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834 Minutes of actions taken by the B ard of Governors of the '8.1 Reserve System on Tuesday, May 25, 1948. The Board met in thett. ' ard Room at 10:30 a.m. PREsENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Eccles Szymczak Draper Evans Vardaman Clayton Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Smead, Director of the Division of Bank Operations Bethea, Director of the Division of Administrative Services Thomas, Director of the Division of Research and Statistics Vest, General Counsel Nelson, Director of the Division of Personnel Administration Townsend, Associate General Counsel Millard, Assistant Director of the Division of Examinations , 1 4 la ecordance with the decision reached at the meeting of the °7:111417 142 19481 there was a further discussion at this meeting °t'qi°11 bY the Board to in re by 2 percentage points the re41'1N 144 1%cNitrements of member banks in the central reserve cities of , elrld Chicago. The discussion was in the light of the existl'141erlre situation of banks in these cities and whether action 11141 takell now in anticipation of renewed inflationary tendencies, 5/25/48 -214Q4,44...g 'a increased lending by member banks, or whether action should be , d/ erred until there was a more definite upward trend in the of credit when action might be more effective in retarding 441ereiag the movement. After a comment by Mr. Thomas that the reserve position of 41441 reserve city banks had not changed greatly since the matter 114 discussed by the Board on May 14, he stated that, if the Board 4111ed to give 30 days notice of an increase in requirements, the 44110 should not be made effective until after the first of July tclr the reason that the market would be under pressure during the Itttter part of June. He also said that in July the Treasury could r4i1it5te adjustment to the increase by reducing its calls on war 14414eount8 during the period of adjustment. He added that the NEtelktY refunding operations should be taken into account in timing t4 804rdi a action. 0, Mr. Szymczak inquired whether four weeks public notice of a 3,4 r ktt104 eserve requirements was necessary and suggested that the 'iglat h. -- more effective if only short notice were given. 111'• McCabe stated that when he and Mr. Sproul were at the kirY on I, Ttke ' 18-Y 12 for their discussion with representatives of the tc4,4, 1 11rY h respect to an increase in the short-term rate, he in, the ' reltallrY that the Board felt strongly that there should hr iacrease in reserve requirements and that action on 836 5i5/48 _3_ ttl° Matter might be taken shortly after the Treasury announcement /tt.411 respect to the June refunding was made. €est d In. response to a request for his comment, Mr. Riefler sugthat the time to take the action was when the money market 'ed to be getting out of hand, at which time action would be keit tor 9 effective than if taken earlier. He questioned the need g much notice before the effective date of the action for the : 48 8°Ia that the increase would affect only the banks in central cities which would not need a great deal of time in which Just their positions to the higher requirements. to With 1148 further reference to the timing of the action there CliBellssion of the possible effect of action in June on the 4tikclille and as to whether it would be preferable to make t4"tectilre date of the action some time in the latter part of 'Ilki (11' eatlY August. It was suggested in this connection that, : 14.17 "4°4 la June would result in increased purchases of certit'ktse by. the Federal Reserve Banks, this effect on the securities 144Nt l'i°41c1 result from the action regardless of when it was taken. The A ,Liscussion indicated that a majority of the Board would takit g the ttr action immediately. Mr. Eccles suggested that the °ate f °II the the action should be in the early part of June 414t 1.fa48°48 that the reserve position of banks would be easy title, eholo there was increasing evidence that an inflationary egain taking hold in the country and action would 837 5/25/48 -4allindication that the Board of Governors was using such powers 48ithad to meet the situation, and if it were made effective at 4 date in June it might interfere with the July financing. Ittle action were not made effective during the early part of June, 46414; the effective date would have to be deferred until the latt'laalt of July or the early part of August. He felt that the 414° rell5(31as that justified a recommendation that the short-term l'atebe in creased applied to an increase in reserve requirements 4cIlle stated that he would favor such action. SzYmczak stated that there was no increase in lending in trttry 414 Chicago by member banks at this time, but on the con- 4 'a decrease, that if action were made effective before July 1 4116t be laterpreted as an effort in the direction of trying to ,t:11‘ecil 44, 14 tacrease in the short-term rate and that, since it would to get legislation at this session of the Congress Nt P°88ible the Board additional credit powers, he felt it would be de- ec/r the Board to use its existing powers at a time when its 1"i°t1 lq°111d have the greatest possible effect later in the year th e was Pe eti,, an indication that member bank lending was increasing. 