19480525_minutes.pdf

Minutes of actions taken by the B

'8.1 Reserve System on Tuesday, May 25,

thett.'ard Room at 10:30 a.m.

PREsENT: Mr. McCabe, ChairmanMr. EcclesMr. SzymczakMr. DraperMr. EvansMr. VardamanMr. Clayton

ard of Governors of the

1948. The Board met in

834

Mr. Carpenter, SecretaryMr. Sherman, Assistant SecretaryMr. Morrill, Special AdviserMr. Thurston, Assistant to the BoardMr. Riefler, Assistant to the ChairmanMr. Smead, Director of the Division of

Bank OperationsMr. Bethea, Director of the Division of

Administrative ServicesMr. Thomas, Director of the Division of

Research and StatisticsMr. Vest, General CounselMr. Nelson, Director of the Division of

Personnel AdministrationMr. Townsend, Associate General CounselMr. Millard, Assistant Director of the

Division of Examinations

1,4 la ecordance with the decision reached at the meeting of the

°7:111417 142 19481 there was a further discussion at this meeting

°t'qi°11 bY the

14441'1N 1%cNitrements

Board to in re by 2 percentage points the re-

of member banks in the central reserve cities of, elrld

Chicago. The discussion was in the light of the exist-

l'141erlre situation of banks in these cities and whether action

11141 takell now in anticipation of renewed inflationary tendencies,

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

5/25/48-2-

14Q4,44...g'a increased lending by member banks, or whether action shouldbe d,/erred until there was a more definite upward trend in the

of credit when action might be

441ereiag the

After a comment by Mr. Thomas that41441

reserve city banks had not changed114

discussed by the Board on May 14,4111ed to give 30

movement.

days notice44110

should not be madetclr the

reason that theItttter partof June.

r4i1it5te adjustment

14414eount8 during theNEtelktY

t4 refunding

804rdi a action.

0, Mr. Szymczak

ktt104

'iglat h.-- more effective if only short notice were given.

111'• McCabe stated that when he and Mr. Sproul were at thekirY on I,

Ttke '18-Y 12 for their discussion with representatives of the

tc4,,,41 11rYh respect to an increase in the short-term rate, he in-

, the

'reltallrY that the Board felt strongly that there shouldh r

more effective in retarding

the reserve position of

greatly since the matter

he stated that, if the Board

of an increase in requirements, the

effective until after the first of July

market

He

to

would be under pressure during the

also said that in July the Treasury could

the increase by reducing its calls on war

period of adjustment. He added that the

operations should be taken into account in timing

inquired whether four weeks public notice of a3,4 r

eserve requirements was necessary and suggested that the

iacrease in reserve requirements and that action on


83 6

_3_

taken shortly after the Treasury announcement

of

title, there was increasing evidenceeholo

in the early part of June

4 1.fa48°48 that the reserve position14t

5i5/48

ttl° Matter might be

/tt.411 respect to the June refunding was made.

€estto a request for his comment, Mr. Riefler sug-

d that the time to take the action was when the money market

'ed to be getting out of hand, at which time action would bekeit tor

9 effective than if taken earlier. He questioned the need

the g much notice before the effective date of the action for

48:8°Ia that the increase would affect only the banks in central

to cities which would not need a great deal of time

Just their positions to the higher requirements.

With further1148

CliBellssion of

4tikclille and

reference

the

in which

to the timing of the action there

possible effect of action in June on the

a to whether it would be preferable to make

t4"tectilre date of the action some time in the latter part of

s

'Ilki (11' eatlY August. It was suggested in this connection that,

14.1:7 "4°4 la June would result in increased purchases of certi-t'ktse by. the Federal Reserve144Nt

takitttr g the action immediately. Mr. Eccles suggested that the

In. response

Banks, this effect on the securities

l'i°41c1 result from the action regardless of when it was taken.The A

,Liscussion indicated that a majority of the Board would

°ate fthe action should be°II the

banks would be easy

that an inflationary

egain taking hold in the country and action would


8375/25/48

-4 -

allindication that the Board of Governors was using such powers

48ithad to meet the situation, and if it were made effective at4 date

in June it might interfere with the July financing.

