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20?9 Minutes of actions taken by the Board of Governors of the Fed— eral Reserve System on Tuesday, November 29, 1955. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Vardaman Mills Robertson Shepardson Carpenter, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Fauver, Assistant Secretary Thurston, Assistant to the Board Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Vest, General Counsel Johnson, Controller, and Director, Divi— sion of Personnel Administration , Mr. Miller, Chief, Government Finance Section cs Statisti Division of Research and Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. The following matters, which had been circulated to the members °f the Board, were presented for consideration and the action taken in each instance was as indicated: . Memorandum dated November 182 1955, from Mr. Sloan, Director, .Lvlsion of Examinations, recommending that the basic annual salary of M pat fr ricia McShane, Training Assistant in that Division, be in °m $3,925 to $410/51 effective December 4, 195$. Approved unaninously. Divis, Memorandum dated November 16, 1955, from Mr. Sloan, Director, Eugenn of Examinations, recommending that the basic annual salary of Lowe, Assista be 4-Ws nt Federal Reserve Examiner in that Division, an J.11 eased December 4, 1955. from $4,660 to $5 2hho 2 effective Approved unanimously. 0 : 0V...0. 11/29/55 -2- Memorandum dated November 18, 1955, from Mr. Marget, Director, Division of International Finance, recommending that John E. Reynolds, !"n°mist in that Division, be advanced 10 days annual leave as needed during the remainder of 1955, to be deducted from annual leave earned 1956. In an accompanying memorandum dated November 21, 1955, the Division of Personnel Administration recommended approval with the un1E.)rstanding that no precedent was being established and that the exception to the Board Ts leave regulations was being made due to the special circumstances involved. Approved unanimously, with the understanding stated in the memorandum from the Division of Personnel Administration. Pursuant to the understanding at the meeting on November 9, 1955, there had been sent to the members of the Board copies of a memorandum from Mr. Carpenter dated November 25, 1955, relating to approval of the Bpard is minutes. The memorandum stated that following an inquiry by Governor Robertson as to whether there would be any objection to dropping from the minutes the statement of formal approval of the minutes of the Preceding meeting and establishing the correctness of the minutes through initials of members of the Board upon circulation, the Legal Division advised that a statement of formal approval was not legally necessary and that any reasonable procedure to establish the correctness of the minutes vItluld suffice. However, since one or two of the members of the Board had expressed a preference for retaining a formal approval in the minutes, the memorandum set forth three alternative procedures which might be followed for entering such approval following circulation of the minutes to the available members of the Board. The memorandum also stated that, 11/29/55 -3-- 3 a means of completing the circulation of the minutes without undue delay, Governor Shepardson had suggested that the Secretary of the Board be requested to inform the Board once a week of any minutes that had not completed circulation to all members of the Board within a certain period of time so that any questions might be cleared up promptly. In addition, the memorandum discussed a suggestion that instead of circulating a Carbon copy of the minutes to the members of the Board, as is done at the present time, the original minutes be circulated. Governor Robertson stated that he favored eliminating any state— ment of formal approval from the minutes and letting the initials of the Board members on the cover sheet attached to the circulated minutes estab— lish aPproval. He agreed with Governor Shepardson'S suggestion that the Secret arY be requested to advise the Board weekly of any minutes which had rlot completed circulation within a certain period. Governor Szymczak stated that he agreed with Governor Robertson. Governor Shepardson suggested that the minutes be approved only bY those members of the Board who were present at the meeting of which the IllinlItes mere a record. He said that for this reason he had suggested to the Secretary that the cover sheet with which the minutes are circulated contain two columns, one in which members of the Board who attended the Particular meeting would initial to indicate their approval of the minutes an the other for the use of the remaining members of the Board to indi— cate that they had read the minutes as a matter of information. Z 11/29/55 With regard to the proposal that the original minutes be circulated rather than a carbon copy, Governor Balderston suggested that in the in— t"est of expediting clearance, the original minutes be circulated to all Of the members of the Board and that a carbon copy also be circulated to some of the members who would then be in a position to initial the official copy when it reached them. At the conclusion of the discussion, it was agreed unanimously: 1. To eliminate from the minutes of the Board the statement of approval of the minutes of the preced— ing meeting and to establish the fact of approval by the initials of the members of the Board on the cover sheet attached to the circulated minutes. 2. That the Secretary should inform the Board once each reek of any minutes that have not circulated to all members of the Board and been initialed within three reeks after the date of the meeting of which they are a record. 