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1449 Minutes of actions taken by the Board of Governors of the Neral Reserve System on Tuesday; September 6, 1949. The Board met ill the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Draper Evans Vardaman Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Thurston, Assistant to the Board Riefler, Assistant to the Chairman Vest, General Counsel Smith, Special Counsel Hodge, Technical Adviser MI% Szymczak stated that in accordance with the action of the 13 at its meeting on August 30, 1949, arrangements had been 4111U to give a dinner to representatives of central banks who will 14 at tendance at the Fourth annual meetings of the International 1314k Or Reconstruction and Development and the International Monete..11 PUnd in Washington in September, that the dinner would be given 111 the Pa.n-Aanerican Room of the Statler Hotel at 7:00 p.m. on Mon(141r, September 12, 1949/ and that it was planned that in addition t° the v isiting central bankers, the members of the Board and a few 1411ited members of the staff would be present. Reference was made to the exception and appeal from the rule Hearing Officer filed by attorneys for Transamerica Corpo- Ntio4 n4der date of August 29, 1949. Mr. Evans stated that he had 1450 9/6/49 -2- 1144 the draft of a suggested statement and order prepared by Counsel coPies of which had been sent to all the members of the Board Allgilst 31, 1949, and that he was completely satisfied with the l'Ilosed statement. Mr. Vardaman stated that before considering the proposed re1)41* would like to know whether Mr. Clayton had filed with the Chad, - 11 or the Secretary's Office a statement along the lines dis- etissea at the meeting on July 19, 1949, of the reasons for his re*malt 4 from participating in the consideration of matters relating to the T ransamerica case. Upon being informed that the statement had not been filed, Mr. Vardaman moved that Chairman McCabe be requested to ask Mr. Clayton for such a statement to be filed with the Board prior to the next meeting at which any matters relating to the Transamerica He added that he was case were considered. extremely reluctant to consider the pending matter until Mr. Clayton had made Ms position clear, that he would do so as a courtesy to Mr. Evans who would be here only a few days, but that he would not take part in any other matters pertaining to the Transamerica case until the suggested statement had been filed. Following a discussion, Mr. Vardaman's motion was put by the Chair and carried'. Mr. Evans took no part in the discussion or action on this motion for the reason that he was not familiar with the background of the motion. At Chairman McCabe's request Mr. Carpenter then read the 1451 9/6/49 -1- elcePtion and appeal from the ruling of the Hearing Officer and tIle draft of proposed statement and order prepared by Counsel. -4.80 read a memorandum dated September 2, 1949, and received thistrorning from Mr. Stewart, Counsel for Transamerica, prepared ' leePonse to a memorandum filed by Mr. Townsend, Solicitor for thetoar _, dated August 31, 1949. At this point Mr. Szymczak referred to a luncheon meeting " he had with Mr. L. M. Giannini and Mx. Roland Pierotti of t4 13 of America National Trust and Savings Association as recorde cl in a memorandum from him dated August 24, 1949, during which, ' qdltion to discussing the formation of an Edge Act corporation 1)Zr g 454k of America National Trust and Savings Association to handle the t ca ' eign business of the bank, Mr. Giannini stated that Mr. Tov118e 1101 Solicitor for the Board, had said upon several occasions 114111g the Clayton Act hearing that if Transamerica did not cont11 the Bank of America there would be no case against Transamerica. 141' 'Gianaini inquired, Mr. Szymczak said, whether the Board would Iteel the same way about the case, to which inquiry Mr. Szymczak N11(311ed that he did not know Mr. Townsend had made such a state- that the Board had not considered the subject, and that he Nati orfer no opinion as to how the Board would feel about the tte ae went on to say that Mr. Giannini then asked him what it the Board wanted to accomplish by the proceeding and that he 1452 9/6/49 44% -4- SzYmczak) told Mr. Giannini that if he had any questions per- taining to the case, his counsel should take them up with the )3°1111's Solicitor. Mr. Szymczak also said that on the morning tAtIgu.st 26 he called Deputy Comptroller of the Currency Robert804 °n the telephone and reported to him the luncheon conversatiot August 24 with Messrs. Giannini and Pierotti, especially