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Minutes for September 21, 1959. To: Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. Chm. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King • ir ;.; Minutes of the Board of Governors of the Federal Reserve System On Monday, September 21, 1959. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson King Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Molony, Assistant to the Board Fauver, Assistant to the Board Young, Director, Division of Research and Statistics Hackley, General Counsel Solomon, Director, Division of Examinations Sammons, Associate Adviser, Division of International Finance Landry, Assistant to the Secretary Messrs. Gemmill, Goldstein, Irvine, Katz, Maroni, Reynolds, and Wood of the Division of International Finance. Economic review. The staff of the Division of International Flnance presented a review of international economic conditions and developments, after which the members of that Division withdrew from the meeting. Memorandum from Miss Hart dated September 18, 1959, commenting °Iitl esentation by the New York Clearing House Association on It ft At Chairman Martin's suggestion, it was agreed that C0lsideration of this memorandum be held over to a later meeting. 9/21/59 -2Messrs. Thomas and Young withdrew from the meeting and Messrs. Chase and O'Connell, Assistant General Counsel, entered during the following discussion. S. 1070, a bill to amend and recodify the Administrative Procedure Act. In a memorandum dated September 15, 1959, the Legal Division presented summary comments on S. 1070, a bill to amend and racodify the Administrative Procedure Act, a draft of section by section comments on the bill, and a draft letter to Senator Eastland, Chairman, Senate Committee on the Judiciary, in reply to his letter Of August 13, 1959, requesting the Board's views on this legislation. Mr. Hackley noted that an important feature of the bill was 4 requirement that prior notice be given for all rule making of an egencY whereas the present law permits the waiving of such notice 'there the agency finds that such public announcement "would be contrary to public interest." Under the proposed bill, any rule issued under this section without such prior notice and hearings 14741,1d be a "temporary or emergency rule" and could not remain in effect 410re than six months unless extended after notice in public hearings. MI** Hackley felt that such a requirement would be impractical in matters ellch as changes in margin requirements. He also pointed out that 4hOther problem area in the language of the bill related to judicial 411Pea18 from administrative decisions. At present an appellate court /411 accept an agency's decision if the latter is supported by 9/21/59 -3- substantial evidence." S. 1070, on the other hand, apparently would allow a court to reverse the agency if the court found that the agency's decision was "based upon findings of fact that were clearly erroneous." In making his statement, Mr. Hackley stressed that he was merely presenting a preliminary report on this bill and that the Board vould have further opportunity to consider it later on. In reply to a question from Governor Robertson regarding the subpoena power, Mr. Hackley observed the language of the bill was not clear on this point. Under the present law, an agency must have received specific authorization to exercise the subpoena power. In this connection Mr. Chase suggested that the Board might wish to raise a question concerning this point in its section by section comment on the bill, and Mr. O'Connell noted that the language of the bill specified that presiding Qfficers should have the subpoena power during agency hearings whereas current law vests subpoena power in the agency itself. After additional discussion, it was agreed that the letter to 8anator Eastland should be revised and brought back to the Board for tarther consideration. Messrs. Chase and O'Connell then withdrew and Messrs. Johnson, til'ect°r,and Sprecher, Assistant Director, Division of Personnel Adillinistration, entered the room. Letter to Dr. Carey (Item No. 1). Pursuant to a request dated 14aY 18, 1959, by Dr. Carey, Chairman of the President's Committee on 9/21/59 -4- Government Employment Policy, a report had been prepared by Mr. Sherman in his capacity as Employment Policy Officer for the Board of Governors concerning operations of the Board under Executive Order 10590. The report, copies of which had been distributed before this meeting, covered the period January 18, 1955 to June 30, 1959. There followed a detailed discussion of parts of the report and a general discussion of the extent to which members of minority groups were employed in various capacities in the Board's organization. During the discussion Mr. Sherman noted that the President's Committee on Government Employment Policy would have a meeting on Wednesday, September 23, 1959, and that he, Mr. Fauver, and Mr. Sprecher Planned to attend. At the conclusion of the discussion, there was unanimous 13:Ell.aa5 that the report should be transmitted to Dr. Carey by letter Pl'epared for Chairman Martin's signature in the form attached to the Se Minutes as Item, No. 1. The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board a letter to the Federal Reserve Bank of Dallas (attached Item No. 2) regarding a survey of filing procedures at that Bank by personnel from the Board's records staff. C 4A BOARD OF GOVERNORS OF THE Item lioo FEDERAL RESERVE SYSTEM 9/211:59 WASHINGTON OFFICE OF THE CHAIRMAN September 21, 1959. Dr. Archibald