Ittle action were not made effective during the early part of June,

46414; the effective date would have to be deferred until the lat-t'laalt of July or the early part of August. He felt that the

414° rell5(31as that justified a recommendation that the short-terml'atebe in

creased applied to an increase in reserve requirements4cIlle

stated that he would favor such action.

SzYmczak stated that there was no increase in lending in

414 Chicago by member banks at this time, but on the con -trttry

4 'a decrease, that if action were made effective before July 1

4116t be laterpreted as an effort in the direction of trying to,t:11‘ecil

tacrease in the44,14

N P°88ible to get legislation at this session of the Congresst the

Board additional credit powers, he felt it would be de-

ec/r the Board to use its existing powers at a time when its

1"i°t1 lq°111d have the greatest possible effect later in the yearth e was

Pe eti,, an indication that member bank lending was increasing.11'4 4Ction.

IN the at that time, he said, he would continue negotiations

ktilt Ill'elIsurY for an increase in the short-term rate, having in

°Dfill 1)°5sibility of increasing the rate by operations in the

11141141t before the next refunding operation is undertaken.

ha 'ence was also made to the fact that those who were op-

cliti°11a1 credit powers for the System had stated repeatedly

short-term rate and that, since it would


8%8,

taklber

5/25/48

-5 -

thel'e was no need for such powers because the Board had not used

ite powers.

After a further discussion of thepossible effects of the action, Mr.Eccles moved that action be taken bythe Board to increase reserve require-ments of central reserve city banks by2 percentage points with the under-standing that the action would be an-nounced immediately to become effectiveon Friday, June 11, 1948.

Chairman McCabe stated that before action was taken he wouldet.,0

halie the latest information as to the reserve position of

batiks in NewYork and Chicago and how the increase would af-etthose

banks.

tit)I Atter some further discussion, Mr. Eccles withdrew his motionthe

understanding that there would be a further discussion of44j4t tter

11()41tri es the first item for consideration at a meeting of theto

be held tomorrow morning at 10:00 a.m.

Ther

read,_4-4g as follows:

the:The Personnel Committee recommends that Section 4 ofbe ern°4rOs travel regulations as amended November 7, 1947,Ilci -nc,led to provide an increase in the allowance for of-Dertt-l'iravel in a person's own automobile from 5O to 6 1/4

an and the elimination of the provision which now re-teed 8 this

the allowance in the case of employees not to ex-ahort cost of transportation by common carrier over thef!lile reniusually traveled route between the points of travel.B--4tion in this respect would then read: When using

automobile in official travel, the traveler may be:414 ,-4mileage at a rate not to exceed 6 1/4 per mile in

lettitti operating expenses except that reimbursement

0111°13ile travel in accordance with the provisions of'lq —l'agl'aPh by others than those excepted from the pro-of‘lettn 4 Paragraph 8 of these regulations shall be sub-he approval of the Personnel Committee.'

e was then presented a memorandum from the Personnel Corn-


839

-6--_

‘j°11111 .tr,. "The Government travel regulations allow 50 per milef."' official travel and the Board's regulation has con-

ed80111 in this respect except for a short period fromePtember, 1946, to March 21, 1947, when the allowance

1/4 per mile.re "A survey of the Federal Reserve Banks sometime ago,vealed the following allowance for official travel inverson s own car:

7 Banks 70 per mile3 Banks 60 per mile1 Bank 50 per mile1 Bank 60 - 70 - 80 per mile

(Atlanta) (depending on cost of car)recent report published by the American Automobile

10 Lciation shows that for a small post-war car driven3 i;ui miles the allowance for operating cost should beclar::w per mile plus $1.30 per day and that when insurance,alVeiation, and license fee are included, the allowancePIN's be 8 1/40 per mile. A similar computation for a

-Zr oar gives a mileage cost of just over 70 per mile.orl, Colonel Press in the office of the Washington BoardPerarade says that the present allowance for the use of a

°Ille own car by local firms is 70 to 80 per mile."