11 4 4Ction. ' at that time, he said, he would continue negotiations IN the ktilt °Dfill ha Ill'elIsurY for an increase in the short-term rate, having in 1)°5sibility of increasing the rate by operations in the 11141141t before the next refunding operation is undertaken. ' ence was also made to the fact that those who were opcliti°11a1 credit powers for the System had stated repeatedly 8%8 , 5/25/48 -5thel'e was no need for such powers because the Board had not used ite powers. After a further discussion of the possible effects of the action, Mr. Eccles moved that action be taken by the Board to increase reserve requirements of central reserve city banks by 2 percentage points with the understanding that the action would be announced immediately to become effective on Friday, June 11, 1948. Chairman McCabe stated that before action was taken he would halie the latest information as to the reserve position of taklber batiks in NewYork and Chicago and how the increase would afetthose banks. et.,0 tit)I theAtter some further discussion, Mr. Eccles withdrew his motion understanding that there would be a further discussion of tter es the first item for consideration at a meeting of the 11()41tri 44j4t to be held tomorrow morning at 10:00 a.m. Ther e was then presented a memorandum from the Personnel Cornread,_ 4-4g as follows: the:The Personnel Committee recommends that Section 4 of be ern°4rOs travel regulations as amended November 7, 1947, Ilci -nc , led to provide an increase in the allowance for ofDertt-l'iravel in a person's own automobile from 5O to 6 1/4 an and the elimination of the provision which now reteed 8 this allowance in the case of employees not to exahortthe cost of transportation by common carrier over the ! f lile reni usually traveled route between the points of travel. B--4tion in this respect would then read: When using automobile in official travel, the traveler may be : 414 ,4 - mileage at a rate not to exceed 6 1/4 per mile in lettitti expenses except that reimbursement 0111°13ile travel in accordance with the provisions of 'lq —l'agl'aPh by others than those excepted from the proof ‘lettn 4 Paragraph 8 of these regulations shall be subhe approval of the Personnel Committee.' operating 839 -6-_ ‘j°11111t. r,. "The Government travel regulations allow 50 per mile f."' official travel and the Board's regulation has con80111ed in this respect except for a short period from ePtember, 1946, to March 21, 1947, when the allowance 1/4 per mile. re "A survey of the Federal Reserve Banks sometime ago , vealed the following allowance for official travel in verson s own car: 7 Banks 70 per mile 3 Banks 60 per mile 1 Bank 50 per mile 1 Bank 60 - 70 - 80 per mile (Atlanta) (depending on cost of car) recent report published by the American Automobile 10 Lciation shows that for a small post-war car driven 3 i;u i miles the allowance for operating cost should be clar::w per mile plus $1.30 per day and that when insurance, alVeiation, and license fee are included, the allowance PIN's be 8 1/40 per mile. A similar computation for a -Zr oar gives a mileage cost of just over 70 per mile. orl, Colonel Press in the office of the Washington Board Perarade says that the present allowance for the use of a °Ille own car by local firms is 70 to 80 per mile." Upon motion by Mr. Eccles, the recommendation of the Personnel Committee was approved unanimously. Co ' e of the agenda for the forthcoming Conference of Chair"th e Federal Reserve Banks at White Sulphur Springs, West 44442 n thq -14114Y 29-31, 1948, were distributed. Mr. Evans stated f ale a.gerlda had been prepared in accordance with the wishes of ' 4ellt, a OOThThjj0 of the Conference and that it was his recomk, 440„. ' th. 4 that „_ 10044re 'due Board authorize the payment of the expenses of 444 4Ce uhich would not be covered by the travel and subsis- N)erisk . of the individuals attending the Conference. Mr. Evans' recommendation was approved unanimously. 