The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1374 A meeting of the Board of Governors of the Federal Reserve arsetftwas held in Washington on Friday, September 15, 1944, at 2:30 PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman McKee Draper Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Thurston, Special Assistant to the Chairman Mr. Dreibelbis, General Attorney Mr. Vest, Assistant General Attorney Mr. Wyatt, General Counsel There were presented telegrams to Mr. Flanders, President of the Pede ral Reserve Bank of Boston, Mr. Treiber, Secretary of the FedeN. Res erve Bank of New York, Messrs. Leach and McLarin, Presidents c't the ederal Reserve Banks of Richmond and Atlanta, respectively, kr. btia arc', Vice President of the Federal Reserve Bank of Chicago, Ste Ntell war*t, Secretary of the Federal Reserve Bank of St. Louis, Mr. 'Vice President of the Federal Reserve Bank of Minneapolis, . oasid ktici 148 well, President of the Federal Reserve Bank of Kansas City, sre. Stroud and Earhart, Vice Presidents of the Federal Reserve a of uallas and San Francisco, respectively, stating that the oar,(1 approved the establishment without change by the Federal Reserve or , °t. Louis and San Francisco on September 12, the Federal ReAtlanta on September 13, the Federal Reserve Banks of 1375 9/15/44 -2New York, Richmond, Chicago, St. Louis, Minneapolis, Kansas City, kid Dallas on September 14, and the Federal Reserve Bank of Boston tocia , "of the rates of discount and purchase in their existing 8chediaes. Approved unanimously. In accordance with the action taken at the meeting of the 13°4baon September 12, 1944, the Legal Division had presented a legal °P1111t Prepared under date of September 14, 1944, in which the posit4r1 was taken that the Board was not required to disclose to the eckllicil drafts of proposed legislation to which the Board might be tillitige°nsideration. The memorandum on this subject which was read ttheeeting on September 12 had also been revised and was available : c°118ideration at this meeting. The opinion and memorandum were Ncialld discussed. The question was raised by Mr. McKee whether, then (knell did not mention the matter at the joint meeting with " he It \la *t 4rd of Governors, the Board should make any reference to it. 8 P°inted 00 out that, at the meeting of the executive committee of With members of the Board on June 7, Mr. Brown, President °I* the tatter W4 e°11noil stated that the Council felt very strongly about the 4nd could not let it rest without determination, so that there tie likelihood of the matter not coming up at the forthcoming t g Upon motion by Mr. Evans, the memorandum was approved unanimously in the 1376 9/15/44 -3following form with the understanding that, if the question were raised by the Council at its meeting with the Board next week, the memorandum would be read and copies distributed to the members of the Council, and that if a request were made for copies of the legal opinion they would be made available also: " .The Federal Advisory Council at several of its meet? recent months asked that the Board of Governors ;rnish to the Council for its information and as a basis discussion a draft of the holding company bill which it 1`.',"derstood had been prepared by the Board. The Council considered the statement made in the Board's 1943 An11141 Report with respect to recommended holding company eislation but stated that without more detailed informaj a; °n it could not discuss the subject with profit. It was 1480 stated on behalf of the Council that it felt that it 131,8 legally entitled to information from the Board as to W.°13c)eed legislation vitally affecting the banking system end that, apart from the question of legality, the Council 21-11c1 not function and could not properly cooperate with the e Board unless it were given such information. The tnneil was advised that the Board would consider the mat' 1 at a meeting when all Board members were present. It 17,8 suggested in this connection that the question involved 0 ; 8 not chiefly a legal one but the much more important a Of the Board and the Council understanding each other ane working together in the common cause. t1,4 The Board has consulted its attorneys with regard to 130 -4-s matter and has been advised that in their opinion the pr ! rcl is not required to disclose to the Council drafts of ..uPosed bills to which the Board may be giving considera,,Ion. 4 no, "It seems obvious to the Board that the Council does IQ have the right to call for all information which the andrd may have. For example, orders for removal of officers directors under the provisions of section 30 of the irl ing Act of 1933 cannot, because of the specific pro--varci • of the statute, be disclosed to others. Again, the clo„ls given a discretion in the law with respect to disove'"re of examination reports of State member banks. Morethere are cases in which it is manifestly inadvisable 1377 9/15/44 -4to Permit advance knowledge to reach the public with respect to proposed changes in margin requirements or Posed actions with respect to reserve requirements and i similar matters. The mention of these various sub!?te is sufficient to show that there are certain facts ' 1341-lch the Board may not be required to disclose. The e°ard in the light of all its responsibilities must excise a sound discretion with reference to the question. dr "If the Board were required to submit to the Council ti afte of legislative bills which it has under considerai ny it is entirely possible that the Council would find advisable to ask the Board to submit to it drafts of bills, or even drafts of all proposed regulations ch the Board might at any time have under study, reardless of the stage of their consideration. This would tean that practically all actions or proposals relating the general affairs of the System which the Board a Tit wish to consider, through its staff or otherwise, 1' 1 4 even in the most tentative way, would have to be fur„, 4,t1-?hed to the Council. Obviously this would greatly imlaT-r the. freedom of consideration of matters by the Board make it very difficult for it to operate effectively. would be especially true in those cases where the leedd, as not infrequently happens, is considering proposed a e-Lelation or proposed regulations jointly with other eiee of the Government, such as the Treasury or the co" supervisory agencies. It would be necessary that the orlulcil be given drafts of all such proposed legislation po regulations while still in tentative form. Such a mataition, . taken