Upon motion by Mr. Eccles, therecommendation of the Personnel Com-mittee was approved unanimously.

Co'e of the agenda for the forthcoming Conference of Chair-

" th e Federal Reserve Banks at White Sulphur Springs, West

44442 nthq -14114Y 29-31, 1948, were distributed. Mr. Evans stated

fale a.gerlda had been prepared in accordance with the wishes of'4ellt, a' OOThThjj0 of the Conference and that it was his recom-k,440„.

th.

4 that „_

10044re 'due Board authorize the payment of the expenses of

444 4Ce uhich would not be covered by the travel and subsis-N)erisk.

of the individuals attending the Conference.

Mr. Evans' recommendation wasapproved unanimously.


840

5/25/48

_7_

Reference was made to the discussion at the joint meeting

the l,-Qard of Governors and the Presidents of the Federal Reserveatt41C nh

, 8 -'4PlaY 21 of the desirability of a reduction in the portion of

4,an interest charge on outstanding Federal Reserve notes

44

eteallaings of the Federal Reserve Banks being paid to the

to the further action to be taken by the Board in connection

/rithe tatter.

It was unanimously agreed that thestaff should prepare, and send to eachmember of the Board for his comment, adraft of a memorandum setting forththe reasons for and against such a re-duction, it being understood that afterthe members of the Board had had an op-portunity to comment on the memorandumit would be revised and placed an thedocket for consideration at a meeting.

was

4tika. 4

(148tim.,

t6 -4

*vhether a proceeding' Dr vi

-aictis of the Clayton-4(I ths.

Mt' ClaYton stated that Mr. Townsend had completed his in-

ready to report to the Board with respect to the

should be instituted by the Board under

Act against Transamerica Corporation

the (Mr. Clayton) would suggest that the Board hear Mr.

t4a 114113 statement at the meeting of the Board tomorrow following

1:4"cleration of,1 La an increase in reserve requirements of member

central reserve cities.

Following a discussion of the na-ture of the proceeding and the pro-cedure that might be followed inconnection therewith, Mr. Clayton'ssuggestion was approved unanimously.


841

of the respective Banks for the year beginning June 1,

ellci upon motion by Mr. Draper the following actions were taken

J Name0. s. veytonstet poweUira(1)1:PUree1

santonclA. McConnell4. T4 MiliS

1.0 Zieter

C

44 B. oreLarson

E. LarsonPeterson.

Z,4 Turner0. 14.4' LYsert

0 1stad1,1.4. McCrackenStrouraan,

C, 4% TowleLareon

5/25/48

-8-

At this point all of the members of the staff withdrew from

thelecting except Mr. Carpenter.

Consideration was then given to the salaries submitted bythe

el'al Reserve Banks of Atlanta, Minneapolis, and Dallas forOfficers

1(48,

—4ms vote:

1. A letter to Mr. Peyton, Presi-dent of the Federal Reserve Bank ofMinneapolis, was approved unanimouslyas follows:

ri,s _4

The Board of Governors approves the payment of sala-c to the following officers of the Federal Reserve BankthroLAIleaPolis and its Branch for the period June 1, 1948the-Z12L May 31, 1949, at the rates indicated, which areyollr't418 fixed by the Board of Directors as reported in

letter of April 22 1948:

Jr.

