19421208_Minutes.pdf

II"):of (1

A meeting of the Board of Governors of the

terlillas held in Washington on Tuesday, December 8,

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. SzymczakMr. McKeeMr. DraperMr. Evans

There

t/le Personnel

1/e8erve Bank of San

Whether Mr.

eept appointment as

11Nrve Bank of San

Nmted as a director

was

Federal Reserve Sys-

1942, at 10:40 a.m.

Mr. Morrill, SecretaryMr. Bethea, Assistant SecretaryMr. Carpenter, Assistant SecretaryMr. Clayton, Assistant to the ChairmanMr. Thurston, Special Assistant to the

ChairmanMr. Dreibelbis, General AttorneyMr. Leonard, Director of the Division

of Personnel AdministrationMr. Vest, Assistant General Attorney:Ir. Wyatt, General CounselMr. Hammond, Chief of the Correspondence

and Publications Section of the Sec-retary's Office

presented a memorandum dated December 3, 1942, from

Committee recommending that the Chairman of the Federal

Francisco be requested to ascertain informally

C. E. Myers of Covina, California, would be willing to ac-

a director of the Los Angeles Branch of the Federal

Francisco and, if he would accept, that he be ap-

of the Branch for the term ending December 31, 1944.

After a discussion which had been sug-gested by Mr. Szymczak in view of certaincomments contained in a letter dated Novem-ber 21, 1942, from Mr. Grady, Chairman ofthe Federal Reserve Bank of San Francisco,relating to matters discussed at the meeting

of the Chairmen of the Federal Reserve Banks

on October 5, 1942, the recommendations of

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

4,9 4,00,0

12/8/42 -2-

the Personnel Committee with respect to theappointment of Mr. Myers were approved.

Before this meeting there had been circulated among the membersOf

Board a memorandum dated December 3, 1942, from the Personnel

e°113111ittee recommending (1) the reappointment of all Class C directors

"he Federal Reserve Banks whose terms would expire at the end of this

(except Mr. Clarence Roberts who had been serving as a Class C di-

tter of the Federal Reserve Bank of Kansas City and who died on Decem-ber ,

4.) 1942), (2) the redesignation for the

841 Federal Reserve Agents at the Federal

Natnt for the year 1943 of the Deputythe

reaPPointment of all Board appointees as directors of branches ofPede

rel Reserve Banks whose terms would expire at the end of this year

8.tIci 1140 by the end of the year would not have completed six years of

year 1943 of the Chairmen

Reserve Banks, (3) the reap-

Chairmen of the Banks, and (4)

ee as directors of the branches (except Mr. H. G. Chalkley, Jr.,

'llose reappointment was

cliltY in the Navy).

not recommended because of his being on active

In accordance with these recommendations,actions were taken by the Board as set forthbelow:

The following were reappointed as Class Cdirectors of the respective Federal ReserveBanks shown, each for a term of three years be-ginning January 1, 1943:

Name

Henry S. DennisonEdmund E. DayThomas B. McCabeR. E. KlagesW. G. Wysor

Federal Reserve Bank

BostonNew YorkPhiladelphiaClevelandRichmond


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1218/42 -3-

Name (Continued)

J. F. PorterW. W. WaymackWilliam T. NardinW. C. CoffeyHarry R. Wellman


AtlantaChicagoSt. LouisMinneapolisSan Francisco

The following were redesignated as Chair-men and Federal Reserve Agents at the respectiveFederal Reserve Banks shown for the year 1943,and the compensation of each as Chairman andFederal Reserve Agent was fixed on the uniformbasis for the same position at all Federal Re-serve Banks, i.e., the same amount as the aggre-gate of the fees payable during the same periodto any other director for attendance correspond-ing to his at meetings of the board of directors,executive committee, and other committees of theboard of directors:

Name

A. M. CreightonBeardsley RumlThomas B. McCabeGeorge C. BrainardRobert LassiterFrank H. NeelySimeon E. LelandWilliam T. NardinW. C. CoffeyR. B. CaldwellHenry F. Grady


