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201 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Tuesday, November 242 1953. The Board met in the Board Room at 10:20 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Evans Vardaman Robertson Carpenter, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Thurston, Assistant to the Board Leonard, Director, Division of Bank Operations Mr. Vest, General Counsel Mr. Hackley, Assistant General Counsel Mr. Mr. Mr. Mr. Mr. There was presented a request that Mr. Allen, Director, Division of Personnel Administration, be authorized to travel to Kansas City, Missouri, and St. Louis, Missouri, during the period December 24, 1953, to review the work of the personnel departments of the Federal Reserve Banks of Kansas City and St. Louis. Approved unanimously. Prior to this meeting there had been circulated among the members of the Board a memorandum dated November 4, 1953, from Mr. Horbett, Assistant Director, Division of Bank Operations, concerning the triennial designation of central reserve and reserve cities, effective March 1, 1954, pursuant to the rule adopted by the Board on December 19, 1947. Governor Robertson and other members of the Board had requested that the matter be discussed at a meeting, and subsequently there had been sent to the members -2- 11/24/53 of the Board for further review copies of Mr. Horbett's memorandum and related papers, including a draft of letter to the Federal Reserve Banks, together with copies of the entry from the record of policy actions in the Board's 1947 Annual Report discussing the adoption of the present formula for the classification of central reserve and reserve cities. At the request of the Board, Mr. Leonard reviewed the development and adoption of the formula and actions taken thereunder in 1948 and 1951. Mr. Leonard's comments were followed by a discussion of the operation of the formula and the desirability of requiring that all member banks (exclusive of banks in outlying sections authorized to carry reduced reserves) must join in a request that a reserve city designation be continued when it would otherwise be terminated under the formula. At the conclusion of the discussion, unanimous approval was given to a letter to the Presidents of all Federal Reserve Banks in the following form: This refers to the rule prescribing standards of classification of reserve cities and providing for a triennial designation of such cities, adopted by the Board on December 19, 1947. The rule appears on pages 86-87 of the Board's 1947 Annual Report. As a basis of the action which the Board will take under the rule effective March 1, 1954, the enclosed table has been prepared showing total deposits, total demand deposits, and interbank demand deposits of member banks in reserve cities other than Federal Reserve Bank and Branch cities, and in nonreserve cities with a large volume of interbank demand deposits, 21 11/24/53 -3- s. The together with two interbank demand deposit ratio er 10, figures of deposits are averages of call dates Octob ses, purpo e 1951 to June 30, 1953, inclusive. For comparativ the for interbank demand deposits ratios are also shown period December 312 1948 to June 302 1950. ional reAs you will observe from the table, no addit ve city desigserve cities will be designated, and the reser will be continued, nation of each of the following nine cities in the city effective March 1, 19542 only if all member banks ict of such city distr ing outly an in (exclusive of any member bank reduced reserves) permitted by the Board of Governors to maintain ded under the request continuation of the designation as provi s: citie ve reser rule for classification of St. Joseph, Missouri Lincoln, Nebraska Topeka, Kansas Sioux City, Iowa Pueblo, Colorado Cedar Rapids, Iowa Dubuque, Iowa Kansas City, Kansas Toledo, Ohio member bank Please advise each member bank (exclusive of any cities above the of any in ves) permitted to carry reduced reser rule, the in ded provi As tion. in your District as to the situa should n natio desig city ve reser the a request for continuation of of the bankts be accompanied by a certified copy of a resolution received by be and st reque board of directors authorizing such 1954. 