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281
Minutes of actions taken by the Board of Governors of the
Reserve System on Tuesday, March
rilet
ill the Board
Room at 10:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
McCabe, Chairman
Eccles
Szymczak
Draper
Evans
Vardaman
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
th
7, 19)0. The Board
Carpenter, Secretary
Sherman, Assistant Secretary
Kenyon, Assistant Secretary
Morrill, Special Adviser
Thurston, Assistant to the Board
Riefler, Assistant to the Chairman
Leonard, Director, Division of
Bank Operations
Vest, General Counsel
Nelson, Director, Division of
Personnel Administration
Millard, Director, Division of
Examinations
Townsend, Solicitor to the Board
Young, Director, Division of
Research and Statistics
Solomon, Assistant General Counsel
Murff, Chief Field Examiner,
Division of Examinations
Hackley, Assistant Counsel
Koch, Chief, Business Finance and
Capital Markets Section, Division
of Research and Statistics
Schmidt, Economist, Division of
Research and Statistics
Ber°re this meeting there had been sent to each member of
a memorandum from Mr. Young dated March 3, 19)0, giving
131tegl'CI
zed bus.
outline of the financing problem of small- and medium-
lnese concerns and the principal provisions 01 the O'Mahoney
2Q2
3/7/50
-2-
bill (8.297) to provide for the establishment of corporations to
facilitate the financing of such concerns.
Chai
(ts to
McCabe stated that the purpose of this discussion
bring the Board up to date on what was being done with
resPect to
proposals for aiding small business in anticipation of
lieqUeet that
the Board testify at hearings in connection with
8110neY
bill or other similar measures.
the
14r.
Vest
o
In this connection
referred to requests received by the Board for reports
'this bill as well as on bills introduced by Senator Lucas (S.2947)
al4Sehator Maybank
(S.2943) There followed a discussion of the possible need for financial
Itsv
1814311ce to small business concerns during which, at Chairman
14Q04be
S r
equest, Mr. Carpenter read a letter from William L. Day,
Zze
elltive Vice President, The Pennsylvania Company for Banking and
ItitIst8/ Phi
ladelphia, dated February 17, 1950, regarding the experience
°ttlIkt bank in making term loans to small business during the first
kilt4 Of oPerations under a newly launched program.
In addition to
.111'11 141-glares of
the number of interviews held and loans made,
letter
stated that the bank felt there was a real need for wise
41111te11
:
igent counsel for the small business concern and that
-er44Ds the
real requirement of the group was guidance rather than
11.
3/7/50
-3In the course of the discussion it was suggested that the
l*ePort to
be prepared on the OiMahoney bill or other small business
legislation include a statement with respect to the basic economic
13r()ble148 involved in financing small business, including reference
to the tax problem and to other matters having a bearing on the
lecItOr credit and
the possible success of such enterprises.
Following the
agreed unanimously
Prepare a draft of
lines discussed at
discussion it was
that the staff should
statement along the
this meeting.
All of the members of the staff, with the exception of
14es8re' Carpenter, Sherman, Nelson, Millard, and Murff, withdrew
rr°111the
meeting at this
point.
141". Millard stated that at the time of the examination by
the 12°411's examiners of the Federal Reserve Bank of Minneapolis
14°1' 41111827 27, 1950, Chief Field Examiner Murff learned of
"tillities Of C. J. Larson, formerly assistant manager of the
1:11114 Ilranch of
that Bank, involving the misappropriation of funds
11YMr.
Larson from the Prescott Company which he served as bookkeeper
:
11 111e he /las also in the employ of the Helena Branch, as well as of
'rregw.e.rities by Mr. Larson at the Conrad National Bank, Kalispell,
14°41841a,
between September 1948 and January 190 while he was
41'11.4 Ete executive vice president and cashier of that bank.
111% Millard then read portions of a memorandum which he had
284
3/7/50
-14ePared and
sent to Chairman McCabe under date of February 14,
1950, re
viewing in detail the activities of Mr. Larson and stating
that on
or about
November 20, 1948, Mr. Towle, Vice President in
charge of
the Helena Branch, met with Mr. Larson and
the senior
krtlier c'r the accounting firm handling the
accounts of the
l'reseott
CompanY (a Towle family interest), at which time Mr.
