veto message on of the Board's views dent, and that he would like to have the benefit on the matter. Chairman Eccles added that a draft of letter to Mr. tive Reference, Bureau Elmer B. Staats, Assistant Director, Legisla of the Budget, had been prepared pursuant to the discussion at the the draft was read and meeting yesterday, and at his suggestion discussed. Following the discussion, upon motion by Mr. Evans, the draft of 489 -2- 3/31/48 letter was approved unanimously subject to such changes as might be deemed necessary by Chairman Eccles in the light of the discussion during the meeting. In taking this action, it was understood that Chairman Eccles would send Mr. Clifford a copy of the letter. u of the Secretary's Note: The letter to the Burea read as day the Budget which was delivered later in follows: 25, 1948, "This letter is in response to yours of March H. R. on nors Gover asking for the comments of the Board of and nts payme tax 4790, a bill to reduce individual income for other purposes. should be no "The Board of Governors feels that there effecTotal time. this net reduction in tax revenues at the than er great now is tive demand for goods and services cactive produ n's natio the supply which can be produced by of tion. ce infla essen the is pacity and labor force. That situation would eiA net reduction in tax revenue in this e the amount of reduc or it ther create a Government defic reduction in for able avail funds that otherwise would be result would the nce insta r the Government debt. In eithe well as capas goods mer consu be an increase in prices of y lead likel would rises price ital goods. The resulting , and banks such from esses busin to additional borrowing by ry tiona to infla add er furth expansion of bank credit would pressures. out the Governmental "In view of the costs of carrying in addition, in and, field policies in the international increase in large a for ng view of the recent program calli than ever t urgen more es military expenditures, it becom a nment avoid Gover to as so that tax revenue be maintained st apply again to us surpl some deficit and, if possible, have nt condi prese under ative imper the public debt. This is if further dangertions of full production and employment ed. be avoid to are ts ous inflationary developmen feels that Board the , above d "For the reasons state this time at e irabl undes is the enactment of H. R. 4790 section 101 in ded provi taxes in especially the reduction of the bill. 490 3/31/48 -3- "Nevertheless H. R. 4790 contains some provisions which the Board believes to be desirable because they recognize and correct certain gross inequities. One such provision is that for the splitting of incomes in order to bring about a more equitable situation as between taxpayers in a considerable number of States which have community property laws and those in States which at present do not have such laws. Since this provision gives benefits chiefly to persons in the middle and higher income brackets, it is necessary that the lower income groups, both because of need and for reasons of equity, have their personal exemptions increased along the lines provided in the bill. It would be desirable under the present economic conditions to limit the benefits of increased exemptions to the persons who would get little or no benefit from the split income provisions because of their low incomes. "It is believed, however, that if provisions such as those mentioned above were to be enacted, with a resulting reduction in revenue, there also should be such changes in the tax laws as would provide an offsetting increase in receipts. The Board would be glad, if called upon to do so, to make suggestions as to some of the changes it believes would be most desirable." At this point Messrs. Thomas, Vest, and Solomon withdrew and the action stated with respect to each of the matters hereinafter set forth was taken by the Board: Minutes of actions taken by the Board of Governors of the Federal Reserve System on March 30, 1948, were approved unanimously. Memorandum dated March 25, 1948, from Mr. Thomas, Director Of the Division of Research end Statistics, recommending an increase in the basic salary of John H. Neill, Jr., an administrative assistant in that Division, from $4,525J30 to $4,776c60 per annum, effective April 4, 1948. Approved unanimously. 