19420527_minutes.pdf

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A meeting of the Board of Governors of the Federal ReserveSYstem was held in Washington on Wednesday, May 27, 1942, at 2:30

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

Mr. Morrill, SecretaryMr. Clayton, Assistant to the ChairmanMr.

Mr.

Smead, Chief of the Division ofBank OperationsLeonard, Assistant Chief of theDivision of Examinations

Chairman Eccles statedat the meeting of the Board

been Prepared to Frank J.

the Pederal

Reserve Bankti°11 as Class C directorPederal

Reserve Bank oftbt' the

reason that Mr.

11 1942.

" Reference

141413"8 or the Boardto 8erite

Notlnei

4irei

(*tient (career system) at01141

Recles stated that, as

vras

the head

tters at

that in accordance with the action taken

yesterday

Lewis,

afternoon a draft of letter had

Chairman and Federal Reserve Agent at

of Chicago,

and Chairman

requesting his immediate resigna-

and Federal Reserve Agent at the

Chicago, but that the letter had not been sent

Lewis had agreed to come to Washington on Monday,

then made to the informal discussions which the

had had regarding the selection of an individual

of a new division of the

the Board and to further

Board's staff to handle

the plan for executive

the Board and the Federal Reserve Banks.

authorized by the Personnel Committee,

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

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he had r44'LLscussed the matter with Mr. Leonard who had expressed his

llingness to undertake the work,before the appointment becamethat

there might be an understandinge8e. whole and by the membersto open the di

scussion.

After expressing appreciation of the offer, Mr. Leonard said

that he had sought the meetinghe

considered essential:

if the Board so desired, but wished

definite to meet with the Board in order

of what was desired by the Board

of the Board. He then asked Mr. Leonard

1.

2.

3.

Propoaed

itlet newhe division which had been prepared by Mr. Leonard, and dur-

for the following three reasons which

To obtain at the outset an understanding and cleardlrections as to the nature of the general objective!,the genera responsibilities, and the general authori-zatlons of the new division.

To obtain,in particular, a clear understanding asO the allocation of functions and responsibilities

between the new division and other divisions of theBoard's staff.

To be assured of the Board's support in the work.

4 discussion ensued of a tentative draft of the duties of the

diecussion reference was also made to memoranda on the sameect hi

w --ch had been prepared independently by Messrs. Morrill and

e°Pies of which have been placed in the Board's personnel files.

wtth -ccles stated that the three memoranda were not inconsistenteach other.

At the conclusion of the discussion,it was voted unanimously:


5/27/42

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(1) To create, effective July 1, 1942,a new division of the Board's staff to beknown as the "Division of Personnel Adminis-tration".

(2) To approve the following statementOf general instructions for the new divi-sion:

"Organization

The new Division will be an independent Divisionresponsible directly to the Board and operatingunder the immediate supervision of designatedmembers or committees of the Board. It will havethe same general status in relation to the Boardas any existing major Division and be subject tothe same general rules and regulations.The head of the new Division should work in closecooperation with the heads of the other Divisionsbut will have administrative responsibilities onlyOver the personnel of the new Division and notOver that of the other Divisions.

"Functions

Relating to work with the Board's staff1. To centralize the personnel work including -

a. Recruitment of personnel and the in-vestigation and study of the quali-fications of applicants.

b. Transmission with recommendation of thenew Division of all requests for ap-pointments to the staff, salary adjust-ments, transfers, separations,retire-ments, leave, and other recommendationsfor actions relating to Board employees.Appointments to the staff will be madeupon the recommendation of the head ofthe Division concerned, but before mak-ing its recommendation the new Divisionwill be expected to inquire into theneed for filling or creating the posi-tion, as well as into the qualificationsof the proposed appointee.

I 0613


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11c. Absorption of the Personnel Section andFirst Aid Unit of the Secretary's Of-fice and assumption of the functionsof the Personnel Officer and of theChairman of the staff Committee onPersonnel Classification.

2. To work toward uniformity of treatment of thepersonnel, particularly as between divisions,in such matters as salary, promotion, leave,etc.

3. To maintain continuing review of working condi-tions and other personnel problems and to fur-ther the maintenance of good employee relations.

4. To serve as the first point of contact of suchcommittee or committees as the employees maydesignate from time to time for consultationwith the Board's personnel committee in re-gard to personnel policies in which the em-ployees may be concerned.

5. To work for the crystallization and establish-ment of personnel policies.6. To work towards making the development of thecareer system effective within the Board'sorganization, in accordance with the Systemprogram.Rela+-, .1ng to the Federal Reserve Banks

le To further the development among the ReserveBanks of the Executive Development Plan(career system).