the, zart about capital requirements of Bank of America and the czitze Act corporation,and that in the afternoon Mr. Robertson said that Giannini was over to see Comptroller of the Currency that morning, that in their conversation Comptroller Dela. Mr. Giannini discussed how to dispose of the Clayton Act ease / and that it was indicated that Transamerica would want their c°13Zsel, Mr. Stewart, to talk with Mr. Vest and Mr. Lynch, General C°141sel of the Treasury. Mr. Szymczak added that he reported these °Illiersations to the other members of the Board (except Mr. Clayton Who /fas out of town, but to whom he subsequently reported the °131rersationsN ) and to Mr. Morrill, Special Adviser, Mr. Vest, Mr. Mr. Smith,and Mr. Townsend, and that on the basis of Mr. comments and the information received from Mr. Robertson itlias Probable that Transamerica interests shortly would approach te 130ard Concerning a settlement of the case. Mr. Vardaman stated that he disagreed with the suggestion th4tt Giannini or his counsel should take such a matter up with 4 3 9N49 -2the Board's Solicitor and that he (Mr. Vardaman) felt that the 13°111'd had no right to designate any agent or any single member of the B c)a.rd as a channel through which the Board must be approached. 4 A1 'Leo stated that he felt that if Transamerica wished to make 414. re Presentations they should be made to the Board or to the Chairm_ of the Board for presentation to the other members of the Board.. There was a discussion of this point, and Chairman McCabe suggeqed i-hat while it had been indicated to representatives of Trens- a that they were free to communicate with the Board at any time, it ve. 8 logical that any representation by Transamerica looking toward settleMent of the case should be discussed informally with the 13°411'a Counsel. Mr, Evans suggested that he and Mr. Townsend be kept fully llit°rIlleci of any such representations and that any proposed settlement "the "-se be clearly set forth in writing so that any settlement l'ee.ehecl vould be effective in finally disposing of the questions re1"11€ to the Transamerica group which had confronted the Board for IllPast several years. Mr. Vardaman then suggested that the Board hear from Counsel ()II the question whether the Board should reverse its action of July 19 '1949 -/ referring to the Hearing Officer the motion to dismiss orY atto rneys for Transamerica under date of July 8, 1949, as 1454 9/6/49 Well -6-. as the date on which hearings were to be resumed. He added that at the meeting on July 19 he felt that the Board should have 46 " arguments on the motion to dismiss, that he still felt this 811°144 be done, and that the day set by the Hearing Officer for resttaption of hearings (September 19) allowed Transamerica an in84111ate time to prepare its defense. Mr. Evans stated that he assumed that the first part of Mr. 116-1444alli s suggestion was answered by the action of the Board in to him the motion to dismiss and that in setting the thle 40r resumption of the hearing he felt that, having in mind that the complaint was filed in June 1948, ample time had been al' Re also said that in conducting the hearing he had been ver,, -4 Itberal in allowing recesses and that he would allow further Nes He added that he Ses if that seemed necessary or desirable. r ea4 carefully the memorandum sent by Mr. Vardaman to the in&1u41 members of the Board under date of August 31, 1949, and that he did not think the points covered therein, including the 1)481b le effects of the death of Mr. A. P. Giannini on the preparatiori °I' Transamerica's case, were sufficient grounds for extending tile d 4te for resumption of the hearings. Chairman McCabe then called upon Mr. Smith who reviewed the 0I1rses of action considered by the Board in disposing of the Ilicrtio, - (.0 dismiss filed by Transamerica on July 8, 1949. He 9/6/49 stevted that the Board had a right to refer the motion to the Hear14 Officer for handling and disposition as had been done with the 113448t8.nding that if the Hearing Officer felt the motion should be igranted he would make a recommendation to that effect to the BOttm and if after having heard the evidence thus far preii(ited he felt the motion should be denied, the Board could rely 011 his Judgment. Mr. Smith added that he felt the course followed Igas entirely consistent with previous decisions in the case and was l'ee.sonable position for the Board to have taken under the circumstances. Continuing, Mr. Smith stated that the questions presented to 41. '41e Board by the exception and appeal filed under date of August 29) 1949, were, in effect, the same as those decided in referring the motion to dismiss to the Hearing Officer. 