J. Carey, Jr., Chairman, The Presidentss Committee on Government Employment Policy, 308 Main Civil Service Commission Building, Washington 25, D. C. Dear Dr. Carey: As requested in your letter of May 18, 1959, Mr. Merritt Sherman, Employment Policy Officer for the Board of Governors, has prepared the attached progress report concerning operations under Executive Order 10590. This report covers the period from January le, 1955 to June 30, 19590 and is responsive to the question,naire included with your letter. Sincerely yours, (Signed) Win. MCC. Martin, Jr. Whi, MCC. Martin, Jr. Attachment r Progress Report of the Employment Policy Officer of the Board of Governors of the Federal Reserve System (January 18, 1955 to June 30, 1959) 1, (a) Have you taken steps to assure yourself that all persons engaged in recruiting give fair and equal consideration to all applicants and, as far as practicable, to all sources of recruiting? (Check-list, Item 4.) Yes. Conferences have been held from time to time with members of the p ersonnel Division engaged in recruiting to make certain that fair and eltial C onsideration is given to all applicants for positions at the Board. Like wise, a review has been made of recruiting processes to determine tha.t there has been no systematic exclusion of sources for applicants who 4light be members of minority groups. In r ecruiting new personnel, the small size of the Board's organiza404 i s an important factor. Its needs for new employees are limited eR -Serai1 a-ly to the turnover of its existing staff. Usual sources of recruitar e Used to fill vacancies such as drop-in applicants, and applicants 'who r flake inquiry by telephone or mail, as well as referral of applicants rrlay be acquaintances of present employees. Continual contact is qvcai ned °11e ge8 with placement offices of high schools, business schools, and or referral of applicants for specific positions and, on occasion, 11 'en necessary to resort to newspaper advertising or to send 1 8 to nearby schools to seek applicants particularly in the clerical, -2- tYPing, or stenographic fields. The process in connection with contact, `ng Placement offices in the various schools has been studied to determine that there has been no systematic exclusion of potential sources. (b) Have you examined, on an adequate sample basis, certificates of eligibles to see that members of minority groups are not being systematically excluded from certain types of positions? (Check -list, Item 5.) Positions at the Board of Governors are not covered by the Classification Act and, therefore, "certificates of eligibles" are not used by this agency. However, on two occasions since January 1955, a 100 Per cent review has been made of all applications received by the Personnel Division within a given month to determine their considera4 and disposition. " The first of these reviews covered all applications received by, or Iltacts made with, the Personnel Division during the month of ' 81. 1956. The report submitted on the basis of this review stated: So far as could be determined, there was no evidence that the procedures used by the Personnel Division would r esult in any violation of the basic employment policy spelled out in the regulations and procedures of the Board ;sued on July 25, 1955, to carry out the purposes of )(ecutive Order 10590 relating to employment policy. It ea _ p n be stated with definiteness that so far as the procedures the Personnel Division are concerned, all applications are forwarded to the operating division having existing or _ tential vacancies in positions for which the applicant e °uld be qualified. It should be noted that in general the A11-11)10yrne nt standards of the Board are exceptionally high. testing program is used for determining the qualifications -3- of applicants for positions that are appropriate for testing procedures, such as clerical, typing, and stenographic Positions. Applicants failing to meet minimum standards are, of course, rejected without referral to operating divisions. A second review covered all applications received, or contacts made with, the Personnel Division during June 1957. The findings 0f the second review were similar to the first. There is no reason t° assume that the experience in these months of the year would be 4111r different than in other periods. Continuous liaison with the /)el'sonnel Division indicates that procedures have not been changed since the date of the last review. 1` (c) Have you observed the personne l of the components of your department or agency to determine whether members of minority groups are restricted to certain low-level positions? (Check-list, Item 7.) Yes. Members of minority groups are not restricted to certain level positions and may be found at virtually all levels within the toa. I'd's organization. 1, (d) Are there any units within your organization where employees are segregated on the basis of race, color, religion, or national origin? (Check -list, Item 8.) 1\I°• While certain units in the Board's organization are comprised 411.gel Y of members of a minority group, this has not come about as a lt of any planned segregation of employees on the basis of race, '4.