1444°4
admitted that he was short $6,600 as claimed by the accounting
4111 and
agreed
to have a check for the full amount in the hands
°I' the
Prescott Company by November 30, 1948, the closing date
of
the't c°tPany's
fiscal year. Mr. Millard stated that, at Mr. Larson's
49.11ftt, the
matter was held confidential, those present agreeing
t() this
Procedure with the understanding' that in case anyone made
-e
inquiry of any member of the
Prescott Company regarding the
tatter
trut
hful statements would be made concerning it. In disel811:1{ his
the exatainerassent to such an agreement, Mr. Towle explained to
Charge of the Helena Branch examination, Mr. Millard
84144 that
hiS
bY three
/12th
illingness to keep the incident secret was prompted
c
onsider tions: (1) the misappropriation had no
connection
kr.
Larson t s
activity at the Reserve Bank branch; (2) his
11%tire
tO giv
Mr. Larson another chance, feeling that the latter
14.111
CI a
lesson; and (3) since he (Mr. Towle) had never been
-' tor a
kitil°1401
letter of recommendation by the Conrad National Bank,
he had written a
letter congratulating the bank on its
4k1.)
3/7/30
el4131°Ynlent of Mr. Larson, he felt no compulsion to report to the
174441-dent of that
institution.
About a year later, Mr. Millard
441
11'it was brought to Mr. Towle's attention that Mr. Larson was
hot
iving too good an account of himself at Kalispell, Mr. Towle
4114g bee
f 171. in ormed in October 1949 by Albert A. Hoerr, former
cashier of
the Helena Branch and now Vice President of the National
Commerce, Seattle, Washington, that the latter bank had
11344" Larson
ve.s
then past
tr°tIqr.
Tovie
9,)00 to buy a new home in Kalispell, that the note
due, and that Larson had failed to answer correspondence
Hoerr regarding the matter.
Mr. Millard went on to say that by late December 1949 Mr.
14" in Possession of such information regarding Mr. Larson
thavt he requested President Edmiston of the Conrad National Bank to
e°11 to
Releila for a conference. Mr. Edmiston, being ill, sent
418 e°n)
assistant cashier of the Conrad National Bank, and as
teSUlt of
the discussion Mr. Edmiston requested Mr. Towle's
441st9/ice in
securing an immediate examination of the Conrad
11E't1oilaa Bank.
Mr. Towle talked with President Peyton of the
1414heaPolis Bank by telephone on January
and
6, 19)0, and on
4'4111417Y 6 tad Mr. Peyton that he had personal knowledge of a
".t14,..t1o4 co
ncerning Larson which he believed would warrant an
Etelerated
exatainati". Mr. Millard stated that although Mr. Towle
leCi With some
degree of promptness upon being informed of Larson's
-6arities at the Conrad National Bank, nevertheless, by his
11111illgiless to comply with Larson's request in November 1948 that
1118 Pec
ulations in connection with the Prescott Company be kept
14'41-caste,
Mr. Towle placed himself in a position where a period
(ItIll°re than 13 months elapsed during which he apparently did not
till)* Of
the matter of possible exposure of the Helena Branch.
Mr. Millard added that the matter had been discussed
ti1
°1'°u6111,Y by Mr. Murff with Chairman Shepard, President Peyton,
al1411ditor Ohnstad of
the Minneapolis Bank during the examination,
that
he
(Mr. Millard) discussed it with Chairman Shepard when he
Vas ill w
ashington shortly after the
middle of February, and that
he
isuo
discussed it with President Peyton when he was in Washing-.
tot
last week.
Chai
n McCabe stated that, with Messrs. Szymczak and
11".411141:1 Present, he
discussed the matter by telephone with ChairYesterday, that Mr. Shepard informed him that the
Directors
of that Bank had reviewed it at length, and that
ot the
fact that the report of the Chief Field Examiner
11°4118e/1 sent
to Washington, the directors felt the Board could
them di
rection and guidance as to the best way to handle it.
e e..1
- 8° stated
that President Peyton was on vacation and that Chair14
'
4 8he
*
-1:18I'd was just leaving Minneapolis on a trip, and he suggested
chEti
11344 ShePard that he review the question with First Vice
e- •
3/7/50
-7-
Pr'esident Powell
and have him call Mr. Szymczak on the telephone
r'r the
Purpose of discussing it further.
Mr. Szymczak stated that subsequently Mr. Powell called
hiltand
St,
stated that he had talked with the three Minneapolis and
PaUl
directors and that he would like to obtain all the facts
colicerning the matter
prior to the next meeting of their directors
be
held on April
13, 1970. Mr. Szymczak also said that he told
kr.