to its logical conclusion, mould even e it necessary for the Board to consult with the Council it each case before replying to the numerous requests which 0 receives from Congress or the Budget Bureau for its girl t.ion with regard to pending or proposed legislation. pis''ead of not less than four meetings a year as contemtoated by the statute, it would be necessary for the Board co have very frequent, perhaps almost daily, meetings or i,12tact3 with the Council. Obviously the law did not so 17;')Lend and the Board's ability to operate effectively be seriously impaired. in The Council is not restricted in giving advice or ae,,,making recommendations to the Board by its failure to - drafts of bills which the Board has under consideration 2 g 4 Z 1378 9115/44 -5- tt, "41. any particular subject. The Council is entirely tree to formulate and discuss with the Board its own urafts of bills or recommendations on any subject in which it is interested, whether or not the Board is ! tutring the subject. The Council may present such 'rafts to the Board independently of any drafts of bills Or contemplated recommendations which the Board may have 11111er consideration. For this purpose the Council can Obtain statistical and factual information that the Board 414Y have available on the subject. "Wholly aside from any legal question involved, the iniPortant consideration is to arrive at a reasonable and P3ractical working arrangement between the Council and the j ard under which each may properly discharge its respon-bilities under the law without in any ray affecting Inie ability of the other to discharge its lawful responsi— ' laities. It is essential that the Board should not be illi titirler compulsion to furnish drafts of bills which it has consideration to the Council or to anyone else if feels that such action would be incompatible with the j oper discharge of its functions or affect its ability carry out its responsibilities. Furthermore in the nature of the case the Board must itself be the judge of Whether there is adequate reason for declining a request ; 1r a. the Council. The Board expects in the future as it the past to furnish to the Council any available :r al which hi may be requested unless for some good till?e it feels that it should not do so. It is essen— ' toal- that the Council and the Board each give recognition Thus thethe functions and responsibilities of the other. Council should not expect to receive from the Board III?, material which the Board for good reason feels should . 111. ' ..be disclosed, and, on the other hand, the Board, recog— gbr zIng fully the responsibilities of the Council, should ever to it all information which the Council desires when— here is no sound reason for not doing so. Only th vu4s way can the two bodies work together and accomplish e ends which Congress had in mind in establishing them." 2 M4141, • McKee referred to informal discussions which had been had • Brainard, Chairman of the Federal Reserve Bank of Cleveland, 1379 , 44 94 -6" ovn nection with the retirement aflowance of Mr. Fleming who will retir.e as President of the Bank on September 15. It appeared that 111% pl at his request, had been placed in a retired status by the Retirement System on July 1, 1944, in order to vest the pension Portio, - of his retirement reserve, and that at the request of the diNttor 8 of the Bank had continued to serve as President and to draw Ilia I, egular salary at the rate of $25,000 per annum. However, during the Period that he continued to serve as President he did not receive kly or the retirement payments that ordinarily would have been made, kid Ian del' a rule of the Retirement System the regular retirement payreeerir Om the pension portion of the reserve were deducted from the e even though they were not disbursed. This had the effect of rechle., ' Llle the total pension payments that would be made to Mr. Fleming °1‘ to . Ills estate in the event of his death before the reserve was ex- hket and Mr. Brainard had inquired whether the Board would approve 8P1 payment to the Retirement System by the Federal Reserve 1)11,e : 0 that the total payments to Mr. Fleming or his estate would not lleed because of his continued service as President of the Bank. thia - expressed the opinion that, if there were any inequity in 8itilation, it was the result of the rule of the Retirement System, 4.1k1 that 4 correct it appropriate action th4c1, 41* any action were justified to e taken by the Retirement System. 1380 9/15/44 —7— The other members of the Board present were in agreement with this position, and the suggestion was made during a further discussion that the matter might be taken up informally with Mr. Rounds, Chairman of the Retirement Committee, when he comes to Washington next week to attend the meeting of the Federal Open Market Committee. In connection with a discussion of the matters on the agenda to the °4 Conference of Presidents of the Federal Reserve Banks beginning rl September 18, Chairman Eccles raised for consideration the N44c Y that should be followed with respect to public statements by 4Pre sentatives of the System in connection with the Bretton Woods IteNe alent- In the discussion which followed various suggestions were tade tit no decision was reached. LaY) At this point Messrs. Thurston, Dreibelbis, Vest, and Wyatt Illthdre from the meeting. The action stated with respect to each of the matters hereinkrter eferred to was taken by the Board: Pim The minutes of the meeting of the Board of Governors of the Reserve System held on September 14, 1944, were approved unani- tatlit Telegram to Mr. Evans, Vice President of the Federal Reserve of °alias, reading as follows: Po' "Reference letter September 12. Board approves apIlItment of James 0. Russell as assistant examiner. If 1381 9/15/44 —8— appointment is not made effective September 18, please advise us.0 Approved unanimously. Letter to the Presidents of all the Federal Reserve Banks read— trig a. f011oWS: "In connection with the execution of T—Loan guar— Iftees) there is enclosed a copy of a letter received the Board from the United States Maritime Commission, Lliiated September 13, 1944) signed by Lieutenant B. B. Griffith, „ 8_8istant to Director of Finance, enclosing a form of ,Qtatement as to Eligibility of Borrower for Proposed T a to be used by Maritime Commission representatives alasilant to instructions from the Maritime Commission to Federal Reserve Banks, dated August 22, 1944." , Z Approved unanimously. Thereupon the meeting adjourned. 441•0 Chairman.
@FedFRASER