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1.496 Minutes of actions taken by the Board of Governors of the Federal erve System on Tuesday, September 14, 1948. The Board met in the Special rarY at 10:30 a.m. PRESENT: Mr. Mr. r. Mr. Mr. McCabe Chairman Szymczak Draper Vardaman Clayton Sherman, Assistant Secretary Mr. Hammond, Assistant Secretary Mr. Morrill, Special Adviser Mr. Thomas, Director of the Division of Research and Statistics Mr. Vest, General Counsel Mr. Nelson, Director of the Division of Personnel Administration There was presented a letter from the Federal Reserve Bank of lki cIdated August 28, 1948, stating that at a meeting on August 26, the 80ard of Directors of that bank voted to change the records of bklit to show that, effective September 1, 1948, the titles "Agricul— 1 t4ttl cori 4, °mist, Senior", "Business Economist, Senior", and "Tax Economist, -4(4,4 c a'rrY official status and that the salaries of the present respec— A r ilinbents of the positions, Messrs. Walter B. Garver, Walter E. j 1%, and George W. Mitchell, be fixed at the rates of 48,700, 3N) and 4 -cN “94. .,Pu,500 per annum effective as of the same date. The letter ated approval of the payment of salaries to Messrs. Garver, Hoadley, 'At 4, Ntk r t4 'LI- as officers of the Dank. There were also presented memo— rom - rilessrs. Thomas and Young, Director and Associate Director of 1°n of Research and Statistics, respectively, dated August St 30 commenting favorably upon the proposal to designate 4 1497 -2the Pos itions as "official", a memorandum from Mr. Nelson dated September 1 ecullftding that the action of the Chicago bank be not approved, and a 1°411dIlm from Mr. Riefler prepared under date of September 9, 1948 at theregAest of the Personnel Committee discussing the proposal in terms of er of official positions in the research departments that might gtit all Federal Reserve Banks took action similar to that taken by cab. th 141. Sherman reviewed the discussion of the matter at the meeting Pel‘sorinel Committee on September 2, 1948, and Mr. Thomas stated the a Why he felt it important that the top economists at the Reserve 4'44 have the recognition and use of facilities which usually went only -iciea status. tkiring a discussion of the matter, Mr. Vardaman stated that 41,weeks ago Mr. Young, President of the Federal Reserve Bank of go) called him on the telephone to discuss the proposal, that he ( ' 'Vardaman) was then inclined to go along with the recommendation and 41`thestill felt so inclined, that he was very much in favor of the use he title, Hsenior economist" as suggested in Mr. Riefler's memorandum, he felt the matter should be considered on a System-wide basis, 41,tit1arly in relation to its effect on the budgets of the Reserve Banks ktrther of the banks should wish to give similar status to one or oh onlists. There was also a discussion of the extent to which other 4qehiona,1 employees such as lawyers and examiners were given official -3rstati, • "s at the Reserve Banks, at the conclusion of which Mr. Vardaman kgo,e ' sted that Mr. Young be informed that, while the Board was sympathet, with the purposes behind the proposal, it preferred not to act th Matter until it had been discussed at a President's Conference "he standpoint of the effects such action might have for the hten1 generally. Mr. Vardaman's suggestion was approved unanimously, with the understanding that (1) Mr. Vardaman would telephone Mr. Young and inform him of the Board's views and (2) the matter would be placed on the agenda for the next President's Conference. 1 Mr. Vardaman referred to the provision in paragraph Etra., S 8 of the travel regulations which requires that when any travel at the exPense is contemplated by any member of the Board or of the , Staff a memorandum shall be submitted in advance of the travel 8 * 13°ard'5 Personnel Committee setting forth details regarding the P 13°Ela .A 'U travel, and providing further that no voucher for expenses ezlich travel shall be paid by the Division of Administrative Services he Personnel Committee shall have approved of the travel. Mr. 1411, Proposed that this requirement, insofar as it applied to tekir , 2 or he Board, be eliminated and that instead Board members be cl to report to the Board as far in advance as possible any of- 11 t1"41vel which they might contemplate. He went on to say that teat _ 0 _14k4t. 11 Board member should have the authority, as an individual of the Board or of any committee of the Board, to give or deny 1499 94/48 —4— his (nricial consent for official travel by another member of the Board. tco strongly that control of Board members' movements and actions zhcoo, ,Q.cLbe with the entire Board in formal session, rather than by any ec)raZitt-ee or individual or group of individuals of the Board, acting t} ir individual, official capacities. During a discussion of Mr. Vardaman's proposal it was stated that the Present provision in the travel regulations had been decided Ilk a+ lin executive session of the Board and that it might be desir- 4131e t consider the proposal at a meeting when all members of the 110EtrA could be present. It was also suggested that the matter be eterr eci. to the Personnel Committee for consideration. Following the discussion, it was agreed unanimously that Mr. Vardaman's Proposal be referred to the Personnel Committee. M • Clayton stated that the Burroughs Adding Machine Company had St means of mechanizing teller window operations in banks and liki(le\reloped a plan for handling savings accounts that would involve he k elinlination of