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1261 A meeting of the Board of Governors of the Federal Reserve Sys— tem Was held in Washington on PRESENT: ednesday, September 4, 1946, at 10:30 a.m. Mr. Ransom, Vice Chairman Yd.. Draper Vardaman Mr. Carpenter, Secretary Smead, Director of the Division of Bank Operations Thomas, Director of the Divis'on of Research and Statistics Mr. Nelson, Director of the Division of Personnel Administration Mr. Townsend, Assistant, General Counsel In connection with an informal consideration of the possible aPPointment of Mr. J. P. Redman of Cairo, Illinois, as a Class C Direc— tor of the Federal Reserve Bank of St. Louis for the unexpired portion °II the term ending December 31, 1948, Mr. Vardaman referred to one or occasions recently ,thero it had not appeared possible to get sug— gestions for satisfactory appointees by the Board as Class C Directors *11c1 Director: of branches of Federal Reserve Banks from the usual c3.11rce5 and major reliance for such suggestions had been placed on the dents of the Banks. He felt that the Board should give considera— " to the desirability of establishing other means of contacting pos— e appointees, and that since the Presidents could not and should be expected to select director: of the Banks, the Board's appoint— should be made after consultation with the Chairmen and others Cr than with the Presidents of the Banks. Mr. Ransom stated that he was satisfied that the other members the Board were in agreement with Mr. Vardal-an's suggestion, that it 1262 9/4/a, - had not been the 12o11cy of the Board to consult the Presidents excc_t in the fele cases there the names of possible appointees had not been Presented from other sources. Mr. Vardman stated that if, by the time he returned from the e°11vention of the American Bankers Association in Chicago on September 2-25, 1946, no satisfactory names were proposed for appointment by the 130-ifd to fill the vacancy on the board of directors of the Pitts13111 El.:nch, he woul(1 Lo to Pittsburgh to see if he could find a man v41Qa he could recommend for the appointriont. Reference was made to a letter received, by the Board from Mr. Jtdon, President of the Federal Reserve Bank of Minneapolis, under te of August 19, 1946, in reay to the Board's letter of August 15, "1-th which was enclosed a copy of President Truman's letter to various clePartrn.ents and agencies of the Government with respect to the reducti On of expenditures. Mr. Peyton's letter expressed the opinion that it 17ould be in the best interests of the Board of Govarnors, the Fedor-I Reserve Banks, .nd the System if the manpoer now employed by the SYs• tem in gratuitous examinations of registrants under Regulation V. reduced to the examiners necessary to follow up complaints and inIre tigate situat4 ons .here there was evidence of evasion. Mr. Vardaman stated that he had suggested that the letter be Placed on the docket for a discussion of the reasons for Mr. Peyton's c°41111ent. Mr. Ransom said that the letter was an evidence of the opinion 1263 9/4/46 -3- Itch Mr. Peyton had held for a long ti,,e and of his disagreement of the Position taken by the Board and some of the other Federal Reserve 4114 With respect to the steps necessary to enforce compliance with Regulation VI, that the matter had been discussed with him on several "easions, and that there was nothing in the situation that would auPear to call for action by the Board. In a discussion of the matter it'was stated that, while Mr. Peyton personally was not in sympathy • he with the current orogram for the enforcement of Regulation t, t 151NTam was substantially being carried out by the Minneapolis bank. Mr. Vardaman then referred to the paper which was written by klter F. Stettner of the Division of Research and Statistics, and Which appeared in Postwar Economic Studies No. 6 under the title Works and Services in the Postwar Economy". He stated that the article had been the occasion for considerable unfavorable as well 46 favorable comment and had been interpreted as advocating the expenditIll'e annually of a large sum for public works, and that he questioned whether articles which did not relate directly to the field of the IlOal'clI s responsibility should be published by it. He felt that the Preface to the studies, which made it clear that there was no official e"orsement by the Board of any of the opinions or proposals of the alith°rs, did not meet the situation adequately and that if the Board wae going to publish material of this kind it should either approve the Papers or state specifically that it did not agree. He felt that 1264 9/4/46 -4- under any other circumstances the publication of the papers carried an implication of approval by the Board. Mr. Thomas outlined briefly the background for the decision of the Board to !Aiblish the studies and Mr. Ransom stated why it was felt, why it was his vie, that because of the relationship of monetary and credit policies to the entire economy of the country it was nececs&rY for the Board to have specialists on its staff in these various fields so that it might have expert advice regarding the possible effects of System actions on the different parts of the economy. He also 8aid that it was not possible to prepare papers of this kind which woei, 'u express