840 5/25/48 _7_ Reference was made to the discussion at the joint meeting the l, -Qard of att41C , Governors and the Presidents of the Federal Reserve nh 8' - 4PlaY et 4, 21 of the desirability of a reduction in the portion of eallaings of the Federal Reserve Banks being paid to the an interest charge on outstanding Federal Reserve notes to t he further action to be taken by the Board in connection /rith e tatter. 44 It was unanimously agreed that the staff should prepare, and send to each member of the Board for his comment, a draft of a memorandum setting forth the reasons for and against such a reduction, it being understood that after the members of the Board had had an opportunity to comment on the memorandum it would be revised and placed an the docket for consideration at a meeting. Mt 'ClaYton stated that Mr. Townsend had completed his in- 4tika.4 was ready to report to the Board with respect to the (148tim., t6 -4 *vhether a proceeding should be instituted by the Board under ' Dr vi -aictis of the Clayton Act against Transamerica Corporation -4(I ths. the (Mr. Clayton) would suggest that the Board hear Mr. t4a 114113 st atement at the meeting of the Board tomorrow following 1:La , 1 4"cleration of an increase in reserve requirements of member central reserve cities. Following a discussion of the nature of the proceeding and the procedure that might be followed in connection therewith, Mr. Clayton's suggestion was approved unanimously. 841 5/25/48 -8At this point all of the members of the staff withdrew from thelecting except Mr. Carpenter. Consideration was then given to the salaries submitted by the el'al Reserve Banks of Atlanta, Minneapolis, and Dallas for Officers 1( 48, of the respective Banks for the year beginning June 1, ellci upon motion by Mr. Draper the following actions were taken —4ms vote: 1. A letter to Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, was approved unanimously as follows: ri,s _ The Board of Governors approves the payment of sala4 c to the following officers of the Federal Reserve Bank throL AIleaPolis and its Branch for the period June 1, 1948 the-Z12L May 31, 1949, at the rates indicated, which are yollr't418 fixed by the Board of Directors as reported in letter of April 22 1948: J Name Title Annual Salary 0. s. veyton $25,000 President stetirapoweU President 18,000 First Vice (1)1:PUree1 13,000 Counsel Vice President and san ton cl 12,000 Vice President A. McConnell 11,000 Vice President 4. T4 MiliS Vice President and Cashier 11,000 1.0 Zieter Vice President and Secretary 9,750 44 B. ore 10,000 Personnel Officer Larson 9,000 Assistant Vice President E. Larson 8,000 Assistant Cashier Peterson. 7,000 Cashier Assistant Z,4 Turner 5,750 Assistant Cashier 0. ' .4 14 LYsert 7,000 Operating Research Officer 0 1stad 7,500 Auditor 1,1.4. McCracken 8,000 Research Director of Strouraan, 7,000 Jr. Assistant Counsel BRANCH HELENA C, 4% Towle 10,000 Vice President Lareon 6,500" Assistant Cashier C 5/25/48 2. After a discussion of questions raised by Mr. Vardaman with regard to the quality of the work being done by r,essrs. McLarin and Clark as President and First Vice President, respectively, of the Federal Reserve Bank of Atlanta (during which Messrs. Smead, Nelson, and Millard were called back into the meeting), it was agreed that on the basis of the information available to the Board it should not approve the increase of $1,000 proposed by the Directors of the Atlanta Bank for First Vice President Clark. 3. The following letter to Mr. McLarin, President of the Federal Reserve Bank of Atlanta, was approved: ri "The Board of Governors approves the payment of sala„ : e to the following officers of the Federal Reserve Bank 19zPantP for the period June 1, 1948, through May 31, 1T3,V, 4't the rates indicated, which are the rates fixed tia ''e Board of Directors as reported in your letter of 5r 14, 1948: 41, s ligL.Lie Title Annual Salary v. x. M cLarin, Jr. President $25,000 S. 1,' Bowman Vice President 11,000 J. ,. Schuessler Vice President 9,000 Deamark Vice President 9,000 0.118H. Bowden Assistant Vice President 7,500 eamP Assistant Vice President 7,500 liartin Assistant Vice President 6,000 Martin Assistant Vice President 5,500 F..41/41, McCravey, Jr. Assistant Vice President 7,500 4riedi0arr Rainey Assistant Vice President 6,000 Director of Research ili:114310 ; .e .allt : 9,000 General Auditor 8,000 14°1(1 T• Patterson General Counsel 9,000 P. L. Birmingham Branch T. 4. 