passbooks, that before the plan could be adopted by 11)1111ks a revision in the definitions of "savings deposits" in the : legulations D, Reserves of Member Banks, and Q, Payment of In- t t °T1 Deposits, which now require that such deposits be evidenced had called to cit1)e.8sbook would be necessary, that the Burroughs Company ok seltse the matter with Mr. Smead, Director of the Division of Bank Itz atIlls, and had asked that the Board make the necessary changes in eille.tions, and that letters had been received from a number of 1_500 9/4/48 -5- INtr and nonmember banks requesting that the Board make such changes 14IJI'egulations as might be necessary to permit those banks which -Ilielleci tc do so to adopt the Burroughs plan. Mr. Clayton went on to a1 t116't the matter had been given some preliminary consideration by the L -egal Division but that no conclusions had been reached as to whether 4410 should be made in the regulations, and he proposed that (1) the let ters from the Burroughs Company and from banks which had requested 'rd to revise its regulations be acknowledged with the statement t4t.,th e Board would be glad to give the matter careful consideration and ‘) the Do Reserve Banks be asked to study the proposal and to comment as to t would be desirable to change the Board's regulations to permit cl°Pti -°11. Mr. Clayton added that if, after studying the matter, the 4rd to 4 that the proposal for revising the regulations was meritorious, laatte r should then be taken up with other bank supervisory agencies. Mr. Clayton's suggestions were approved unanimously. hairman McCabe stated that Mr. Riefler, Assistant to the Chairman, member of an advisory committee making a study of savings under Z1) kke ' s ‘11 ' Ship of the joint committee on investment research of the all lq 141fe Convention and of the Life Insurance Association of America, dhi 11 yesterday that he had been asked to preside at a meeting of Naeax eh committee (which included the heads of four of the large life 41% Nt4v, ,Lee e°mpanies) at which the monetary and fiscal problems of the the 1501 'hu4/48 —6- tolte.N 411131ent would in all likelihood be discussed. Chailman McCabe said that h, uoldMr. Riefler it was almost inevitable that the discussion at ha meeting would turn to current monetary policies and the bond market, kki 4 questioned whether it would be appropriate for Mr. Riefler to preadded that if, by participating in the meeting, anything con"47e could be done to get the insurance companies to slow down their 1)4 g of Government bonds and making of commercial loans it would be l'able, but that he had informed Mr. Riefler that there was some question lihether he should preside and that it was a question that should be conk? the Board. Mrs Szymczak said that while Chairman McCabe was absent on vacation d that Mr. Riefler was chairman of the advisory committee to which McCabe referred, that the matter was discussed informally by the Of the Board who were then in Washington, and that at their request 4 82Ymczak) talked with Mr. Riefler who said that for several years he 114p4,1 —4 the insurance companies to sponsor a study of savings, that the 11 not developed until after he became Assistant to Chairman McCabe, t the . Insurance companies recently provided a fund of 0.00,000 for a -7 to " conducted at (but not under the auspices of) the Institute for A ke d e- atilt' at Princeton University, and that Ralph A. Young, Associate 4 q't 44t °r ot' the Division of Research and Statistics, was to be Mr. th alternate. Mr. Szymczak also said that during his discussion Dpl,c8taa Riefler he learned that arrangements had been made, with the °f Messrs. Eccles and Draper, to make space available in the 1_502 1114/118 oar,(N _7_ building for the study which was expected to extend over a 1)elbci of about two years. Iva% Szymczak went on to say that 'ir. Riefler 41t th study was highly desirable and would be of help to the System, 41}lat he raised a question as to whether he and Ir. Young could continue tt erw, ori the committee under whose conduct it was to be made since rters _ °I. the committee were to be paid a fee of 4100 for each meeting 4tteridect. Mr. Draper stated that he had understood the study was to cover and that he felt it should not get into the question of current a/-17. Policies or of the Government bond market. g8 M-r. Clayton said he felt the study was constructive and would no )tibt' Provide information that would be useful to the System but that it ktseci aMn the question whether members of the Board or of the Board's 8hould serve on committees of private organizations, a question %10 l'eeently was considered in connection with a suggestion that Mr. Assistant General Counsel, serve as a member of a committee of kkelleari Bar Association. He added that, because of his position as 4tatkrit to Chairman McCabe, expressions of opinion by Mr. Riefler either k4rnaari of the connittee or as a member almost certainly would be : 14 1113°11 by executives of life insurance companies who were vitally Nqt'eqeci in the Government bond market as reflecting the same thinking 11'd at meetings of the Board and of the Federal Open Market nkilttl*ells? ' ttee and that, while Mr. Riefler's outstanding professional standing I503 —8- 9114/48 16-thout auestion would cause him to be desired on the committee, it was likely that his close association with the Chairman of the Board and of the Federal Open Market Committee made his selec— tion even more desired by the insurance companies. Following a further discussion, at Chairman McCabels suggestion it was agreed