BostonNew YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. LouisMinneapolisKansas CitySan Francisco

The following were reappointed as DeputyChairmen of the respective Federal Reserve Banksshown for the year 1943:

Name

Henry S. DennisonEdmund E. DayWarren F. WhittierR. E. KlagesW. G. WysorJ. F. PorterW. W. WaymackOscar G. Johnston


BostonNew YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. Louis


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littizon

12/8/42 —4—

Name (Continued) Federal Reserve Bank

Roger B. Shepard MinneapolisR. L. Mehornay Kansas CityJ. B. Cozzo DallasSt. George Holden San Francisco

The following were reappointed as direc-tors of the respective branches of the Fed-eral Reserve Banks shown, each for a term ofthree years beginning January 1, 1943:

Federal ReserveName Bank Branch

Gilbert A. Prole BuffaloJoseph D. Baker, Jr. BaltimoreD. W. Watkins CharlotteHoward Gray BirminghamW. E. McEwen NashvilleH. L. Pierson DetroitR. E. Short Little RockG. 0. Boomer LouisvilleJ. P. Norfleet MemphisLloyd Noble Oklahoma CityR. E. Sherman El Paso

The following were reappointed as direc-tors of the respective branches of the Fed-eral Reserve Banks shown, each for a term oftwo years beginning January 1, 1943:

Federal ReserveName Bank Branch

Frank A. Brown CincinnatiR. B. Richardson HelenaWilliam H. Steen PortlandR. C. Rich Salt Lake CityFred Nelsen Seattle

In view of the fact that Jay Taylor, Chairman and Federal Re-erve

Agent at the Federal Reserve Bank of Dallas, is on active duty as4

ioned officer in the Army and is now serving at Los Angeles as

officer in connection with Regulation V loans, Mr. Szymczak


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12140+2 —5-

811ggested that there be a separate discussion of the recommendation oftheD4""nnel Committee that Mr. Taylor be reappointed as a Class C di-

l'ector and redesignated as Chairman and Federal Reserve Agent at the

Dallas Bank, which had been made after consideration of the facts stated

1"411 respect to his service in the Army and the fact that he would be

114able during such service to discharge his duties as Chairman and Fed-

ekl. Reserve Agent. During the discussion, the suggestion was made that

4110ther course that might be followed would be not to reappoint Mr.

lInc)1' at this time, with the understanding, however, and with advice tohit 4' at the position was not being filled and that upon the termina-

tionor his active duty and return home he would be reappointed as a

NeeC director and redesignated as Chairman and Federal Reserve Agent.

41°14 the Personnel Committee recommending that the Deputy Chairman of

At the conclusion of the consideration ofthese alternative courses, upon motion by Mr.Evans and by unanimous vote, Mr. Taylor was re-appointed a Class C director of the Federal Re-serve Bank of Dallas for a term of three yearsbeginning January 1, 1943, and redesignatedChairman and Federal Reserve Agent at the Bankfor the year 1943, his compensation as Chairmanand Federal Reserve Agent being fixed on theuniform basis for the same position at all Fed-eral Reserve Banks, i.e., the same amount asthe aggregate of the fees payable during thesame period to any other director for attend-ance corresponding to his at meetings of theboard of directors, executive committee, andother committees of the board of directors.

In taking this action, it was understoodthat Mr. Taylor would be on leave of absenceto such extent as may be necessitated by hismilitary service.

There was then presented a memorandum dated December 8, 1942,


22Lit

12/8/42

-6-

thepaderal Reserve Bank of Dallas be requested to ascertain informally

Whether Mr. J. S. Abercrombie of Houston, Texas, would accept appoint-

1111k 48 a director of the Houston Branch and, in the event he was will-

'theta accept, that he be appointed a director of the Houston Branch

for a term of three years beginning January 1, 1943.

Approved unanimously.