?Nell that if
it was felt here that a special meeting of the
t0
kitilleaPolis directors would be desirable to consider the matter
111.°1" to April
13, he would be so advised.
In the ensuing discussion, there was general agreement
Vith
the view
that the Board should not assume primary responsibilitY
for the
matter unless the Minneapolis Bank failed to take
4PPropr,
'ate action promptly. It was suggested that, in the absence
or pres
kvell
Rivela
ident Peyton and Chairman Shepard, First Vice President
be informed by telephone and by letter that, if the facts
vere correct,
the Board felt that Mr. Towle, in failing to
kakke k4
ta
to the
Conrad National Bank promptly his knowledge of
t4 imr8°4's irregulars, had failed to recognize and discharge
ki
—4474.1tant responsibility resting on him as an officer of the
)
1 113:11:)°11s bank, and that the Board requested that the matter be
l'e411ted to the directors of that Bank at the earliest practicable
qkte
o
that appropriate action may be taken with the least possible
4-)
3/7/50
-8Tf
-- was suggested that Mr. Szymczak call Mr.
Powell on the
telePh°11e and inform him fully of the
Board's views and that the
SteLfr iplisPare a draft of letter
to Mr. Powell for the consideration
°t the Board,
This suggestion was approved
unanimously.
Secretary's Note: The following letter
was approved by the members of the Board
who were present and mailed under date
of March 8, 1920, to Mr. Powell, First
Vice President, Federal Reserve Bank of
Minneapolis, marked air mail, personal,
and confidential:
"This letter is
being addressed to you in the absence
Messrs. Shepard and Peyton who, it is understood, are
,rom Minneapolis on vacation.
co
All of the members of the Board have given careful
Bollsideration to the information made available to the
Re::di s examiners during the examination of the
Federal
sla;;I
'
ve Bank of Minneapolis as of January 27,
1950, and
to 4,reatlY by Messrs. Peyton and Shepard with respect
C
situation surrounding the misappropriation by
Mr.
1;,er-.estLarson
of funds of the Prescott Company (a family
1 li
, of Mrs. Towle) while he was an officer of the
con:ral. Reserve
Bank of Minneapolis and of funds of The
sel:;74. National Bank, Kalispell,
Montana, while he was
13g. as Executive Vice President and Cashier of that
-stit
ution.
Of
411
r
R , It
appears from this information that Vice President
1,' Towle was aware as
early as November 1948 that Mr.
Cona,had misappropriated funds belonging to the Prescott
thi-;14,y; that
Mr. Towle did not feel it necessary to bring
tio" tact to
the attention of Mr. Peyton or to the attenk4c
,
,/ ! the directors of The Conrad National Bank; and that,
Towl:ts of the previous
defalcation of Mr. Larson, Mr.
$6,6-1naPParently made no effort to determine whether the
1,
received by the Prescott Company from Mr. Larson
4:ovemb
in restitution of misappropriated funds
1fl°I1sY5 rightfully coming
into his hands.
3/7/Do
-9-
t.
"It is the view of the Board that, if this informa410n is correct, Mr. Towle has failed to recognize and
uz, discharge the
important responsibility resting on him
an officer of the Minneapolis Reserve Bank. In these
,
'
l rellmstances, the Board requests that this letter be
j
l esented to the board of directors of your Bank at
:
le earliest practicable date so that appropriate action
i
o-Y be taken
with the least possible delay. The Board
„11 await advice of the consideration given by your
'aLLrectors to the matter and if the Board can be of
"istance in any way it will be glad to do so."
Z
The meeting then recessed and reconvened at 2:40 p.m. with
the seun
e
attendance as at the close of the morning session, except
that
Me
ssrs. Nelson, Millard, and Murff were not present.
Mr. Eccles referred to the death of Mr. Lawrence Clayton,
t(11.rner. raerober of the
Board, on December 4, 1949 and to the benefits
131'°1cled for M. Clayton's
widow by the Civil Service Retirement
S3rsteril to which Mr. Clayton belonged.
At Mr. Eccles request, Mr.
411)elltel" read a memorandum prepared by Mr. Vest, General Counsel,
1111ciels date of February 23, 190, which was as follows:
vari "You have requested that I state in a memorandum
by
considerations which might be taken into account
1!
-,t 1 Board in considering the possibility of a payment
to !
.8*
x"'
Clayton, the widow of the late Governor Clayton,
all,aMount equal, say, to three months' salary.