0 Beavers Vice President and Manager 9,500 4 * "azer Assistant Manager 7,000 I,eo w.1.1r quhartCashier 6,500 Starr Assistant Cashier 5,500 5/25/48 -10'...Lame Annual Salary Title Jacksonville Branch Tn• A. Lanford Vice President and Manager $10,000 `1:11"alford Clark 7,000 Cashier jas°11 C. Ford 5,000 Assistant Cashier ' lIY1Y Snyder 6,000 Assistant Cashier Nashville Branch B. Fort, Jr. 8,500 Vice President and Manager 6,500 liarrison Cashier Robert E. TvkgYiy, Jr. Assistant Cashier 6,000 E. p New Orleans Branch 'raris 13,500 Vice President and Manager ; 31 g614 L. Shaw 8,000 Assistant Manager 4 , 1,' 11 Sewell 6,600 Cashier T. Chapman Assistant Cashier 5,400 • V 5,100 Assistant Cashier asterling The Board also approves the payment of salary to Mr. 1,471,L Milling for the period June 1, 1948, through May 31, at the rate of $5,500 per annum as an officer of the with the title of Assistant Vice President. ereti "The Board has given careful consideration to the inVice"! in salary recommended for Mr. L. M. Clark as First erea ' resident and has come to the conclusion tht,t the in13140 should not be approved at this time. However, the 4e.,rk °f Governors approves the payment of salary to Mr. IlYth:1 his present rate of 416,000 per annum, if fixed JlatLe ; 4Joard of Directors at this rate, for the period 1948 through May 31, 1949." 4. Chairman McCabe was requested at a convenient time to talk with Mr. Neely, Chairman of the Federal Reserve Bank of Atlanta, about the question whether Messrs. McLarin and Clark should be reappointed as President and First Vice President, respectively, at the end of their present terms. 5. After a discussion of questions raised by Mr. Vardaman with respect to the quality of the work being performed by Messrs. Gentry and Novey, First Vice President and Auditor, respectively, of the Federal Reserve Bank of Dallas, the following letter to Mr. Gilbert, President of the Federal Reserve Bank of 844 5h5/48 -11Dallas, was approved with the understanding that at his convenience Chairman McCabe would talk with Mr. Parten about the quality of the services of Mr. Novey as Auditor; "The Board of Governors approves the payment of sala: 11 .„ 8 t0 the following officers of the Federal Reserve Bank °ti:aruallas and its Branches for the period June 1, 1948 the°11gh May 31, 1949, at the rates indicated, which are ,,,, rates fixed by the Board of Directors as reported in . 11r letter of May 14, 1948: Name Annual Salary It. ,.------Title v. , I. Gilbert $25,000 President IL ;).• Gentry 17,000 First Vice President . b'4E . Coleman 14,000 Vice President 11,000 Vice President L. 4118tin 4 . II:, rondrom 11,000 Vice President and Cashier Delyross 11,000 President Vice me. • Irons 11,000 Vice President moe C, yth 8,400 Vice President rga4 H. Rice Assistant Vice President and B, 0 9,000 Secretary of the Board 7,200 Assistant Cashier J• L. Webb 7,500 Assistant Cashier Ro%rarta • C°°k A. rj" 7,000 kd., 1,(4Carrithers Assistant Cashier 14. D Lchaelis 6,800 Assistant Cashier P. T' Waller 6,800 Assistant Cashier Nailer " 11.u.8,000 General Auditor Houston Branch 4.,;,t Holloway 10,000 Vice President B.' ' 1 Davis 6,300 Cashier "Ts Troy 5,500 Assistant Cashier San Antonio Branch ' 111E. b_ 9,000 Vice President tAYr lgle . ceci 5,400 Cashier C. ,,-* Mundt mgee 5,000 Assistant Cashier C, El Paso Branch R ,Wland Vice President T, e% zoerg Cashier 75:80 50g 4 Arnold 4,800" Assistant Cashier Mr. . v. .rdaman presented a letter dated April 27, 1948, from President of the Federal Reserve Bank of Atlanta, in 845 5125-A8 -12481)())18e to the Board's letter of April 12, 1948, with respect to the plats for the Jacksonville Branch Building. All of the members q the Board indicated that they would prefer to adhere to the positi°11t0en in the Board's letter and it was understood that Mr. 444 lictild prepare a draft of reply to Mr. McLarin's letter for 1481derati011 by the Board. The action stated with respect to each of the matters hereillatter re ferred to was taken by the Board: MillIltes of actions taken by the Board of Governors of the 1 Re serve System on May 24, 1948, were approved unanimously. 14etflorandum dated May 12, 1948, from Mr. Evans stating that '11111t8t011 and Mr. Thomas had selected Mr. Riefler as the third 141111 01* the 4t4" 114' Staff Editorial Committee to succeed Mr. Parry, who APril 1, 1948, and recommending that the selection be bY the Board. Approved unanimously. tette, to 4_ Mr. Brainard, Federal Reserve Agent of the Federal tr Of Cleveland, reading as follows: 4tt: Ill accordance with the request contained in your "r: !;14°I' May 20 1048, the Board of Governors approves, roia"'ve June ' 1 1948, the payment of salaries to the tiinE member; of the Federal Reserve Agent's staff Iv rates indicated: 14/4 Annual Salary Title 4' Cosgrove *3,480 Federal Reserve Agent's Representative, Pittsburgh Branch 4°11°4 M. Trowbridge Federal Reserve Agent's 3,660" Representative, Pittsburgh Branch Approved unanimously. 