Question was raised as to the present status of plans for the

rig of a committee of directors of the Federal Reserve Bank of Cleve-iszct ,

with the Board for the purpose of discussing the official personnel

eitiztv-on at the Bank. Mr. Szymczak stated that he had received a letter

lalder date of December 4, 1942, from President Fleming and that a letter

clikted December 3, 1942, had been received from Deputy Chairman KlagesPropo

sing certain changes in the official personnel of the Bank, and that

he(b"Lr' Szymczak) felt that a meeting with the committee of directors

811014„ ,m De held sometime before Chairman Eccles left for the west on De-

1

19.

he earch and Statistics, and Mr. Smead, Chief of the Division of Bank

°Perat4entered the room and Mr. Leonard withdrew.

It was understood that Mr. Szymczak wouldmake a recommendation to the Board as to thedate for the meeting.

At this point, Mr. Goldenweiser, Director of the Division of

Mr. McKee stated that in accordance with the understanding

4e0he- at the meeting of the Board on December 1, 1942, the possibility

t-ang the necessity of classifying the proceeds from the sale of

%)Itew-'nent securities, which are held in war loan deposit accounts, as


2284

dePosits subject to reserve requirements and to the Federal Deposit In-

811rence Corporation assessment had been discussed with the Treasury andthe

Federal Deposit Insurance Corporation, and that drafts of amendmentsto tu

"e Federal Reserve Act had been prepared which would provide that,

ng the continuance of the present war and for six months after the

-"Ametion thereof, balances payable to the United States by any insured

be* ar.18-Lng solely as the result of subscriptions made by or through

811eh insured bank for United States Government securities issued undertheaUthority of the Second Liberty Bond Act, as amended, would be ex-

from the definition of demand deposits for the purpose of deter-

littning Federal Deposit

ellhiect to

l'he tatter

Nloait Insurance

ranged for 3:00 o'clock this

Banking and Currency

14e alld Currency Committee

l'fith 4 View

11le further

itl°n on the part of'N114a held in war loan

44ed Nith respect to

1154tion assessment on

keition that, unless the1)13c'sit

to having them

statement was

Insurance Corporation assessments and would not be

reserve requirements required to be maintained by member banks.

had been discussed with Yr. Crowley, Chairman of the Federal

Corporation, Mr. McKee said, and a meeting had been ar-

afternoon with Chairman Steagall of the

Committee and Senator Brown of the Senate Bank-

for a discussion of the proposed amendments,

enacted at the present session of Congress.

made that, although there had been no great ob-

member banks to the maintenance of reserves against

deposit accounts, numerous complaints had been re-

the payment of the Federal Deposit Insurance Cor-

such deposits, but that Mr. Crowley had taken the

exemption of such deposits from the Federal

nsurance Corporation assessment was made to expire six months


12/8/42 -8-

atter the termination of the war and was coupled with the removal of

the requirement for the maintenance by member banks of reserves against

" deposits, he would not favor the amendments.

At the conclusion of the discussion, Mr.McKee moved that the Board approve the submis-sion of the proposed amendments to Messrs.Steagall and Brown, with the understandingthat such technical changes in the language notaffecting the substance of the amendments asmight be found to be desirable would be made.

Mr. McKee's motion was put by the chairand carried unanimously. In voting for the mo-tion, Mr. Ransom said that he was in principleopposed to exempting from reserve requirementsany type of Government deposit, including warloan deposits. Since the principal purpose ofreserves is to help the Federal Reserve Systemto regulate bank credit expansion and contrac-tion, and since the purchase of Government se-curities by banks and the consequent creationof Government deposits is a form of bank expan-sion, he believes that these deposits should besubject to the same reserve requirements asother deposits. In view of the fact, however,that the Chairman stated at the meeting that in-clusion of the exemption from reserves was theonly condition on which the Board could get thecooperation of the Federal Deposit Insurance Cor-poration for the proposed legislation, and of thefurther fact that the Chairman felt that the pro-posal would assist the Treasury in financing thewar and is to expire six months after the end ofthe war, Mr. Ransom did not wish to break theunanimity of the Board in its favorable recommen-dation.