• religion, or national origin. It has resultetl from the tendency for 4411110rity groups to be more available for certain kinds of work. -41. (e) Does your department or agency have Negroes in supervisory positions? If so, do they supervise white employees? (Check -list, Item 9.) As indicated in the Board's letter to the President's Committee, dated April 26, 1956, there are a number of Negroes in supervisory Positions within the Board's organization. In some areas Negroes instruct white employees in the use of machines or techniques in the cours e of their work. Negroes have not been excluded from suPervisory positions over white employe es. Although at the present tirrie none is in such a position, such arrangements have existed and Proved satisfac tory in the past. 1. Have you checked to determine whether there is a belief on the part of supervisors that white employees would refuse to work cooperatively with Negroes, particularly if the latter were placed in supervisory positions? (Check -list, Item 10.) Negroes and white employees work together harmoniously in sever al different units and divisions within the Board's organization. l'her• e 1s no reason to believe that white employees would refuse to \ltiOrk c°operatively with Negroes in supervisory positions over them. Q14 the c krra ontrary, as indicated in the answer to 1(e) above, such ligernents have existed and proved satisfactory in the past. what extent have the non -discrimination policy and program been st included in your inservice programs, and on the agenda of aff• executive, and supervi sory conferences? The bearin nature and size of the Board's organization has an important g Oil the methods used to bring before the members of its staff -5- the rules, regulations, and principles regarding the nondiscrimination P°1icY. Action to inform the staff regarding the policy preceded txecutive Order 10590, of course, going back at least as far as ecutive Order 9980 of 1948, setting forth basic Fair Employment Practices. So far as Executive Order 10590 is concerned, the provisions of the Board's regulations relating to this Order have been called to the a. ttention of every officer, supervisor, and employee at least once a Year since their adoption. In July 1955, every person on the staff was Provided with a personal copy of the Rules and Regulations. In 1956, Copies were again circulated and initialed by everyone within they . arious divisions of the Board's organization. In 1957, a copy of —Lorandum No. 9, Prepared by the President's Committee and dated 3s Was distributed to each member of the staff. When the 3:lc:lard!S regulations were altered in February 1958, to take account tx ecutive Order 10722, a copy of the revised regulations was made 4vailable to each officer, supervisor, and employee. Finally, an erriployees handbook, recently completed for the convenience and use thp. S taff, also includes a statement of the nondiscrimination policy. Mor eover, as each new employee joins the Board's staff, he is tildoetrinated regarding this policy. During the induction process, new employee is given a copy of the Board's rules and regulations, -6- together with a letter from the Employment Policy Officer. This letter begins: "It is the policy of the Board of Governors that all Personnel actions shall be based solely on merit and not on considerations of race, color, religion, or national origin." It invites the new employee to bring to the Employment Policy Officer or his dePlitY any questions he might have concerning the policy. As a result of this comprehensive orientation program it is believed that the Board's employees have a good understanding of hat is l'ight of expected in regard to this policy, as well as of what their redress is, if they should feel on the basis of their personal e3q)erience that the policy has not been followed. The nondiscrimination policy has been discussed on various oce — '"`I.ons at meetings of the Board and the senior staff as well as divis•ionai staff conferences. Discussion of the policy will also be eluded in a supervisory development training activity now being instituted. 3. If your department or agency has recruited employees from ources other than civil service registers, what measures have You of adopted to insure that no discrimination because , race, color, religion, or national origin was resorted to ln the recruiting, examining, and appointing process? As indicated in the answers to 1(a) and 1(3) above, positions °11 the )3°a-rd's staff are not covered by the Classification Act, and theref °re all recruiting is from other than civil service registers. -7Please see the answers to these questions for measures adopted to insure that no discrimination because of race, color, religion, or national origin is resorted to in the recruiting, examining, and PPointing process. 4. Aside from the survey made at the request of the Committee lfl five cities in 1956, have any surveys been made by you, either specific or general, to determine the extent to which minority groups have obtained employment or advancement? If. Your answer is "yes" furnish information concerning such Placements. No surveys similar to the comp7hensive visual check made in 1956 at the Committee's request have been made. However, the small size spf the Board's organization makes it practicable for the Employment Aoli, "n*V. Officer personally to observe procedures throughout the organization • On the basis of general surveys that he has made, it is apparent that e r1.11310yrnent opportunities and advancements have been given to , vlittuals without regard to the fact that they may be members of 41inor it, 7 groups, 5• 4.1 You know of instances in which members of minority groups, Pearticularly Negroes, have been placed in positions or job ,ategories previously not open to such group members since ;43cecutive Order 10590 was issued on January 18, 1955? If o ur answer is "yes" furnish information concerning such —t-ac ernent. I\10• The Board's policy of nondiscrimination predates Executive Orde /. 