15, ary Febru than the Federal Reserve Bank not later Board as the to rd forwa will It will be appreciated if you from Bank your by ved recei promptly as convenient all requests s. statu city ve reser the of the member banks for continuance their t permi to late too Should any such requests be received 1954, it is being forwarded to reach the Board by February 16, receipt of the of wire by requested that you advise the Board such requests. in your disIn response to appropriate inquiries you may, regarding the n herei ined conta cretion, give out the information indicated redesignations and terminations. from the meetMessrs. Leonard, Vest, and Hackley then withdrew ing. to action Reference was made to the practice instituted pursuant tion cards are sent of the Board on September 270 1951, whereby identifica dents and each year to Federal Reserve Bank and branch directors, Presi 2fl -4- 11/24/53 are other officers of Federal Reserve Banks and branches whose names ary listed in the Federal Reserve Bulletin, and the members and secret of the Federal Advisory Council. Question was raised as to whether there was justification for continuing the practice. Following a discussion of the matter, during which various be taken views were expressed, Chairman Martin suggested that no action Presidents of at this time but that the comments of the Chairmen and of the the Federal Reserve Banks be obtained during the conferences two groups in December. Chairman Martin's suggestion was approved unanimously. The Board then went into executive session, after which the Secretary was informed by the Chairman that during the session unanimous approval WAS given to the following letter to Mr. Parten, Chairman of the Federal Reserve Bank of Dallas, which had been prepared for Chairman Martin's signature in accordance with suggestions made in the course of informal discussions at earlier meetings of members of the Board: ce, This will refer to our conversations and corresponden the to t respec with 13th, er Novemb of especially your letter of Dallas. selection of a President of the Federal Reserve Bank a of Federal ent Presid a of tment appoin As you know, the e prostatut the since ty, sibili Reserve Bank is a &Al respon ors of Direct Board the by vides that he shall be appointed rethe is It ors. Govern with the approval of the Board of poss of canvas full a make sponsibility of the Directors to ble availa ied man qualif best sible appointees and to select the five of a term for is tment for the appointment. The appoin years, and because of the importance of the position, the approval of the Board of Governors cannot be lightly given. 20f 11/24/53 -5- Whenever the Board feels that a person proposed for apns pointment as President does not have the qualificatio to rove. disapp necessary for the position, it is its duty When Mr. Gilbert was reappointed President in 1951, e the Board indicated that it would be willing to approv tandunders clear the reappointment of Mr. Gentry with the and that ing that he would resign when Mr. Gilbert retired, Vice the question whether Mr. Gentry was continued as First wanted President would depend on whether the new President him in that office. You later informed the Board that Mr. Gentry was entirely willing to resign as First Vice Presias dent, to take effect with the retirement of Mr. Gilbert, Presithe he (Mr. Gentry) took the commendable position that the dent of a Federal Reserve Bank should have a voice in not want selection of the First Vice President and he would to the to serve in that capacity if he were not acceptable President. While we appreciate very much the service which Mr. ue Gentry has given the System over many years, MB contin e provid to ied qualif not is he to be of the opinion that e Bank Reserv l Federa the enable the leadership necessary to l of Dallas to take its proper place as part of the centra ore, theref that, and States banking system of the United apin the best interests of the Federal Reserve System his ed. be approv not pointment to the presidency should There have been rumors that two or more members of the Board of Governors seek appointment as President of the Dallas Bank. These rumors are utterly false. Each member of the Board has stated that he is not interested in the were job and would decline to accept the appointment if it tendered to him. of Your letter indicates the possibility that members ors Govern of Board the with your Board might wish to meet in Washington. We would welcome such a meeting in order apthat each of us - all members of the same team - might views. tive respec our preciate more fully the basis of The meeting then adjourned. During the day the following ad- the members present: ditional actions were taken by the Board with all of Minutes of actions taken by the Board of Governors of the Federal Reserve System on November 23, 1953, were approved unanimously. 