unanimously that he would request Mr. Riefler not to preside at meetings of the committee. At this point Messrs. Thomas, Vest, and Nelson withdrew 4rki the action stated with respect to each of the matters herein— Set forth was taken by the Board: Minutes of actions taken by the Board of Governors of the Federal Reserve System on 6eptember 13, 1948, were approved 141a/lii1ous1 Y. Memorandum dated 6eptember 3, 1948, from Mr. Thomas, -ctor of the Division of Research and Statistics, recommending the appointment of Mrs. Jennie Lee Glass as a clerk in that Divi— aion $ on a temporary indefinite basis, with basic salary at the rate °f 02,498.28 per annum, effective as of the date upon which She enters upon the performance of her duties after having 15488eci the usual physical examination. The memorandum also etated that it was contemplated that Mrs. Glass would become 1504 9/ 14/48 -9Taerab er of the Federal Reserve retirement system. Approved unanimously. Memorandum dated September 10, 1948, from the Division of 8 rin, -e-L Administration submitting memoranda from the heads of the 4118i°4s hereinafter named recommending increases in the basic annual taiaries of the following employees in those divisions, effective SePtezber 191 1948: 04/0 4°41-flt! °I THE v idrenn SECkilif,T.LiY an CH AND 6TATI61,PT -- CS • li:1-4.va Vicars Morse ,18. Arnold ) 11.er4.Y .k C, Lacey 41'-`4.atil Edward Har4- Salary Increase To From Title General Assistant ,i'4,479.60 44,730.40 Clerk-Stenographer Clerk Clerk Clerk-Typist Messenger 2,799.24 2,799.24 2,573.52 2,573.52 2,152.00 2,874.48 2,874.48 2,648.76 2,648.76 2,218.00 Approved unanimously. 4 Letter to Mr. Sproul, President of the Federal Reserve Bank of ork reading as follows: "This refers to your letter of September 3, 1948, in A ach You recommend that for the purpose of electing Class 411111d Class B directors Group 3 include banks having capital leR silrPlus of $400,000 and less instead of $300,000 and aS at present. Gov, In accordance with your recommendation, the Board of the-Illors has changed the classification of member banks for kIrPUrpose of electing Class A and Class B directors of Bank so that Group 1 will consist of banks having capital 44.4.24rP1us of 410,000,000 or over, Group 2 of banks with 4/1d 'al and surplus over $400,000 but less than $10,000,000, atici r°111) 3 of banks having capital and surplus of 4400,000 Approved unanimously. 1505 94/48 —10— Letter to Mr. McConnell, Vice President of the Federal Reserve Minneapolis, reading as follows: "In accordance with the request contained in your letter September 8, 1948, the Board approves the designation of v L Grath as special examiner for the Federal Reserve Bank 4. Minneapolis. II te Appropriate notation will be made in our records of the ae,114ination of the designation of C. J. Larson as a special 1"sistant examiner." Approved unanimously. Telegram to Mr. Smith, Assistant Vice President of the Federal of Cleveland, reading as follows: "Reurtel September 10. RegulationW does not require pi:rument or record mentioned in section 3(c) to follow ljer when instalment sale obligations are sold or discounted. to sc)me cases when checking records of purchaser or dis— talter it may not be possible to establish compliance with ,0 1)ect to purchased paper when paper does not show its face cle" t e to comply but as a rule the contracts show sufficient lie,„!Lils. Section 8(a) requires adequate records on part of cl:Z : ;istrants extending instalment sale or instalment loan at least for the life of obligations to which such eoz-rds relate regardless of what instruments or records ac134113r paper that is sold." Approved unanimously. Letter to Alfred Goldstein, Esquire, 402 Sixth Street, N. W., 't°13 D. C., reading as follows: Nia "This refers to your letter dated September 2, 1948, a ci lve to Regulation W. You inform us that you represent It ilent who is engaged in the instalment sale of taxicabs. 1,(4 Your feeling that the inclusion of taxicabs under the co.Zation is unfair and inconsistent with the principles of '14ner instalment credit control. You suggest either that 150E; /1148 -11- they be excluded from the automobile classification, as are 0 -(InPaseenger , automobiles, or that loans to finance their pur"ase be specifically excepted. cti "Prior to the original adoption of Regulation V4 in 1941, r„, ring the lifetime of the previous regulation, and again to the adoption of the present regulation, the Board °a'lle detailed consideration to the problem which you raise, a11,, 1c1 on each occasion it was decided that it would be undesirw., "•Le to attempt to exclude taxicabs. In the first place it 81'8 not possible to identify a taxicab as a type of vehicle ahdlice in many instances popular model sedans are purchased for 81)„,are used as taxicabs. In the second place it was not postiou-te to exclude taxicabs on a commercial use basis since to 1314,8° would have required excluding all passenger automobiles hased for commercial use. In general, our numerous studies cioated that taxicabs properly belong in the automobile autseification. For all practical purposes they are passenger with°111°biles which continue in short supply and in connection ' th which unduly liberal credit could have no effect other 4r1 to push upward on prices. you "It may be that you have some specific suggestions which hav feel would enable us to overcome the objections to which we thezi e: 1t eferred. If so we shall certainly be pleased to consider • Approved unanimously. Assistant Se ret,ary. I Ch rman.
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