491 -4- 3/31/48 Memorandum dated March 31, 1948, from the Division of Personnel Administration recommending that Mrs. Mary Rose Arnold, a stenographer in the Division of Administrative Services, be transferred to Chairman Eccles' office as a stenographer, and that her basic salary be increased from $2,394 to $2,544.48 per annum, both effective April 4, 1948. Approved unanimously. Memorandum dated March 30, 1948, from Mr. Johnson, Personnel Officer in the Division of Personnel Administration, rec- Virginia ommending an increase in the basic salary of Mrs. Mary Malarkey, a clerk-stenographer in that Division, from $2,394 to $2,469.24 per annum, effective April 4, 1948. Approved unanimously. Memorandum dated March 30, 1948, from Mr. Bethea, Director of the Division of Administrative Services, recommending that Miss Catherine L. Schmidt, Secretary to Mr. Parry, Division of ative Security Loans, be transferred to the Division of Administr present basic Services as a stenographer, with no change in her salary of $3,146.40 per annum, effective April 1, 1948. Approved unanimously. Memorandum dated March 30, 1948, from Mr. Bethea, Director of the Division of Administrative Services, recommending CYZ -5- 3/31/48 increases in the basic annual salaries of the following employees in that Division, effective April Name John Blash Bernard W. Larson Mary S. Seagle Ethelyn M. Palmer Gertrude E. Trivett Elizabeth M. Young Anna M. Utz Hazel M. Glover 4, 1948: Designation Maintenance Mechanic Operating Engineer Telegraph Operator Stenographer Stenographer Charwoman Charwoman Elevator Operator Salary Increase To From $3,146.40 $3,271.80 3,021.00 3,271.80 2,770.20 2,8)4.5.14I 2,168.28 2,168.28 1,888.00 1,756.00 1,690.00 2,243.52 2,243.52 1,954.00 1,822.00 1,756.00 Approved unanimously. Letter to Honorable Harry B. Mitchell, President, Civil Service Commission, reading as follows: "Reference is made to your letter of February 9, 1948 addressed to Chairman Eccles, regarding the status of the Federal Employees Loyalty Program in this agency. "The Board has designated its Division of Personnel Administration as the unit to conduct the necessary loyalty investigation of new employees. In the case of all new employees this division obtains a Standard Form No. 86, 'Fingerprint Chart', and Standard Form No. 84, 'Request for Report on Loyalty Data' and forwards the required copies of these forms to the Federal Bureau of Investigation. Standard Form No. 79, 'Notice of Personnel Investigation' is forwarded in duplicate to the Investigations Division of the Civil Service Commission. Record checks and inquiries as specified in Section 3 of Part 1 of Executive Order 9835 are made of all new employees. "On incumbent employees on the rolls of this agency on September 30, 1947, Standard Forms 86 and 84 have been sent to the Federal Bureau of Investigation. "As you know, employees of the Board of Governors of the Federal Reserve System are appointed by the Board 493 3/31/48 -6- "without regard to the provisions of the Civil Service laws, and this organization does not operate on appropriated funds. Under Section 10 of the Federal Reserve Act it is expressly provided that funds of the Board 'shall not be construed to be government funds or appropriated moneys.' Consequently, employees of the Board are in a somewhat different status from those of other agencies. "We have been diligent in keeping abreast of developments of the Federal Employees Loyalty Program, and it is our feeling that we are meeting our responsibilities under such Program as outlined in Executive Order 9835. "Incidentally, members of our staff have met on several occasions with Mr. James E. Hatcher, Chief of Investigations Division, Civil Service Commission, and members of his staff, and we appreciate the cooperation which they have given to our staff." Approved unanimously. Letter to Mr. Dillard, Vice President and Secretary of the Federal Reserve Bank of Chicago, reading as follows: "Reference is made to your letter of March 24, 1948, advising that the Board of Directors has voted to give officer status to C. Paul Van Zante, Chief Examiner, and Arthur M. Gustayson, Assistant Auditor, effective April 1, 1948, without change of title or salary. "The Board approves the payment of salary to Mr. Van Zante as an officer of the Bank with the title of Chief Examiner at the rate of $8,000 per annum and to Mr. Gustayson as an officer of the Bank with the title of Assistant Auditor at the rate of $7,500 per annum, the rates fixed by the Board of Directors, for the period from April 1, 1948 to March 31, 1949, inclusive." Approved unanimously. Memorandum dated March 29, 1948, from Mr. Smead, Director of the Division of Bank Operations, recommending that the Board 494 3/31/48 -7- approve the purchase by the Federal Reserve Banks, at a cost of $7,330 exclusive of the cost of postage and labels, of 20,000 MPS showing Federal Reserve districts and branch territories in colors together with a table showing check routing symbols for each district or branch territory, and that each member and nonember bank be furnished a copy of the map. Approved vrnRnimously.
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