that Mr. Crowley had said that it had been necessary to arrangethe

During the course of the meeting, Chairman Eccles left the

t° -answer a telephone call from Mr. Crowley, and upon his returnqated

illeeting with Messrs. Steagall and Brown at luncheon today. He


12/8/42

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—9-

18° said that he had told Mr. Crowley that he and Mr. McKee would be

17111trig to attend the meeting at 1:15 p.m. Chairman Eccles added that

Mr Crowley had agreed that, if Messrs. Steagall and Brown felt that

leeslation could not be considered at the present session of

without commi ttee hearings, no effort should be made to have the bill

18ed during the present session. All of the members of the Board

illdicated that they were in agreement with this position.

Congress

Chairman Eccles then stated that telegrams had been receivedfrom

Messrs. McLarin and Day, Presidents of the Federal Reserve Banks

°t Atl anta and San Francisco, respectively, referring to telegrams re-

TreasurY, to reach it not later than Monday, December 14, a list show-

trigOr each member bank in the respective districts (1) the amount

b$c rlbed for the 1-3/4 per cent bonds, (2) excess reserves for the

ta°4 r-ecent reporting date before such subscription, and (3) the total

by them from the Treasury asking that the Banks airmail to the

'r amount of assets on June 30, 1942, for each bank. Chairmaneq.e

8 also said that Mr. Williams, President of the Federal Reservetarikq Philadelphia, had called on the telephone regarding the matter

tha.t- he and Mr. Day had raised the question whether the request for

nformation should not come from the Board of Governors so that

Propriety of the Federal Reserve Banks furnishing the information

the

the

Ovei„

"t be questioned by member banks.

Chairman Eccles went on to say that he discussed the matter

the telephone this morning with Under Secretary of the Treasury


12/8/42

-10-

Bell, who stated that the wire had been prepared by Messrs. Haas and

141111:thy f- -or his signature and that in the pressure of other duties he

had overlooked the Board's interest in the matter. The Chairman

"ed that he told Mr. Bell that it would appear that the Treasury

811°11-id have consulted with the Board before calling for such informa-%4' and that Mr. Bell concurred and said that he would take the mat-

UP With Messrs. Hans and Murphy and at the same time ascertain whattheir

Purpose was in asking for the information.

It was agreed that Chairman Ecclesshould call Mr. Bell azein and tell himthat the Board hesitated to authorize theReserve Banks to furnish the informationrequested without knowing the ourpose forwhich it was intended, and that what theBoard would like to have would be the rea-sons for requesting the information, afterWhich the Board might send a telegram tothe Reserve Banks apwoving their furnish-in a the information.

Chairman Eccles subsequently discussedthe matter with Mr. Bell, and the followingtelegram prepared for the Chairman's signa-ture to the Presidents of all the Federal Reserve Banks was approved unanimously:

or "Referring to telegram from Under Secretary Bell askingf„ certein data regarding member banks in your district,igiUOtit which I have received inquiries from several Federalserve Bank Presidents, I discussed this subject today with

trer Secretary Bell. I understand that Treasury believesinat an analysis of this information may be helpful in form-

opinions as to what kinds or classes of banks subscribeTreasury issues. In the circumstances the Board approves

1.211r furnishing the requested information to the Treasury.that connection it will not be necessary for Treasury pur-

l:8 to list names of individual banks. They can be desig-ro''ed by number or otherwise as you think best. When yout l'°Iard this information to Treasury, please furnish copies° Bonrd.fl


12/8/42 —11-

Mr. Ransom stated that Mr. Dreibelbis had prepared a memorandum

setting forth the developments with respect to the taxation of the

Board,8 building which had taken place since the matter had last been

considered by the Board on December 1, 1942, that he (Mr. Ransom) haddistC -

used the matter with Chairman Eccles and they were satisfied withthe

Present status of the matter, but that he would ask that the memo-rend,

'Aube circulated so that if any member of the Board felt that some

the" course should be pursued the matter could be considered.