1934 Governor
Clayton came with the Board in December
chan as Assistant to the Governor, his title being
re lecl in August 1932 to Assistant to the Chairman. He
Diemb;ned in that capacity until April 1942. He became a
slach-Lof the Board in February 1947 and continued as
ezo '
Luta his death in December 1949. Accordingly,
ou,ipt for a period of about two years, he was continu:
,
a ssociated with the Board for a period extending
about 14
years. Governor Clayton was a member of
the
Civil Service Retirement System and under this
3/7/)0
-10--
It
Ystem his widow receives a small annuity for life
.$1,368 per annum). She will receive nothing from the
'ederal Reserve Retirement System and has, of course,
received
nothing from the Board of Governors except
cal small amount of accrued salary ($167.11) which was
!
.01 to Governor
Clayton upon his death. I understand
r,"'It while a small amount of insurance was left by
;°17ernor Clayton payable directly to his widow, she has
tnintarily used a substantial portion of this insurance
PaY obligations of the estate which otherwise might
ot, have
been met.
ar "Salaries of the members of the Board of Governors
3; fixed by statute and there is no authority in the
14 for an additional payment to any member of the Board
i4
law,
widow, although there is no express prohibition
eve-4e
on any such payment. The possibility, howanyone in authority raising the question as to
seem-`egality or propriety of such a payment, if made,
verY unlikely and accordingly the possibility of
evini liability resulting to members of the Board seems
'
41 more
unlikely as a practical matter.
vhi "There are a number of equitable considerations
a ell indicate the desirability and appropriateness of
PaYMent of this kind.
it he"It happened that Governor Clayton died suddenly.
cour had suffered a long illness, the Board would, of
aria se/ have paid his salary while a member of the Board
othel'IoUld have also had the expense of his secretary and
i4
eXPenses of his office during such period. Thus
case of the late Governor Ransom the Board paid
:
the
ill,- eXPenses over a very considerable time during his
•
a Ittat Congress itself provides an important precedent in
dies er of this kind. Whenever a Congressman or Senator
Congress appropriates an amount equal to one year's
D18.11;t7 for the widow ($12,)00). This has been done for
8etat
,
Years as a matter of routine. Congressmen and
as ."'rs are under the Civil Service Retirement System,
Members of the Board.
Ploye IThere have been a number of cases where Board em1 e8 have retired and the Board, because of equitable
ax a ,
pEvra'llmanitarian considerations, has made a lump sum
stouil
erit into the Retirement System to increase the
have t of their retirement allowances. These amounts
beR
-11 for only $2,000 or $3,000 or less, except in
4
3/7/50
-11-
Case in 1946, where there was a very substantial
Payment.
"There have also been a number of cases in which
c2fficers of the Federal Reserve Banks have retired and
'
41e Board has approved lump sum payments, sometimes in
rather large amounts, to supplement their retirement
all
owances.
"Governor Black of the Federal Reserve Bank of
Atl
ulua, who served as Governor of the Federal Reserve
rard during a part of 1933 and 1934, died in December
34 shortly after returning to his position as head
„ the Atlanta Reserve Bank. Shortly thereafter the
ectors
voted to pay Mrs. Black a lump sum of
)
,C00 and the Board approved this payment.
"If Governor Clayton had been an officer of a
!ederal Reserve Bank and subject to the Federal Reserve
4t!tirement System, his estate would have received at
j
1 8 death a lump sum equal to one year's salary plus
c4e amount of his accumulated contributions, but, of
et
)
i711rse, his widow would not have been entitled in that
ent to any annuity such as is provided for her under
the
Civil Service Retirement Act.
age "Under the law, when an employee of a Government
thencY dies, such employee's estate is paid salary covering
is Period of his accumulated annual leave; and this rule
aDPlied also in the case of employees of the Board.
l,
s°Ine cases this is as much as 90 days leave. Board
inemu
ir—ers do not, of course, accumulate annual leave, but
ie sUch a provision were applicable to Board members, it
Probable that Governor Clayton would have had some
"crued leave to his credit."
4
w
Dnring the ensuing discussion, all of the members of the
abl e
stttt
Pressed themselves as favoring, for reasons which they
ea, the-
to mr.
payment to Mrs. Clayton by the Board of an amount equal
ClaYton's salary for a period of three months.
Thereupon, upon motion by Mr. Evans
and by unanimous vote, it was agreed that
a payment in the amount equal to three
month's salary or $4,000 should be made
to Mrs. Lawrence Clayton, with the under-
292
3/7/50
-12standing that the check would be made
payable to her and delivered to Mr.