10590. 6, boe s Your department or agency have a formal program for the arldPfecti°n of management and personnel functions of bureaus beir:leld es tablishments? If so, to what extent is this service to secure information concerning the effectiveness thg used orA e nond iscrimination program provided for by Executive ‘-ter 10590? As indicated in previous correspondence with the Committee, the 13°ard of Governors does not have a field organization in the usual sense °f this term as applied to other government agencies. The Federal Iteserve Banks are quasi-governmental organizations, and their employees ' a re not government employees. Therefore, while the Board does have 4 for program for inspection of management and personnel functions °f the Reserve Banks, such a program is not used in the manner suggested by the question. With regard to the Board's own organization, responsibility for level °Ping information concerning the effectiveness of the nondiscrimination program provided for by Executive Order 10590 has been placed On the Employment Policy Officer and his deputy. Periodic inspections h`tve b een made to determine that the policy of nondiscrimination is being 1°14)wed in the recruitment, placement, promotion, and retention of ett1131°Yees. 7. 111 your department or agency has the non-discrimination P,1311cy been strengthened and advanced by Executive Order 10590. -csxPlain your answer. The nondiscriminatory policies provided for in Executive 10590 are substantially the same as those set forth in its preExecutive Order 9980, which outlined the basic policy of 15t°11ibiting discrimination against any employee or applicant for employ- Use of race, color, religion, or national origin. From. that View,therefore, it could be contended that Executive Order 10590 not sf -r engthen or advance the Board's nondiscriminatory policy, 11111ch a8 the Board had been adhering to the Fair Employment Policy I -9 On the other hand, certain administrative changes brought about xecutive Order 10590 were significant. As an example, the SePa-ratio n of the responsibility for carrying out the policy from the 04, , handling personnel matters established an independent elle L. e‘/.14 on compliance and provided an additional safeguard for °hjectivity• Similarly, the more active leadership provided by the ; , ' nuependent President's Committee since June 1955, has in till...4 Provided a basis for more frequent presentation of these Illatters to Board employees. From the broad point of view, there- fore, it Would appear that while Executive Order 10590 did not Re the basic policy of the Board of Governors regarding nondisc ,i illination, that policy has been strengthened and advanced becau se of administrative changes which accompanied it. beePort on any additional activities which you believe would er,of interest or assistance to those concerned with the "e ctivenes s of the non-discrimination policy. Alth °ugh this agency has no activities of its own to report, 041d ik e to point out that experiences of other agencies, as oted the Cormnittee's Employment Policy News, have been of sider le interest. For example, good use was made of the llent pa P1114i She rriphlet on "The Federal Nondiscrimination Policy" d bY the Veterans Administration and reported in the News. 3cv • -10It would hardly have been practical, of course, to print such a booklet for the small number of execut ives in the Board's organizati"S By circulating a copy of the VA pamphlet, however, to each division director, it was possible to accomplish the same purpose. *** Respectfully submitted, lagrisa Ibraitt Oat= 1959. Merritt Sherman Employment Policy Officer BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 9/21/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 21, 1959 ItIr• W. H. Irons, President, Reserve Bank of Dallas, 411as 2) Texas. ' Dear Mr. Irons: It is understood that in recent conversations you expressed a trtlje to have the advice of personnel from the Hoard's records staff . regar u to the installation of improved filing procedures at the °Ieral Reserve Bank of Dallas. comply The Board has considered your request and will be pleased to Reo0 • As an initial step, Miss Edna B. Poeppel, Chief of the Board's ,fas Section, would be prepared to visit the Dallas Bank for a week der to appraise your requirements and make preliminary findings. r'°ePpel could arrange to be at the Bank on Wednesday, October 214, from "ain through Tuesday, October 20, if that would be convenient Your standpoint. made Following Miss Poeppel's general survey, arrangements could be ' 1 a qualified person or persons to go to Dallas and remain for such .f.° the _Cline as necessary to establish a revised filing system and begin eirdatining of Bank staff assigned to that function. On the basis of Atiall;' work done several years ago at the Federal Reserve Bank of 43 it is to estimated that approximately two months might be required aeccm1Plish these purposes. Projem. Miss Poeppel and any other person or persons assigned to this baais-w,Would be retained on the Board's pay roll on a nonreimbursable 01 i but it would be expected that travel and incidental expenses be reimbursed to the Board by the Reserve Bank upon submission PPropriate vouchers. °Lltli„If You would like to proceed under an arrangement such as that ntlita;lus Please let us know whether the date of October 114 would be 6 for Miss Poeppel's initial visit. Very truly yours, (7 L Merritt Sher an, Secretary.
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