14 the He said that the autho- *+ he Board was clear, that it had complete power to allow e4cePtion and appeal and to vacate the order of the Hearing Of- tieer denying the motion to dismiss, or that it had authority to deny the elccePtion and appeal on the grounds that interlocutory appeals Ilete 40t Provided for by the Board's rules of procedure or the Admin- 18trative Procedure Act. On the question of the date for continuing the ilearings, Mr. Smith said there was a basis for arguing that Rule IV °r the Rules of Procedure authorized an appeal to the Board from 4'4^ 4ecision of the Hearing Officer in that regard but that there was 14.36 9/6/49 -8- 18° a basis for saying that the rules did not give such authority that if the Board held that it might hear an appeal from a ruling 143141" by the Hearing Officer it opened the way for appeals on any and "1117 such ruling. Therefore, he said, he construed the rules of Proc edure as not intended to allow appeal from a ruling of the Hear14 Officer but that they did allow the respondent to file a motion vould bring a matter to the attention of the Board. He made the further statement that while opinions on the point might differ, he did laot feel that a refusal at this time to extend the date for retntlizotion of the hearing beyond September 19, 1949, could, as a matter Of 411, be said to be unreasonable or would fail to give the respondent a fair hearing, because it could not now be known how many recesses nlight be taken, and that if there was error in fixing September 19 48 the date for resumption of the hearing that error might be cor,y recteA 'A 0 recesses granted in the future. He added, in response to ItUlesti°n from Chairman McCabe, that the question whether the Board slackla sustain the Hearing Officer ruling on this point or extend thedate for the resumption of the hearings was a matter of judgment (54 the Part of the Board but that he (Mr. Smith) was of the opinion tileLt the time allowed the respondent was somewhat short and that an elttelision should be granted. Mr. Szymczak then moved that the Board Issue the statement and order as prepared by Counsel and read at this meeting in response to the exception and appeal filed by Transamerica under date of August 29, 1949. 1457 9/6/49 -9Mr. Vardaman moved, as a substitute for Mr. Szymczak's motion, that the Board allow the exception and appeal filed by Transamerica under date of August 29, 1949, and that it hear oral argument on the motion to dismiss filed under date of July 8, 1949. Mt. VardRman's substitute motion was put by the Chair and lost, Mr. Vardaman voting "aye" and Messrs. McCabe, Szymczak, Draper, and Evans voting "no". Mr. Szymczak's motion was then put by the Chair and carried, Messrs. McCabe, Szymczak, Draper, and Evans voting "aye" and Mr. Vardaman voting "no". Mr. Szymczak then moved that the statement and order referred to above be issued with the understanding that as the Clayton Act proceeding progresses Mr. Evans will be liberal in granting such further recesses as may be justified by developments in the case. Mr. Evans said he would be glad to be guided by such an 11114erstatding. Mr. Vardaman moved that as a substitute for Mr. Szymczak's motion, the Board extend for 60 days from September 191 1949, the date for the resumption of the hearing. Mr. Vardaman's substitute motion was put by the Chair and lost, Mr. Vardaman voting "aye" and Messrs. McCabe, Szymczak, Draper, and Evans voting "no". Mr. Szymczak's motion was then put by the Chair and carried, Messrs. McCabe, 1458 9/6/49 -10Szymczak, Draper, and Evans voting "aye" and Mr. Vardaman voting "no". Mr. Vardaman requested that his dissent be shown on the statement and order to be issued by the Board, and it was understood that the statement and order would be revised to include the dissent. During the foregoing discussion, Messrs. Thomas and Young, tiz'ector -- and Associate Director, respectively, of the Division of sA_ Re-c'rch and Statistics, entered the meeting. At this point Messrs. Smith and Hodge withdrew, and Mr. Eccles eliCi** Nelson, Director of the Division of Personnel Administration, ed the meeting. Before this meeting there had been circulated among the mem13el's of the Board a memorandum from the Personnel Committee dated AllglIst 24) 1949, transmitting memoranda from Messrs. Nelson and Vest AugUst 15 and July 28, 1949, respectively, with respect to 8143Plemental retirement allowances for Presidents of Federal Reserve 13444 having short terms, such allowances to be paid