3. That the original minutes should be circulated to the members of the Board for approval and that, to ex— pedite clearance of the minutes, a copy should be circu— lated to some of the members prior to their receipt of the official copy. 4. That the cover sheet attached to the original min— utes provide a column for initials of Board members who Were present at the meeting and another column for the initials of members who were not present and who would Initial only to indicate that they had seen the minutes. At this point Mr. Leonard, Director, Division of Bank Operations ente red the room. There had been sent to the members of the Board copies of a memo— from Mr. Carpenter dated November 25, 1955, relating to a letter 2083 11/29/55 _5_ a ddressed to Chairman Martin under date of November 21, 1955, by Mr. Hodgkinson, Chairman of the Federal Reserve Bank of Boston, transmitting and commenting on the following action passed unanimously by the Board of Directors of the Boston Bank at its last meeting, presumably on November 7, 1955: _i_ VOTED that, subject to the approval of the Board of Gov— Ors of the Federal Reserve System, the President be and he ! . . r.?10Y is authorized to make a contribution on behalf of the "Dank to United Community Services of Greater Boston, such cor— porate gift to be in an amount equal to $20 for each employee of the bank. Mz 'Carp ter memorandum reviewed consideration by the Board of Governors of similar questions at various times in the past. Attached to the memo— l'and11211 were copies of letters written by the Board to the Reserve Banks in 1945, 1946, 1951, and 1952, each having to do with this general subject. The memorandum also pointed out that in 1953 the question of contributions of Reserve Banks to community chests and similar organizations was raised at a meeting Of the Presidents, Conference at the request of the Executive Director of Community Chests and Councils of America, Inc., and that a ma jority of the Presidents did not feel that the Reserve Banks should ini— tiate or actively support legislation to authorize contributions to such organ izations. Governor Robertson said that he had some sympathy with the position tak -on by the Boston directors and that he could easily understand why the Bankn -- wou1d want to make such contributions. Nhat made it difficult, he ) 11/29/55 —6— Pointed out, was how to draw the line. He did not see how the Board of Go ve rno r5 could draw the line and he felt that the Reserve Banks would be subject to a great deal of pressure. In the circumstances, he felt that the Board should adhere to the position taken in the past unless legisla— tion was passed specifically authorizing Reserve Bank contributions. He did not think that the Board should sponsor such legislation. Chairman Martin inquired of Mr. Vest whether the Board would be Justified in stating to the Boston Bank that in the absence of legislation the Board did not feel that it had the authority to approve the Boston Bankt3 Proposed contribution. Mr. Vest responded that the Board would be jIlstified in so stating, although it might prefer to put the matter partly On legal grounds and partly on policy grounds. He went on to say that even With legislation there would be a practical difficulty in that the Reserve nks might be called upon to make contributions not only to organizations in the head office and branch cities but also to organizations in other cities throughout the respective districts. Governor Mills said it would be his judgment that the Board should adhere to the same position as in the past and that the Federal Reserve Banks should in no way be encouraged to believe that the Board would either sPoneor or be amenable to legislation which might be introduced that would Permit contributions of the kind in question. He said it was very diffi— to uulieve that the Banks are not agencies of the Government in the sense that their earnings come through a Governmental operation and not in 2085 11/29/55 any way through the initiative of private enterprise. This being the case, and since approximately 90 per cent of the Banle earnings after ex— Penses and dividends revert to the United States Treasury, he felt it mould be difficult to find a case for permitting the Banks to make gifts to com— munitY chests and similar organizations out of their earnings. Governor Szymczak commented that Chairman Hodgkinsoniu letter raised the r question of what interests the Federal Reserve Bank directors represent, that is, public or private, and that it also seemed to questions concerning the practice of the Banks in making payments to the TreasurY as interest on Federal Reserve notes. Governor Shepardson said he agreed with Governor Mills' statement and that he also saw a great deal of difficulty in distinguishing between Proper and improper contributions in view of the variety of requests that the Reserve Banks would be likely to receive from parties throughout their districts. Governor Robertson expressed the view that the prDblem envisaged bY Gove mor Shepardson might not be so acute outside the head office and branch cities where the Reserve Banks' employees reside, but that this did not d iminish the weight of the argument against Reserve Bank contributions. During a further discussion of the nature of the reply that should be made to Chairman Hodgkinson, Chairman Martin stated that although Mt. HodgkinR -°n was ill, Class C Director Killian of the Boston Bank would be i4 the TR.",. ardt3 offices later this -week to attend the meeting of the 2086 11/29/55 -8- Chairman's Conference and the subject might be discussed with him. He suggested that in addition a letter to Mr. Hodgkinson be drafted