Eccles and that he would look into
the possibility of having the funds
deposited in a bank or trust company
in Boston, where Mrs. Clayton is now
living, under an arrangement whereby
they would be paid to her on a
monthly basis. In taking this action,
It was agreed that the appropriate
item in the budget of the Board
Members' Section would be increased
by an amount sufficient to cover the
payment.
MI% Carpenter stated that word had been received this afterthat the Senate Banking and Currency Committee had reported
°Ilt 4 bill,
S. 3105, to increase from $10 million to $2 million
the atount
authorized in section 10 of the Federal Reserve Act that
e°111c1 be spent in construction of Federal Reserve Bunk branch build1148
'bltt that
it included a provision that such construction shall
be°r
Dle design, shall be deferred unless urgently needed for
N
efficient and economical operation of the branch, and shall
IIE114
"41. ken only when it will assist in relieving local unemploy-
41t' There was a brief discussion of the matter but no conclusion
teached with
respect to it.
141% Nelson joined the meeting at this point.
Mr. Szymczak stated that pursuant to the request at the
rtlet14 of,
the Board on February 3, 19)0, the Personnel Committee
htlq),
4evie
Wed the
problems that would be involved in the appointment
293
3/7/50
-13-
"residents and First Vice Presidents of the Federal Reserve Banks
t"he term beginning
March 1, 1951. He then stated the views of
the
corunittee with respect to the situation at each Federal Reserve
11141k and
whether there were presently officers at the Banks qualified
to 811
ceeed to these positions in 1951 or in future
years.
The views expressed by Mr. Szymczak on behalf of the Personnel
ittee
were discussed at length and there follows a summary of
the c
(311clusions reached:
With respect to the Federal Reserve Bank of Boston,
was the consensus that Mr. Erickson, who became assoL-tated
with that Bank in December 1948 and who will be
Years of age on March 1, 1951, had been doing a good
tZb as President since his appointment and it was assumed
the directors of the Bank would reappoint him, in
4 'eh event
the Board would see no reason for not approvthe appointment. First Vice President Willett of that
'k would not be eligible for reappointment under the
gene
ofgral Policy of the Board, and would retire at the age
'
ID Years, 7 months. Officers to fill the vacancy would
be
pi available from within the Bank, the names of Messrs.
CO?' Latham, and Neal having been mentioned in this
11;:tnaection, the consensus being that Mr. Pitman would
as°!?,ablY be the most logical person for the appointment
zirst Vice President for the five-year term beginning
Year, at which time he would be 59 years, 4 months of age.
it
V
z
ass At the
Federal Reserve Bank of New York, it was
de limed that the New York directors would re-elect PresieZ'SProul whose service with the System began in 1920
ep, /41110 will be 55 years of age next March and that his
tje-intment as President would be readily approved by the
0482* First Vice President Rounds (age 64 years, 9 months
ki --"reh 1, 1951), who contemplates retirement next year,
0
continue to serve for a year or two if Mr. Sproul
reght
toi'llested him to do so. In the event Mr. Rounds should
th vish to continue as First Vice President even for a
°rt Period, it was felt that either Vice President Phelan
294
3/7/)0
Ol" Vice President Kimball would be qualified for the Dosition, the consensus being that Mr. Phelan's appointment
would be pLove suitable in 19)1. At that time Mr.
Phelan
would be )8 years of age and Mr. Kimball would be 49 years
Of age.
Both President Williams (age ')8 in March 19)1) and
Pirst Vice President Davis (age 59
in March 19)1) were
expected to be reappointed
and approved next year for
;11 additional term in their respective offices at the
deral Reserve Bank of Philadephia, and it was felt
that
,
material would be available from within the Bank
'c) fill the positions in later
years.