directly by the el111'1°Ying bank independently of the Retirement System of the Federal Banks. The memorandum from Mr. Nelson outlined a plan for 11111)1eMental Payments which would assure a president who retired "ter attaming age 65 and completing ten or more years of service ''c°1'eia pension-annuity from the Retirement System and payment from the eMP1°Ying Bank of not less than $10,000 a year, and stated that I 4S! 9/6/49 -11this would be along the lines recommended by the Conference of C11411111sn of the Federal Reserve Banks at its meeting on May 28-30, 1949. In commenting on the memorandum, Mr. Szymczak stated that the b ,ersonnel Committee felt that the plan would accomplish the pur130 Bes "ich the Chairmen had in mind and that the question presented tcltc011eideration by the Board was whether in accordance with the taccftendation by Mr. Vest in his memorAndum of July 28, 1949, the " 'sr should be submitted formally to the Bureau of Internal ReveIlue f an opinion as to whether the plan would endanger the tax aZftPt status of the Retirement System of the Federal Reserve Banks. There followed a discussion of the proposed arrangement, vhich voUld involve a contract between the employing bank and the 111111114.3ual concerned, and the reasons for such an arrangement as Veil Its the recommendation of Mr. Vest that it be submitted to the Llterh., the Revenue Bureau for an opinion before adoption. During Aj ''lscussion, question was raised as to the advisability of adoptille 8437 Plan, it being stated that studies by the Chairmen's Contereti,„, Committee indicated that the present retirement plan of the Metal Reserve Banks was more liberal than most other retirement Ystetin - and that if individual cases arose in which the retirement allov alIce seemed inadequate, consideration could be given by the clirecto -rs of the Federal Reserve Bank and by the Board at the time "reti rement to whether such allowance should be supplemented by 9/6/49 -12contribution. Following a discussion, upon motion by Mr. Draper, it was agreed unanimously that the matter be referred back to the Personnel Committee for further consideration with the understanding that the Committee would again report to the Board. Chairman McCabe then referred to a letter from the Budget 1114 klu dated August 18, 1949, regarding the proposed letter to Bellator kittee Maybank, Chairman of the Senate Banking and Currency Comtransmitted to the Bureau of the Budget for comment on Au- Rust 11, 1949, with respect to S. 2340, a bill which would require (1) that ti°4 membership on the Board be bi-partisan and (2) that func- of the Board with respect to internal management, its rela- tictship with Congress, and the execution of policy be performed ' b3 the Chairman. The letter from the Budget Bureau stated that there 1401ald be no objection to the submission of the proposed letter to the Senate Banking and Currency Committee but that the pro- \Isiolls of S. 2310 which relate to the functions of Chairmen of rY commissions were in accord with the program of the Presi- ree;1 cle4t, There followed a discussion whether the proposed letter sho tad be sent, during which it was suggested that Chairman McCabe dtz kticl re the matter informally with Mr. Pace, Director of the Budget, 13°I ' t his discussion to the Board at a meeting next week. 1461 9/6A9 -13This suggestion was approved unanimously. Mr. Szymczak stated that during a discussion at the meeting 11Allgust 30, 1949, of topics to be submitted to the Federal Advisory Council for consideration at its meeting on September 18-20, Mr. V43.1142141a4 suggested that the Council be asked to discuss to what exteat Personnel from commercial banks might serve as members of foreign nlissions arranged by the System. Mr. Szymczak also said that the sug- 8estion had been carried over for discussion at this meeting when all nierabers of the Board could be present. Mr. Vardaman stated that he felt the question should be sub411tted for the reason that he was interested in promulgating through°Ilt the 'world the principles of private banking and he felt inclu411511 °f Private bankers on such missions might assist in accomplish„ dbjective. Mr. Evans said he would be opposed to submitting the topic for the reason that many of the large commercial banks that would be in a Doe1tio4 to furnish Personnel for such missions had branches or other ilItelsests abroad and the disinterestedness of their contribution to a. kitfsion would be open to question. Following a discussion, Mr. Vardaman moved that the question be added to the agenda for the meeting of the Federal Advisory Council. Mr. Vardaman's motion was put by the Chair and lost, Mr. Vardaman voting "aye” and Messrs. McCabe, Eccles, Szymczak, Draper, and Evans voting "no". 