TitlePresidentFirst Vice PresidentVice President and CounselVice PresidentVice PresidentVice President andVice President andSecretary

Personnel OfficerAssistant Vice PresidentAssistant CashierAssistant CashierAssistant CashierOperating Research OfficerAuditorDirector of ResearchAssistant Counsel

HELENA BRANCH Vice PresidentAssistant Cashier

Cashier

Annual Salary$25,00018,00013,00012,00011,00011,000

9,75010,0009,0008,0007,0005,7507,0007,5008,0007,000

10,0006,500"


5/25/48

2. After a discussion of questionsraised by Mr. Vardaman with regard tothe quality of the work being done byr,essrs. McLarin and Clark as Presidentand First Vice President, respectively,of the Federal Reserve Bank of Atlanta(during which Messrs. Smead, Nelson,and Millard were called back into themeeting), it was agreed that on thebasis of the information available tothe Board it should not approve the in-crease of $1,000 proposed by the Di-rectors of the Atlanta Bank for FirstVice President Clark.

3. The following letter to Mr.McLarin, President of the Federal Re-serve Bank of Atlanta, was approved:

ri "The Board of Governors approves the payment of sala-„e: to the following officers of the Federal Reserve Bank19zPantP for the period June 1, 1948, through May 31,1T3,V, 4't the rates indicated, which are the rates fixedtia ''e Board of Directors as reported in your letter of

5r 14,1948:

v. x.41, s ligL.Lie

McLarin, Jr.S. 1,' BowmanJ. ,.

SchuesslerDeamark

0.118H. BowdeneamPliartinMartin

F..41/41, McCravey, Jr.4riedi0arr Raineyili:114310;.e.al :lt

14°1(1 T General• PattersonP. L.

4. 0T.

Beavers4 * "azerI, reo w.1.1

quhartCashierStarr

Title Annual SalaryPresidentVice PresidentVice PresidentVice PresidentAssistant Vice PresidentAssistant Vice PresidentAssistant Vice PresidentAssistant Vice PresidentAssistant Vice PresidentAssistant Vice PresidentDirector of Research

AuditorGeneral Counsel

Birmingham Branch

$25,00011,0009,0009,0007,5007,5006,0005,5007,5006,0009,0008,0009,000

9,5007,0006,5005,500

Vice President and ManagerAssistant Manager

Assistant Cashier


5/25/48

'...Lame

Tn• A. Lanford`1:11"alford Clarkjas°11 C. Ford

l'IY1Y Snyder

B. Fort, Jr.liarrisonRobert E.

TvkgYiy, Jr.

-10-

TitleJacksonville BranchVice President and ManagerCashierAssistant CashierAssistant CashierNashville BranchVice President and ManagerCashierAssistant Cashier

Annual Salary

E. p New Orleans Branch' raris

;31g614 L. Shaw Vice President and ManagerAssistant Manager

41,1,1' Sewell CashierT. Chapman Assistant Cashier

• Vasterling Assistant CashierThe Board also approves the payment of salary to Mr.

1,471,L Milling for the period June 1, 1948, through May 31,at the rate of $5,500 per annum as an officer of thewith the title of Assistant Vice President.

ereti "The Board has given careful consideration to the in-Vice"! in salary recommended for Mr. L. M. Clark as Firsterea 'resident and has come to the conclusion tht,t the in-13140 should not be approved at this time. However, the4e.,rk °f Governors approves the payment of salary to Mr.IlYth:1 his present rate of 416,000 per annum, if fixedJlatLe ; 4Joard of Directors at this rate, for the period

1948 through May 31, 1949."

$10,0007,0005,0006,000

8,5006,5006,000

13,5008,0006,6005,4005,100

4. Chairman McCabe was requestedat a convenient time to talk with Mr.Neely, Chairman of the Federal ReserveBank of Atlanta, about the questionwhether Messrs. McLarin and Clark shouldbe reappointed as President and FirstVice President, respectively, at theend of their present terms.