in the light of the views expressed at this meeting for the Board's further consi deration. This suggestion was approved unanimously. All of the members of the staff except Messrs. Thurston, Carpenter, and Fauver withdrew from the meeting at this point. On the basis of information contained in a memorandum from the Division of Personnel Administration dated July 5, 1955, subsequent memo1'4464 from Mr. Fauver, Assistant Secretary, dated October 17 and 25, November 17 and 22, and information distributed at the meeting, the Board gave l*ther consideration to the designation of Chairmen and Federal Reserve Agents at Federal Reserve Banks for the year 1956, the appointment of Deputy Chairmen of Federal Reserve Banks for the year 1956, and the appoint1%14 of Class C directors at Federal Reserve Banks and directors at Federal Reserve Bank branches for terms beginning January 1, 1956. The Board had cliacilssed proposed appointees in executive sessions. The following actions /Is taken: The following individuals were reappointed as Class C directors of the Federal Reserve Banks indicated, each for a threeyear term beginning January 1, 1956: Name Henderson Supplee, Jr. John B. Woodward, Jr. Bank Philadelphia Richmond 2087 11/29/55 Name Bank Caffey Robertson P. Albee Flodin Raymond W. Hall Henry P. Drought Y. Frank Freeman St. Louis Minneapolis Kansas City Dallas San Francisco The individuals listed below were designated as Chairmen and Federal Reserve Agents at the Federal Reserve Banks indicated for the year 1956 and the compensation of each as Chairman and Federal Reserve Agent was fixed on the uniform basis for the same position at all Federal Reserve Banks, i.e., the same amount as the aggregate of the fees payable during the same period to any other director for attendance corresponding to his at meetings of the board of directors, executive committee, and other committees of the board of directors: Bank Name Jay E. WilliamCrane J. Meinel John C. Virden John B. Woodward, Jr. M. Moss Alexander Leslie N. Perrin RaymondW. Hall Robert J. Smith A. H. Bramner New York Philadelphia Cleveland Richmond St. Louis Minneapolis Kansas City Dallas San Francisco The following individuals were apPointed as Deputy Chairmen of the Federal Reserve Banks indicated for the year 1956: Name Forrest F. Hill Henderson Supple°, Jr. Alonzo G. Decker, Jr. CIffeY Robertson Bank New York Philadelphia Richmond St. Louis 2088 11/29/55 -10Bank Name 0. B. Jesness Joe W. Seacrest Hal Bogle Y. Frank Freeman Minneapolis Kansas City Dallas San Francisco The following individuals were reappointed as directors of the Federal Reserve Bank branches indicated, each for a three-year term beginning January 1, 1956: Branch Name Douglas M. Moorhead WM. Purnell Hall T. Henry Wilson Harry M. Smith Ernest J. Moench William M. Day A. Howard Stebbins, Jr. Henry Banks E. J. Workman Tyrus R. Timm Pittsburgh Baltimore Charlotte Jacksonville Nashville Detroit Little Rock Memphis El Paso Houston The following individuals were reappointed as directors of the Federal Reserve Bank branches indicated, each for a two-year term bcginning January 1, 1956: Branch Name 411.•••••••1.111. =.1 111110M George R. Milburn Aksel Nielsen Davis D. Bovaird Gilbert C. Swanson Shannon Crandall, Jr. Warren W. Braley Joseph D. K. Rosenblatt tr@cDonald Helena Denver Oklahoma City Omaha Los Angeles Portland Salt Lake City Seattle It was agreed unanimously to designate Mr. Robert C. Sprague as Chairman and 2089 11/29/55 —11— Federal Reserve Agent at the Federal Re— serve Bank of Boston for the year 1956, to fix his compensation on the same basis as for the same position at other Federal Re— serve Banks, and to appoint Dr. James R. Killian, Jr., as Deputy Chairman of the Bank for the year 1956. In taking these ac— tions it was understood that Chairman Martin would discuss the matter with Dr. Killian while the latter was in Washington this week and ifs following that conversation, Chair— man Martin felt that the appointments should have further consideration by the Board they would be taken up at a later meeting. It was also agreed unanimously to desig— nate Mr. Bert R. Frail as Chairman and Federal Reserve Agent at the Federal Reserve Bank of Chicago for the year 1956, to fix his compen— sation on the same basis as for the same posi— tion at the other Federal Reserve Banks, and to ask Mr. Coleman to ascertain whether Mr. Daniel F. Gerber would accept, if tendered, appointment as a Class C director of the Bank for a three—year term beginning January 1, 1956, and as Deputy Chairman of the Bank for the year 1956. It was further unanimously agreed to ask Mr. Coleman to ascertain whether Mr. Carlos E. Allen, Jr. mould accept, if tendered, appointment as a director of the Detroit Branch for the unexpired portion of the term ending December 31, 1956. In taking these ac— tions it was understood that Chairman Martin would discuss the matter with Chairman Coleman While the latter was in Washington this week and if, following that conversation, Chairman Martin felt that the appointments should have further consideration by the Board they would be taken up at a later meeting. It was also understood that Governor Shepardson, who would be in Dallas next week, would look into the matter of a replacement for Mr. Perry on the San Antonio Branch board° 2090 11/29/55 —12— Chairman Martin indicated he would get in touch with Chairman Crane of the New York Bank with regard to a replacement for Mr. Wendt on the Buffalo Branch board and with Chairman Alexander of the St. Louis Bank with regard to a replacement for Mr. Broadbent on the Louisville Branch board. The meeting then adjourned.
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