1462 9/6/49 -3 4 Chairman McCabe then stated that he would like to discuss in- 11Y with the members of the Federal Advisory Council the question c3f the executive pay bill, H.R.1689, now before Congress. Following a discussion, Chairman McCabe's suggestion was approved, and it was agreed that a background memorandum should be handed to the members of the Council with the informal statement that the Board would like to have the views of the Council as to the salaries that should be provided in the bill for the members of the Board in the light of the salaries contemplated by the legislation for officials of other departments and agencies of the Government. Mr. Vardaman referred to a memorandum prepared by Mr. Barton, A8s18 tailt Counsel of the Federal Reserve Bank of Chicago, for Mr. Young, iresiclent of that Bank, under date of July 29, 1949, with respect to the E/43Plicability of the Michigan General Sales Tax to materials purell4sed for the addition to the Detroit Branch building. It was stated that the contract for the addition had been let and that it included $74,00 , which would cover the estimated amount of the tax that would have t ° be paid by the contractor. Mr. Vardamsn suggested that an attempt be made to find a means vrheret Y Pe3rment of the sales tax could be avoided so that this addittolial maount would not be a charge against the $10 million authorizatioz of Congress for the construction of branch buildings of Federal 11A ve Banks. ' Following a discussion, the matter was referred to Mr. Vest with the understanding that he, in consultation with Mr. Leonard, would consider Mr. Vardaman's suggestion. Before this meeting there had been circulated among the members 9N49 -15- or the Board a memorandum from Mr. Nelson dated July 28, 1949, which l'ecollmended (1) that the present policy with respect to outside busitkes8 and teaching activities be continued, with the understanding that " activities not interfere with the performance of the duties of the emPloyee in his position with the Board, and that the employee not take anY position which might embarrass the Board in the conduct of its 0 Perations, (2) that no objection be raised to any employee accepting "°Minal compensation for such outside business or teaching activitie 8, anA „ "(3) that the practice of obtaining reports each year on such activities be continued and reviewed by the Personnel Committee. Mr. VardAman stated that he had asked that the memorandum be discussed at this meeting because he felt that the matter should be e°48iderad by all of the members of the Board, that he was opposed to ing employees of the Board to engage in any outside business activities, and that any exception to such a policy should be authorized °413 'bY the Board. There followed a discussion of the outstanding instructions with reepe et t0 reporting outside business activities and teaching engagements t11(1 the de velopment of the present arrangement over a period of years. At the conclusion of the discussion, Mr. Nelson's recommendation was approved, Mr. Vardaman voting "no': A memorandum from the senior staff dated August 15, 1949, had en slz4est culated among the members of the Board before the meeting ing a policy to be followed in the future regarding membership or toar d employees on committees of outside organizations. Mr. Vardaman 1414 9/6/49 -16- stated that he had asked that this matter be considered at this meet14 and) as in the case of outside business and teaching activities, he oPposed to membership by members of the Board's staff on any ectimaittees of outside organizations. Following a discussion, a memorandum of policy was approved in the following form, with the understanding that a copy would be furnished to each employee of the Board, Mr. Vardaman voting "no". "Inquiry has been made of the Board as to the extent which members of the Board's staff might appropriately serve as members of committees or similar groups of profes64.0nal, business, civic and other organizations. "It is the opinion of the Board that such service is cc3MPatible with the policy adopted by the Board in connection with outside business and teaching connections and ccUld be undertaken by members of the staff to the extent Permitted by the principle underlying that policy, that is, 13tlat it is important that officers and employees of the e°ard refrain from being placed in any position which might the Board in the conduct of any of its operations, or rest result in any questions being raised as to the independ4 4ce of their judgment or their disinterestedness in the charge of their official responsibilities or their llitY to perform their duties satisfactorily. "Accordingly, the statement contained in the memorandum sent to employees of the Board under date of March 24, 1948, has , been amended to cover this point as well as to state the t-. 