846 5/25/48 -13Letter to Mr. Viltse, Vice President of the Federal Reserve 4.4 or „ 'ew York, reading as follows: till_ "Reference is made to your letter of May 18, 1948, tzitting the request of the Manufacturers and oFITre Trust Company, Buffalo, New York, for approval 4fle establishment of a branch in Ebenezer, New York, Il_eonnection with the proposed absorption of The -ulmiezer State Bank. ezia In view of your recommendation, the Board of Govbrpl e aPproves the establishment and operation of a 1,1;:ch in Ebenezer, New York, by the Manufacturers and Cells Trust Company, Buffalo, New York, provided the L4Ption of The Ebeuezer State Bank is effected subin accordance with the plan submitted; the obt-LaPProval of the appropriate State authorities is the Rd, and with the understanding that Counsel for 1 eserve Bank will review and satisfy himself as to +4; : ; 4 e legality of all steps taken to effect the pro1008 'u absorption and establishment of the branch." Approved unanimously. NAs4erzia Letter to Mr. Vance L. Sailor, Chief, Division of Examination, Deposit Insurance Corporation, reading as follows: 1146:111 compliance with the recent oral request of Mr. Your— °f Your Division, we are sending herewith, for Not c°nfidential information and use, photostatic ../3 of the following financial statements of the ee 0 1Per Company, Jacksonville, Florida: balance 1.08D",,ae of December 31, 1942; statement of profit and laci-1.1.or the year 1942; and schedules numbered 1, 2, EuPPorting the balance sheet." Approved unanimously. Letter 1101.18z to the Federal Deposit Insurance Corporation reading Feder 4u,.1 euant to the provisions of section 12B of the Of the Reserve Act, a8 amended, the Board of Governors Federal Reserve System hereby certifies that the 847 -14- it A__ zwierican State Bank, Lubbock, Texas, became a member of 1;';ile Federal Reserve System on May 20, 1948, and is now a ! 1 Der of the System. The Board of Governors of the FedReserve System further hereby certifies that, in : 1 4ecti0n with the admission of such bank to membership „ the Federal Reserve System, consideration was given c7;the following factors enumerated in subsection (g) Bection 12B of the Federal Reserve Act: 1- The financial history and condition of the bank. 2. The adequacy of its capital structure. 3. Its future earnings prospects. 4. The general character of its management. 5. The convenience and needs of the community to be served by the bank, and 6. Whether or not its corporate powers are consistent with the purposes of section 12B of the Federal Reserve Act." 4 Approved unanimously. Letter to Mr. Earhart, President of the Federal Reserve Bank Cisco, reading as follows: to "Thank you for your letter of May 5, 1948, in reply zlikt: letter of April 30 with reference to the buying Irl; of°1 bankers' acceptances with resale agreement. Your, -- 1 of the explanation in the second paragraph of 4ppr J-etter, the Board's telegram of January 14, 1948, ;;n e minimum buying rate for bankers' acceptances &1:i qi,allegarded as having included approval of a rate eetPe1 cent for bankers' acceptances with resale Nti flit is noted that the special commitment rate on be di:4 13b loans guaranteed under Regulation V will co11tinued at the next meeting of your Board of °4c4ors.,, Approved unanimously. Meito randum dated May 21, 1948, from Mr. Thomas, Director of Nkti() Qf Research and Statistics, recommending, for the tie etlited in the memorandum, that the System reporting form 848 —15(3140tion of quarterly information on interest rates on business Itt tade at banks in 19 principal cities be revised in the form tackled to the memorandum for use beginning with the June report- Approved unanimously. It. Letter prepared for Chairman McCabe's signature to Mr. Arthur 1434, Chairman, National Security Resources Board, reading as toki to i _ nrz response to your letter of May 14, I am pleased lion,14„°rm 44 you that the Board will be glad to have Mr. 8,1iis ef Thomas, Director of the Division of Research Aci 4Qtatistics, serve as a member of an Interdepartmental flei;!nr Committee on Plans and Programs which you are . up for a six months' period. It is understood tu; t 44% tilernbers of the Committee from the different agenaZof the Federal Government will serve in their perNA :capacities and not as official representatives of a gencies." Chairman.
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