201(k -6- 11/24/53 Telegram to Mr. M. Moss Alexander, President, Missouri-Portland Cement Company, St. Louis, Missouri, prepared pursuant to action taken at 16, 1953, and reading as follows: the meeting on November Board of Governors has appointed you Class C director of the Federal Reserve Bank of St. Louis for three-year term beginning January 1, 1954, has designated you Chairman and Federal Reserve Agent at the Bank for the year 1954, and has fixed your compensation as such on uniform basis fixed for same position at other Federal Reserve Banks, i.e., at same amount as aggregate of fees payable during same period to any other director for attendance corresponding to yours at meetings of board of directors, executive committee, and other committees of board of directors. Your acceptance by collect telegram will be appreciated. The Board will issue later a press statement on appointments of directors at all Federal Reserve Banks and Branches. It would be appreciated if announcement of your appointment could be deferred until release of Board statement. Approved unanimously. Telegram to Mr. Caffey Robertson, President, Caffey Robertson Company, Memphis, Tennessee, prepared pursuant to action taken at the meeting on November 16, 1953, and reading as follows: Board of Governors has appointed you as Class C director of Federal Reserve Bank of St. Louis effective January 1, 1954, for unexpired portion of term ending December 31, 1955, and will be pleased to have your acceptance by collect telegram. As you know, the Board will issue later a press statement on appointments of directors at all Federal Reserve Banks and Branches. It would be appreciated if any announcement of your appointment could be deferred until release of Board 13 statement. Approved unanimously. Telegram to Mr. Leslie N. Perrin, Director, General Mills, Inc., Minneapolis, Minnesota, prepared pursuant to action taken at the meeting -7- 11/24/53 on November 162 1953, and reading as follows: Board of Governors of the Federal Reserve System has appointed you Class C director of Federal Reserve Bank of Minneapolis for three-year term beginning January 1, 1954, and will be pleased to have your acceptance by collect telegram. It is understood that you will relinquish all commercial bank affiliations and dispose of any bank stock you may own in order to qualify as Class C director. The Board will issue later a press statement on appointments of directors at all Federal Reserve Banks and Branches. It would be appreciated if any announcement of your appointment could be deferred until release of Board's statement. Approved unanimously. Telegram to Mr. Phillip I. Welk, Vice President, Preston-Shaffer Milling Company, Walla Walla, Washington, prepared pursuant to action taken at the meeting on November 20, 1953, and reading as follows: Board of Governors of the Federal Reserve System has appointed you director of the Portland Branch of the Federal Reserve Bank of San Francisco for two-year term beginning January 1, 1954, and will be pleased to have your acceptance by collect telegram. It is understood that you are not a director of a bank and do not hold public or political office. Should your situation in these respects change during the tenure of your appointment, it will be appreciated if you advise the Chairman of the Board of Directors of the Federal Reserve Bank of San Francisco. Board will issue later a press statement on appointments of directors at all Federal Reserve Banks and Branches. Would be appreciated if any announcement of your appointment could be deferred until release of Board's statement. Approved unanimously. Letter to Mr. Meyer, Vice President, Federal Reserve Bank of Chicago, reading as follows: 11/24/53 -8- In accordance with the request contained in your letter of November 13, 1953, the Board of Governors approves the payment of salaries to Frank Biess and Wilhelm Lange, Night Janitors, at the rate of $3,877 per annum, which is $367 in excess of the maximum established for the grade in which their jobs are classified. Approved unanimously. Letter to Mr. Peterson, Vice President, Federal Reserve Bank of St. Louis, reading as follows: This refers to your letter of October 23, 1953, requesting an interpretation by the Board of the language contained in section 8 of Regulation F that a committee of directors shall "at least once during each period of twelve months" make or have made an audit of the trust department of each national bank. The specific question is whether this provision means that such audits must be made at intervals of not more than twelve months or may be made at least once during each calendar year. The language "at least once during each period of twelve months" also appears in section 6(c) of Regulation F, relating to the review of trust assets by trust investment committees, and in section 17(c)(3) of Regulation F p relating to audits of common trust funds. It is the Board's opinion that the correct interpretation of this language in each instance is that not more than twelve months shall elapse without the required action being taken. Approved unanimously, with the understanding that copies of the letter would be sent to the Presidents of all Federal Reserve Banks for their information.
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