At the Cleveland Bank, President Gidney will have
his 64th birthday next February, but it is known
that
the directors plan to re-elect him President for
a
c
'
ive-year term and it was the view of the Board that,
111°4sidering all the circumstances, Mr. Gidney's reappointIketAt should be approved for the five-year term. First
b"e'ce President Fletcher, whose service with the System
a /a.11 in February 1918, will be 63 years, 3 months of
tr °II March 1, 19)1, and it was the view of the Board
a.nat his reappointment as First Vice President should be
Proved only if it were clearly understood that he
3.9111d resign when he attained age 6) on December 1,
r )2, or in no event later than the end of the calendar
ear
)
2. In discussing a possible successor to Mr.
19
ptli:cher, the names of Vice Presidents Thompson and
°11 (ages ;2 and 53, respectively, in March 19)1)
ver
'
81 e mentioned without, however, a consensus as to a
'ecific selection.
clIn No change in the Presidency at Richmond was disoxi-Vd, it being assumed that Mr. Leach (age )6 years
vo,',411"ch 1, 1951, with service in the System since 1920)
:
61.1‘
0 4d be reappointed and approved by the Board for
prOther five-year term. With respect to First Vice
ezeasident Walden (service with the System since 1919
co, 'I-Imost 63 years of age in March 19)1), it was the
sh'eellsus that if he were to be reappointed, the Board
i
ILlIc°111c1
aPprove the appointment only if it were clearly
1.4 erstood at the time that he would resign upon attaine-Re 6) in April 19)3, or in any event by the end of
ca-lendar year 1953. It was also the consensus that
295
3/7/50
-1)-
It should be necessary to appoint a new First Vice
esident, Vice President Wo.yne, who will be almost
48 years of age in March 19)1, would be qualified to
steP into the position at any time.
Following a discussion of the situation at the
Pederal Reserve Bank of Atlanta, it was the view of
the Board that Chairman Neely should be informed at
114 early date that President McLarin (age 61 years,
D months on March 1, 19)1) should retire
and a
cessor found not later than March 1, 1921. There
;
las agreement that if former First Vice President
ele011 Bryan (age )8 years on March 1, 1921) would
1'
,
ave his present position as Vice Chairman of The
Te
,ust Company of Georgia,
his appointment as President
(3_f the
Atlanta Bank would be the best possible
!
olution to
the situation. If Mr. Bryan were not
Int
erested, the Board felt that a full investigation
/fIr
it the qualifications of Deputy Chairman Rufus C.
150.,1'
1is, who would be )4 years of age in March 19)1,
.t
d be made. It was also the view of the Board
:
de t selection of a First Vice President at Atlanta
ti'lvended on the selection of a President and that if
liewlY elected President wished the present First
'e President, Lewis M. Clark (age )6 years, 8 months
8Larch 19)1), to continue for a time so as to avoid
Bo---Ltaneous changes in the two top positions, the
ru
:
Isd would consider such a suggestion. As to the
1111e, it was felt that Winslow E. Pike (age 44
ye
:
is 8 months in March 19)1), former General Auditor
of—l.s,
"he Atlanta Bunk who recently resigned to become
Vice Pre
Ix)
sident of The First National Bank of Atlanta,
ai:siblY would be interested and qualified. In
potential prospects from within the Bank,
the
1951‘
4."ule of Morgan L. Shaw (age 4o years in March
now Assistant Manager at New Orleans, was
rot.
although it was felt he might not be ready
litts the First Vice Presidency for some years. It
rai,l,aleo felt that at a future date, consideration
be given to Harold T. Patterson, General Counsel,
voo
entered the employ of the Bank in 1947 and who
1114 be almost 48 years of age in March 19)1.
eel:18uin discussing the Chicago Bank, it was the conPresident Young (age 60 years in March 19)1),
296
3/7/50
-16-
'who has served with the System since 1921, would be
l'eappointed and that First Vice President Harris
‘age 56 years, 7 months in March 1921) would also be
reappointed, and that these appointments would be
,PProved by the Board. With respect to the future,
tt vas felt that there were no promising prospects
:270M within the Bank to succeed either Mr. Young or
vir. Harris and that this situation called for
serious consideration by the directors of that Bank.
s
The re-election of President Davis (with the
tem since 1936 and age 63 years, 3 months on
Barch 1, 19)1) as President of the Federal Reserve
411k of St. Louis was taken for granted, with the
.0eei
that his reappointment should be readily
Proved by
the Board. The question at that Bank
elf
) /140 was to be appointed First Vice President to
ti,:c
4eed Mr. Hitt was discussed and it was understood
D:
'
- this matter would be taken up with Chairman
'
v arMont at an early date. The Board felt there
8°Uld be no objection to Mr. Attebery, Vice President,
ejving as First Vice President until he attained age
in August 19)2 or until the end of that calendar
thar. The Board also indicated it would like to have
st
:7iews of Chairman Dearmont as to Vice President
h,
-aa (age 52 years in March 1951) although it felt
-qould not complement President Davis, nor would he
ish the assistance in the operations of the Bank
:
81:
- greatly
needed by President Davis. Mr. Vardaman
ei,!° stated he would like to know more of the cir/Zstances surrounding Mr. Stead's leaving Washington
fo;versitY. If the St. Louis Bank were to go outside
man, the Board felt it might be desirable to
po-" from another Reserve Bank and mentioned as a
massibility the name of D. C. Johns (age 52 years in
ach 19)1), Vice President and General Counsel of the
-el*a1 Reserve Bank of Kansas City.
p
?