5. After a discussion of questionsraised by Mr. Vardaman with respect tothe quality of the work being performedby Messrs. Gentry and Novey, First VicePresident and Auditor, respectively, ofthe Federal Reserve Bank of Dallas, thefollowing letter to Mr. Gilbert, Presi-dent of the Federal Reserve Bank of


844

5h5/48

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Dallas, was approved with the under-standing that at his convenienceChairman McCabe would talk with Mr.Parten about the quality of the ser-vices of Mr. Novey as Auditor;

"The Board of Governors approves the payment of sala-11:8 t.„ 0 the following officers of the Federal Reserve Bank°ti:aruallas and its Branches for the period June 1, 1948the°11gh May 31, 1949, at the rates indicated, which are

.,,,, rates fixed by the Board of Directors as reported in11r

letter of May 14, 1948:Name

v. ,I.Title Annual Salary

Gilbert President $25,000It. ,.-------

IL ;).• Gentry First Vice President 17,000'4E Cole . b. man Vice President 14,000

L. 4,118tin. II: rondrom Vice PresidentVice President and Cashier

11,000411,000

Delyross Vice President 11,000me. • Ironsmoe C, yth Vice President 11,000

rga4 H. Rice Vice President 8,400Assistant Vice President and

B, 0 Secretary of the Board 9,000

J• L. Webb Assistant Cashier

Ro%rarta• C°°k

7,200Assistant Cashier 7,500

A. rj" Carrithers 7,000kd. 1,(4 Assistant Cashier14. D ,Lchaelis Assistant Cashier 6,800P. T' Waller Assistant Cashier 6,800"

NailerGeneral Auditor11.u.8,000

Houston Branch4.,;,t Holloway Vice President 10,000B. '1' Davis"Ts Troy

Cashier 6,300Assistant Cashier 5,500

1'11E. b_ San Antonio BranchAtYr lgle Vice President 9,000. ceci,,-* Mundt Cashier 5,400C.

mgee Assistant Cashier 5,000El Paso Branch

50Cashier gVice President

75:80 Assistant Cashier 4,800"

C,

R,WlandT, e% zoerg

4 Arnold

Mr. . v..rdaman presented a letter dated April 27, 1948, from

President of the Federal Reserve Bank of Atlanta, in


5125-A8

845

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481)())18e to the Board's letter of April 12, 1948, with respect tothe

plats for the Jacksonville Branch Building. All of the members

q the Board indicated that they would prefer to adhere to the posi-

ti°11t0en in the Board's letter and it was understood that Mr.444

lictild prepare a draft of reply to Mr. McLarin's letter for

1481derati011 by the Board.

The action stated with respect to each of the matters here-illatter re

ferred to was taken by the Board:

MillIltes of actions taken by the Board of Governors of the

1 Re serve System on May 24, 1948, were approved unanimously.

14etflorandum dated May 12, 1948, from Mr. Evans stating that

'11111t8t011 and Mr. Thomas had selected Mr. Riefler as the third

141111 01* the Staff Editorial Committee to succeed Mr. Parry, who

4t4" APril 1, 1948, and recommending that the selection be

114' bY the Board.

Approved unanimously.

tette, 4_to Mr. Brainard, Federal Reserve Agent of the Federal

tr Of Cleveland, reading as follows:

4tt :Ill accordance with the request contained in your"r:!;14°I' May 20 1048, the Board of Governors approves,roia"'ve June 1' 1948, the payment of salaries to the

tiinE member; of the Federal Reserve Agent's staffIv rates indicated:

14/44' Cosgrove

Title Annual Salary Federal Reserve Agent's *3,480Representative,

4°11°4 M. Pittsburgh Branch

Trowbridge Federal Reserve Agent's 3,660"Representative,Pittsburgh Branch

Approved unanimously.Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

846

5/25/48

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Letter to Mr. Viltse, Vice President of the Federal Reserve4.4 or „

'ew York, reading as follows:

till_ "Reference is made to your letter of May 18, 1948,tzitting the request of the Manufacturers andoFITre Trust Company, Buffalo, New York, for approval