At this point, Messrs. Thurston, Goldenweiser, Smead, Dreibelbis,

Ve4t, Wyatt, and Hammond withdrew from the meeting, and the action stated

respect . to each of the matters hereinafter referred to was then taken

b.lirthe Board.

The minutes of the meeting of the Board of Governors of the Fed-

41 Reserve System held on December 7, 1942, were approved unanimously.

Memorandum dated December 3, 1942, from Mr. Morrill, recommendingthat

the salaries of Charles D. Lindamood and Joseph T. Glotfelty, Jr.,

°Ieratall*--g engineers in the Secretary's Office, be increased from $2,400

41(1 $2to $2,600 and $2,500 per annum, respectively, effective Decem-

b51' 16' 1942.


Memorandum dated December 5, 1942, from Mr. Leonard, Director ofthe „.

ullii-sion of Personnel Administration, submitting the resignation of)(tea lit

re elania K. Sokol as a stenographer in that Division, to become ef-ctive

t4 as of the close of business on December 31, 1942, and recommend-

eth.,the resignation be accepted as of that date.

The resignation was accepted.


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12/8/42 —12—

Telegram reading as follows to the Presidents of all the Federal

Rese Banks, which had been revised following the receipt of a reply

1111der date of December 7/ 1942/ from the Secretary of the Treasury to

the 1,-coard's letter of November 20 relating to the issuance of existing

8t43eks of Federal Reserve Bank notes:

"Decision has been reached with approval of Treasury to paycut present stock of Federal Reserve Bank notes. It is sug—gested that Board be asked to have entire stock of such notes13.1* Your Bank in Washington shipped to Federal Reserve Agent,,1,,hat Bank use Federal Reserve Bank notes so far as practica—'le to meet current demands for currency, and that they beObtained from Agent at a rate approximately equal to the rateat which the notes are paid into circulation. The notesShould be issued to the Bank in accordance with Treasury reg-

111;ation dated March 11, 1933, and Board's telegram of March

3) 1933, TRANS 1647, against security of United States Gov—obligations held by your Bank in System Open Market

account. Immediately thereafter Bank's liability should betinguished (and collateral withdrawn) by crediting United

States Treasurer's General Account with amount of notes issued

O that Bank's daily balance sheet will at no time show lia—

i)ality for Federal Reserve Bank notes. As no Bank notes willne,Placed in circulation on which Bank has liability, it will26 be necessary to establish a redemption fund for FederalReserve Bank notes or to pay a tax on the amount of such notes

circulation. No press statement being issued on this sub—ject If questions are asked, suggest that inquirers be toldthat Bank notes are now being issued as a matter of economy."


Letter to the Secretary of the Treasury, reading as follows:

have received a letter from the Federal Reserve Bank

°r I\Tcw York raising the question whether a commercial bankholds Treasury tax savings notes, Series C, in its own

„841e or as pledges from its customers may validly pledge or?Pledge such notes to a Federal Reserve Bank as collateraloc)fr a loan from the latter. The question is raised in view

the Provisions of Treasury Department Circular 696, datedIQ'ePtember 12, 1942, and particularly in view of the state—

therein that the notes 'may not be transferred in or—nary course', that such notes 'may be pledged as collateral


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12/8/42 -13-

"for loans from banking institutions, but no other hypothe-eatlon will be recognized by the Treasury Department', andthat the notes will be redeemed when accompanied 'by request?f the pledgee under power of attorney given by the pledgorln whose name the notes are inscribed'.

"For your information in this connection, there is en-Closed a copy of the letter from the Federal Reserve Bank ofNew York, and we will appreciate your advice as to whether aPledge to a Federal Reserve Bank in the circumstances statedWill be recognized by the Treasury Department as a validPledge of tax series C notes, in order that we may inform"e Federal Reserve Bank with regard to the question."


Thereupon the meeting adjourned.

Chairman.


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