W
rev At the Minneapolis Bank, President Peyton will
he 're at the end of his present term, at which time
be 65 years, 10 months of age. In the expectation
"First Vice President Powell (age )4 years, 2 months
1,b1) would succeed Mr. Peyton, it would be
ite.;earY to select a new First Vice President, and
-as the view of the Board that in terms of ability,
29?
3/7/50
-17-
Personality,
and potential growth, Vice President
McConnell (age 52 years, 1 month in March 1951) would
bBethe most suitable officer within the Minneapolis
ank to succeed to the First Vice Presidenc
y.
Both President Leedy (age 58 years in March
951) and First Vice President Koppang (age 52 years
.44 March 19)1) were expected
to be reappointed and
aPProved for an additional term in their respective
fices at the Federal Reserve Bank of Kansas City.
waS the view of the Board that so long as
"Ice President and General Counsel Johns (age )2
eal's in March 1951) remained with the Bank, it
roU
w ld be
well equipped with a potential successor
either the Presidency or the First Vice
sidency.
4
Il
IQ
It was the consensus that a change in the
'1"esidency should be made at the Federal Reserve Bank
Zr
il Dallas by March
1, 1951, and the Board indicated
p„.4t in no event would it approve reappointment of
,
sident Gilbert (age 62 years, 7 months in March
-)1) except with a clear understanding that he
:ad resign not later than August 1953 when he
tained age 6'
y
,
)
, or by the end of that calendar
81-lar. The Board felt strongly that every effort
c °Illd be made to obtain an outstanding person who
111(1 succeed Mr. Gilbert as President at the end
8
,!ills present term, and it felt that since no
i:en. successor was in the employ of the Dallas Bank,
lz bec
amiz a matter of finding the individual outside.
de 'was felt that appointment of a First Vice Presi:
61
should depend upon the selection of a President,
5.1' it was the view of the Board that Mr. Gentry (age
Years in March 1951) should be replaced but that
13e 131"esident Gilbert were replaced with a suitable
W
on, it would be possible that the new President
'
pi 44 prefer that Mr. Gentry continue for a time as
bcgt Vice President, rather than to have changes in
tu "Positions simultaneously. If an outstanding
m:!ssor to Mr. Gilbert could not be obtained by
1931 and it should turn out that he would
raj,:e a year or so longer, Mr. Gentry's reappointWould not be looked on with favor by the Board.
1:
4
-18Was also indicated that there was no adequate
sUccessor
for either of these positions available
from
within the Dallas Bank at the present time.
Both President Earhart (age 60 years, 7 months
March 19')1) and First Vice President Mangels
“age )4
years in March 19)1) were expected to be
j
r e.PPointed and approved for an additional term in
trlr respective positions at the Federal Reserve
tis
!
lk of San Francisco. The Board felt, however,
0"
4t while the Bank has a number of good operating
"leers who may succeed to the First Vice Presidency
t
a'Iti a later date, it would be desirable to
strengthen
a
:
staff from the standpoint of a potential Presi;
c 1141t
. by bringing in, at senior officer level, an
ID'
standing broad-gauge man from another Federal
'eserve Bank, or from outside the System.
It was agreed unanimously that
Messrs. McCabe and Szymczak would
determine how the necessary preliminary discussions of such of the
above matters as require discussion
should be initiated with the Federal
Reserve Banks.
At this
point Mr. Nelson withdrew and the action stated
With
respect to each of
the matters hereinafter referred to was
13Yr the
Board:
Minutes of actions taken by the Board of Governors of the
de
ral
Reserve System on March 3, 19)0, were approved unanimously.
Memorandum dated March 6, 19')0, from Mr. Bethea, Director
th
el)ivision of Administrative Services, recommending increases
:::
1 theba'sic
ual salaries of the following employees in that
ic/11) ef
fective March 19, 19)0:
3/7/50
t.
..kttr1 J.
Bricen —Steger
Barnes
Dolores Ann
Winkler
Clar't Ray
Cooke
liel3r11 M.