81fcli s policy with respect to articles for publication and 1V bY Board employees, and to set forth the understanding O u has been in effect for a number of years with respect Political activity on the part of members of the staff. "A copy of the revised statement is attached." to 4 4 The statement enclosed with the above memorandum was as follows: t teachiWith respect to outside business affiliations and ng activities of officers and employees of the Feder ' Boa Reserve Banks, and members of the Board's staff, the beard has expressed the view that such connections should ti:ade by those occupying responsible positions only with elpproval of the Board whenever a member of its own 1465 9/6/49 -17- tt staff was involved and only with the approval of the approDriate committee or officers of a Federal Reserve Bank whenever an officer or employee of the Federal Reserve Bank was 1.11volved. The pertinent parts of a letter written to the federal Reserve Banks on this subject are quoted below: 'For many years the Board has taken the position that the good conduct and repute of the Federal Reserve System require that officers and employees occupying responsible positions in the Federal Reserve Banks shall give their entire time and attention to the affairs of the Banks and not be identified With any outside business interests. Stated as a general principle, it is important that officers and employees of a Federal Reserve Bank refrain from being placed in any position which might embarrass the Federal Reserve Bank in the conduct of any of its operations or result in any questions being raised as to the independence of their judgment or their disinterestedness in the discharge of their official responsibilities or their ability to perform satisfactorily all of the duties of their positions. 'Question as to the applicability of this policy to teaching commitments has been raised and it has been urged that there is a definite distinction between the outside business connections contemPlated by the above statement of policy and purely educational work, and that there should be no objection to an officer or a member of the research staff of a Federal Reserve Bank having a teaching connection with a university which is also helpful in enabling him to keep in touch with current developments in his field and in establishing and maintainrelations between the Bank and the university which would be of advantage to the Bank. The Board Is in agreement that such instances, as well as other !eaching connections which are closely related to Lhe work of the Federal Reserve Banks, such as A.I.B. classes; should not be regarded as coming within the scope of the policy stated above, provided; (a) the . teachi_rig engagement is clearly secondary and in keeping with employment by the Reserve Bank, and (b) the teaching engagement does not interfere with the work of the Reserve Bank. 'In the review of this policy, other questions 1466 9/6/49 -18- "'have arisen about outside activities of members of the research staffs. Some time ago the Board had occasion to consider the question of the proPriety of a member of the research staff receiving substantial pay for preparing for a semipublic agency astudy peculiarly in the field of Federal Reserve interests. The Board expressed the view that an important principle was involved, namely, that a full-time employee or officer of a Reserve Bank Should not receive pay from another source for work being; or which should be, done by the Reserve Bank as part of its -Dulaic service, and that, in the case in question, if the study were one that the Bank, as such, should make, it should be done by the Bank without charge to the other agency, except possibly for out-cf-pocke:, expenses. It may be added that frequently the person Involved would not be called upon to render the outside service if he were not in position to utiliLe information and material accumulated in the conduct of the affairs of the Bank. 