4fle establishment of a branch in Ebenezer, New York,Il_eonnection with the proposed absorption of The-ulmiezer State Bank.ezia In view of your recommendation, the Board of Gov-brpl e aPproves the establishment and operation of a1,1;:ch in Ebenezer, New York, by the Manufacturers andCells Trust Company, Buffalo, New York, provided theL4Ption of The Ebeuezer State Bank is effected sub-

in accordance with the plan submitted; theobt-LaPProval of the appropriate State authorities isthe Rd, and with the understanding that Counsel forto +41;eserve Bank will review and satisfy himself as1008:4;e legality of all steps taken to effect the pro-'u absorption and establishment of the branch."


LeNA tter to Mr. Vance L. Sailor, Chief, Division of Examination,

s4erzia

Deposit Insurance Corporation, reading as follows:

1146:111 compliance with the recent oral request of Mr.Your— °f Your Division, we are sending herewith, forNot c°nfidential information and use, photostatic

../3 of the following financial statements of theee 0 1Per Company, Jacksonville, Florida: balance

1.08D",,ae of December 31, 1942; statement of profit andlaci-1.1.or the year 1942; and schedules numbered 1, 2,

EuPPorting the balance sheet."

Approved unanimously.Letter

to the Federal Deposit Insurance Corporation reading1101.18z

Feder 4u,.1 euant to the provisions of section 12B of theO f

the Reserve Act, a8 amended, the Board of GovernorsFederal Reserve System hereby certifies that the


it A__zwierican State Bank, Lubbock, Texas, became a member of1;';ile Federal Reserve System on May 20, 1948, and is now a

41!Der of the System. The Board of Governors of the Fed-Reserve System further hereby certifies that, in

1:4ecti0n with the admission of such bank to membershipt„he Federal Reserve System, consideration was given

c7;the following factors enumerated in subsection (g)Bection 12B of the Federal Reserve Act:1- The financial history and condition of the

bank.2. The adequacy of its capital structure.3. Its future earnings prospects.4. The general character of its management.5. The convenience and needs of the community

to be served by the bank, and6. Whether or not its corporate powers are

consistent with the purposes of section12B of the Federal Reserve Act."

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847


Letter to Mr. Earhart, President of the Federal Reserve Bank

Cisco, reading as follows:

to "Thank you for your letter of May 5, 1948, in replyzlikt: letter of April 30 with reference to the buyingIrl;of°1 bankers' acceptances with resale agreement.Your--,1 of the explanation in the second paragraph of4ppr J-etter, the Board's telegram of January 14, 1948,

&1:i ;;n e minimum buying rate for bankers' acceptances

qi,allegarded as having included approval of a rate

eetPe1 cent for bankers' acceptances with resale

Nti flit is noted that the special commitment rate onbe di:4 13b loans guaranteed under Regulation V will

°4c4orsco11tinued at the next meeting of your Board of.,,

Approved unanimously.Meito

randum dated May 21, 1948, from Mr. Thomas, Director of

Nkti() Qf Research and Statistics, recommending, for the

tie etlited in the memorandum, that the System reporting form


848

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(3140tion of quarterly information on interest rates on business

tade at banks in 19 principal cities be revised in the formItt

tackled to the memorandum for use beginning with the June report-


It. Letter prepared for Chairman McCabe's signature to Mr. Arthur

1434, Chairman, National Security Resources Board, reading astoki

to i_nrz response to your letter of May 14, I am pleasedlion,1444„°rm you that the Board will be glad to have Mr.8,1iis ef Thomas, Director of the Division of ResearchAci 4Qtatistics, serve as a member of an Interdepartmentalflei;!nr Committee on Plans and Programs which you aretut;44%. up for a six months' period. It is understood

tilernbers of the Committee from the different agen-aZof the Federal Government will serve in their per-NA: capacities and not as official representatives of

agencies."

Chairman.


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