the views of the authors and at the same time meet with the approval of all of the members of the Board, and that it was the belief of the Board the publication of the papers might occasion further iscusEion l hich would be helpful in ulti. ately finding the most satis- ory solution of some of the difficult problems :i_th whch the ccun- tz-, il '.as faced and that in that situation the best procedure was to pubthe articles with a disclaimer of Board approval rather than not to Publish them at all. In a discussion of Mr. Stettner's paper and of the extent to thich the Board might be justified to publish material of this kind, Ur, vardauan expressed the opinion that, in the absence of a request fr, Qtti the Congress or the President, no agency of the Government should material dealing with fields in which the af-cncy did not have 1265 9/4/46 -5- r"Ponsibility, and that material prepared by the staff of the Board and the Federal Reserve Banks in those various fields should he for the information of the System only. He did not mean by that that he w°11-1c1 restrict, the research work of the System as he realized that it Wes necessary, but he doubted that. it was ever intended by Congress that thc results of such studies should be published when they related to matters regarding which the Board had no responsibility for policy Or other action. Mr. Ransom referred briefly to some of the Alestions that had riS€11 as to the scope of the Board's responsibility, particularly as discusced in the annual report of the Board for 1938, and stated that it would be difficult, if not impossible, for the Board to determine what its credit policies should be v.ithout a study of the whole economic Picture and that Mile such studies had not been specifically assigned LO the Board by Congress it was believed that they were a part of the SYsteln's responsibility. Mr. Vardaman stated that he understood that it was proposed ash,Ls to No. 8 in the Postwar Economic Studies, a pamphlet under the tit _ _ le "Federal Reserve Policy", and that he felt that the papers conin the parimhlet should not be released until after they had been cussed fully at a meeting of the Board. The other members of the “1 present concurred in Mr. Vrsrdaman'o suggestion and it was underthat it would be followed. 1266 9/4/46 -6Consideration was then given to a letter dated August 28, 1946 from. Mr. Drvis, President of the Federal Reserve Bank of St. 411is, relating to the desire of the United States Employment Service in St. Louis to renew the lease for space occupied by it in the Nugent Pl ' ()Perty owned by the Federal Reserve Bank. It was agreed that Messrs. Carpenter and Smead should prepare a reply to the letter for consideration by the Board. Mr. Vardaman stated that he had recluested Messrs. Smead and Leonard, and such members of the staffs of their respective Divisions a8 they might think advisable, to attend the meeting of the State Bank 811Pervisors to be held in Cleveland on September 18-20, 1946. At this point Mr. Parry, Director of the Division of Security to • Mr. Bethea, Director of the Division of Administrative Services; 11r. Leonard, Director of the Division of Examinations; Messrs. Young, kor 8e and Knapp, Assistant Directors of the Division of Research and Statistics; Messrs. Garfield, Dembitz, Gerschenkron, Musgrave, Grove, illter, Renner, Koch and Youngdahl of the Division of Research and $tatistics; and Messrs. Gardner and Triffin, formerly of the Division t Research and Statistics and now members of the staff of the InterIle*tional Monetary Fund, joined the meeting and Mr. Thomas made an int°1111 1 report on the conference of experts on central bank problems 1111-eil he and other representatives of the System attended in Mexico Cl:t'Y during the last half of August. 1267 At the conclusion of Mr. Thomas' statement, all of the members of the staff with the exception of Mr. Carpenter withdrew from the meeting and the action stated with respect to each of the matters hereinafter referred to was taken by the Board: Memorandum dated August 28, 1946, from. Mr. Leonard, Director °I' the Division of Examinations, submitting the resignation of Miss 48-11ces n. Jenkins, a stenographer in that Division (who has been on tex4Pora 7 loan to Governor Szymczak's office since June of this year "who had submitted her resignation to accept a position as secretary O1 Mr. Szymczakis staff in Berlin, Germany), to become effective as of the close of business on the date immediately prior to that when her enalaoyment ith the Lar Department became effective. The memorandum ther recommended that appropriate payment be made for the accumulated ' tIll 4111111a1 leave remaining to her credit at that time. The resignation was accepted as recommended. Memorandum dated August 30, 1946, from Mr. Nelson, Director of the Division of Personnel Administration, submitting the resignation Miss Mary Ellen Hallett, a Clerk-Typist in :that Division, and re%Lending that the resignation be accepted, effective, in accordance With - her recuest, at the close of business September 6, 1946 and that 8444"°Priate payment be made for the accumulated annual leave remaining to her credit at that time. The resignation was accepted as recommended. Thereupon the meeting adjo
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