'The policy with respect to outside engagements applies only to officers and to full-time regular employees. It may not necessarily apply to individuals engaged as consultants on a fee 'basis, to those engaged as part-time employees, or to those employed for temporary periods, such as durine vacations or for work on specific projects. Such cases should be considered individually by the Reserve Banks in the light of the general Principle involved 'It is expected that reports now being made c) the boards of directors of the Federal Reserve canks regarding indebtedness and outside business activities of officers and employees occupying responsible positions will be continued... In no event should an officer or an employee occupying a reSponsible position undertakeliany outside business activity or teaching engagement without first Obtaining the approval of the appropriate committee Or Officer of the Bank.' The Board appreciates the desirability of a member of the aff keeping in touch with developments in his chosen Pl'°fession and that at times he may be called upon to serve 1467 9/6/49 -1921 a committee or other similar group of an orcaniza'ion in that field. The Board would not regard such n-vice as inconsistent with employment with the Joofird. so long as it would not result in any embarrassto the Board or in questions as to the employee's (lisinterestedness in the discharge of his official f!sPonsibilities or his ability to perform his work for " v e Board satisfactorily. In no event, however, should a member of the staff accept membership on a committee 11116-er circumstances which might be understood or interpt reted as indicating that he was serving on the commitas a representative of the Board. Should member, 8414 on a committee or similar group of an outside : 1*garlization involve payment to the staff member of a '?e, honorarium, or other form of compensation far seriv3l rendered, the service would constitute an outside ce5 ilsiness connection and should be handled accordingly. tak"No business or teaching activities should be under-44 by any employee of the Board until the matter has been reviewed with the head of the division under whose ellPervision he works, and, in the case of officers and _!Ployees occupying responsible positions, the approval w' the Personnel Committee obtained. Likewise, before eittPloYee accepts an office or membership on an Jimrtant committoe of an outside business or professional g 3.nization the matter should be presented to the head di his division. If at any time there appears to the on head to be any question as to the propriety of the c service he will submit the matter to the Personnel °Illmittee of the Board. th It is the view of the Board that, to the extent it can be done without interfering with the work of the e Board, the members of the staff should feel free to tilt° articles for professional and technical publicai)r°4s, and to give talks before technical, educational, s; essional, and other groups, on the Federal Reserve of%eill and its functions. This is desirable as a means Re,:rinEing about a better understanding of the Federal : rve System by bankers and by the public. However, stcoe"'r members should receive no fee, honorarium, or other ofMPensation for such articles or talks. The approval cel,!lie Personnel Committee should be obtained before acro;'ing an invitation to speak or to write an article 8„ Publication, and such articles or talks should be oloomitted in each case to Mr. Thurston, either in text ' 4 oral outline if no text is prepared. r 4 9/6/49 -20"In the past the Board has not issued any formal instructions to the staff with respect to political acor the holding of political or public office. 4owever, attention has been called from time to time to the provisions of the Hatch Act, which cover this matter, and it has always been understood that the members of the staff would not participate in political campaigns or the collection of assessments of a political character or !therwise engage in political activity except to the exf permitted by the Hatch Act. As far as the Board 74011s, this understanding has never been violated and it ' ; 1 8 mentioned at this time solely for the purpose of . 1"inging it to the attention of the members of the staff that they can keep it in mind." At this point Messrs. Riefler, Vest, Thomas, Nelson, and Youte vithdrew, and the action stated with respect to each of the _ 444tters hereinafter referred to was taken by the Board: Minutes of actions taken by the Board of Governors of the "11 Reserve System on August 30, 1949, were approved unani- n4 ' ti ly, Minutes of actions taken by the Board of Governors of the Peur 41 Reserve System on August 31, 1949, September 1, 2, 1949, Vero 4413Proved and the actions recorded therein were ratified Unnni111°141Y. Chairman.
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