Lewis
Title
General Mechanic
Operator (Mimeograph)
Stenographer
Charwoman
Elevator Operator
Salary Increase
From
To
$3,12.5
$3,22)
2,770
2,870
2,670
2,730
2,470
2,740
2,330
2,400
Approved unanimously.
Letter to Mr. Wiltse, Vice President of the Federal Reserve
titrat
QT. New
York, reading as follows:
a
"Enclosed is a letter of the Board of
Governors
X.11;
america, New York, New York, to
.)
_rizin Bank of ,erica,
-ctsulish branches at Bremen, Frankfurt a. Main, and
t7urg, Germany, which you will please deliver to
f4 ballk. A copy of this letter is enclosed for your
,, "Please ask Bank of America to note that the
i'e4thority to establish the branches will automatically
o
n March 1, 1951, with respect to any one of
the
1e three
branches
unless any such branch is actually
a!
a
blished and opened for business on or before that
i;16e) and request Bank of
America to advise the Board
po riting through the Federal Reserve Bank of New
:
1, '4 when
a branch is so ectablished and opened for
ullsiness
4
Der,. "please also inform Bank of America that the
00
tillent of Ftate has been advised by the High
41144418sioner for Germany that there is not at present
Ileed for additional banking services for occupapr,T Personnel, and that the activities of the branches
be-vcIssd to be established in Germany would of course ,
subisct to High Commission regulations and policies.
Approved unanimously, together
with the following letter to Bank of
America, New York, New York:
Sytt "The Board of Governors of the Federal Reserve
1)11.1„e111 authorizes Bank of America, New York, New York,
peetlant to
the provisions of section 25(a) of the
erea Reserve Act and the Board's Regulation K, to
300
3/7/50
-20-
establish
branches at Bremen, Frankfurt a. Main, and
s4burg, Germany, and to operate and maintain such
!
ul'anches subject to the provisions of such section and
upon condition that all rights granted
hereby shall be deemed to have been abandoned and
the authorit
y hereby granted shall automatically
termi te
on March 1, 1951, with respect to any of
such branches which is not actually established and
°Pea for business on or before that date."
Letter prepared for Chairman McCabe's signature to
lick°
rable Burnet R.
Maybank, Chairman of the Committee on
kg and
Currency, United States Senate, reading as follows:
"This is in response to Mr. McMurray's request
February 16, 19)0, for an expression of the Board's
sl'ews on the merits of S. 2943 to create the office of
711 business coordinator on a permanent basis as part
011
ad the Executive Office of the President. We have been
binsed by Mr. McMurray that, while hearings on the
vill not be held, your Committee wishes to consider
or 2943 this week and you would like to have the views
the Board
by Tuesday, March 7.
As you know, the Board has been particularly intra.,
for
ed over the years in the problem of providing
1. ,
1 the financial needs of small business. Under section
hial" of the Federal Reserve Act, the Federal Reserve Banks
Z
rel
. a direct but limited authority in this field. Curetd;'1Y Proposals are before Congress to provide more
eloac
elY for financial assistance to small business,
it
._
vario is the hope of the Board that studies of these
stm, uS proposals Will result in a practical and cons'etive solution.
viv, "The vitality of small business is intimately connected
:the preservation of our system of free competitive
elit
faZ13,
1:ieel and the Board recognizes that the problems
the-- °Y small business enterprises are not confined to
as jaestion of finance, but include other aspects, such
fai,a2cation, the availability of technical assistance, and
asp;°°MPetition for Government contracts. These other
e!a, which fall largely outside the area of the Board's
the-(?,' experience, are the concern of other agencies of
vhi ',7c°7ernment, particularly the Department of Commerce
ea for a
- number
of years has maintained a Division of
301
3/7/50
-21-
all Business and during the past two years has given
th6se problems special consideration.
The Board does not feel qualified to pass on the
ed to establish additional coordinating facilities
in
1,11e Executive Office of the President on a permanent
i4sis
v
as is contemplated in this bill. It would be
,liclined to defer on this question to the judgmen
t of
ilphe
Secretary of Commerce and the Director of the Budget,
et°th of whom have had direct contact with the problem,
4(1 it urges that the Committee give consideration to
their
views.
tv,
m lf Congress, however, should decide to establish
e office as contemplated in this bill, the Board
:
11 cooperate in every way possible to make the
'Iltperiment successful."
r
Approved unanimously.
Secretary.
Chairman.
@FedFRASER