2. To encourage sound personnel policies amongthe Reserve Banks.

3. To maintain a continuing review of compensa-tion of officers and employees of the FederalReserve Banks from the standpoint of theBoard's responsibility for their approval,assuming in this connection the functionsheretofore performed in the Division of BankOperations.4. To work for the crystallization and establish-ment of personnel policies relating to the

5. 'flatters referred to in paragraph 3 above.To develop, and report on, possibilities forappointments of Class C directors and of di-rectors at the branches of the Federal Re-serve Banks.


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Relating to the Retirement System1. To review and prepare for consideration mat-

ters and questions coming before the Boardof Governors pertaining to the RetirementSystem."

(3) To appoint Robert F. Leonard as Di-rector of the new division, effective July 1,1942, to relieve him of his duties as Assist-ant Chief of the Division of Examinations assoon as possible to enable him to work on theestablishment of the new division, and to in-crease his salary to the rate of $12,OOO perannum, effective as of the date upon which heiS relieved of his present duties.

(4) To have prepared and submitted to theBoard for approval a budget covering the ex-penses of the new division..

At this point Messrs. Smead and Leonard left the meeting,arld

88rs. Bethea and Carpenter, Assistant Secretaries, entered thertieetin

g' and the action stated with respect to each of the mattershereiriar.

'ter referred to was taken by the Board:

Theminutes of the meeting of the Board of Governors of the

.4-1- Rept..--rye System held on May 26, 1942, were approved unanimously.

tivist:emorandum dated May 26, 1942, from Mr. Smead, Chief of the

of Bank Operations, submitting the resignation of Mrs. EllenThorila8

as a clerk in that Division, to become effective as of theLc'8e Of

businessti°11

on May 31, 1942, and recommending that the resigna -be

accepted as of that date.

The resignation was accepted.Let

or ter to Mr. Sproul, President of the Federal Reserve Bank

reading as follows:


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"Referring to your letter of May 21, 1942, the Boardof Governors approves the payment of a salary at the rate

Zi! 4/000 per annum to Mr. John J. Clarke, an employee ine Legal Department assigned to the Foreign Property Con-01 Department.

. "It is noted in your letter that, in the light of7, Clarke's performance since his employment, it is prob-able that he will be retained as a member of the Bank'sPermanent

staff. In this connection, it will be appre-eAlated -X you will submit for the Board's approval a ForminPage covering the position occupied by Mr. Clarke, since,the

accordance with the Board's instructions relating tothe

operation of personnel classification plans (B-315),Personnel classification plan of each Federal Reserve

nk

should cover all nonofficial positions in the Bank."

Approved unanimously.

Let

04v -I ter to Mr. Fleming President of the Federal Reserve Bank of

e-4and) reading as follows:

let "In accordance with the request contained in yourch !r of May 22, the Board approves the appointment ofern741 ,e,re L. Davies as an assistant examiner for the Fed-

Reserve Bank of Cleveland. Please advise us of theas ! uPon which the appointment becomes effective and also140 the salary rate."


Telegram to the Presidents of all the Federal Reserve Banks,

gas follows*

cha "Until further notice interest, fees, and otherO"es derived by War Department from loans and guar:-to) referred to in Section 6, page 7, of instructionsbe :-"1- Federal Reserve Banks, dated April 8, 1942, shouldcoldited to General Account of U. S. Treasurer for ac-Zhe,°f Colonel W. M. Dixon, Finance Officer, U. S. Army,sell.% 28-418. CD Form 6599, should contain brief de-eoltlXi°I1 of item Credited. Original of CD should ac-nY transcript to Treasury and carbon should be


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mailed to Colonel V. M. Dixon, Finance Officer, U. S.!rrAY, 801 Channing Place, Northeast, Washington, D. C.YOU will be advised later with respect to accounts tobe

credited for interest and fees collected on behalf°f Navy

Department and Maritime Commission."

-7-


Telegram to Mr. Swanson, Vice President of the Federal Reserve

ofMinneapolis, reading as follows:

"Your wire May 7. Mere fact that all or portion of„'rge account is considered bad debt and charged off or;Trbed in reserve would not relax prohibition of section8\ ) of Regulation W if charge account is in default underm.,.°fl 5(c) and default has not been cured by one of8;'"°ds in section 5(d). Charge off or absorption in re-

CeZiould not abolish 'indebtedness' referred to in sec-4 However 'indebtedness' under 2(g) does not

"ude indebtedness which is legally unenforceable."


Telegram to Mr. Swanson, Vice President of the Federal Reserveof

PC is, reading as follows:

mpt "Y°ur wire May 22. Loan to American Legion not ex-under section 8(1) Regulation W."


Telegramto Mr. Stroud, First Vice President of the Federal Re-

"e 13nro.-'4 of Dallas, reading as follows:

not e te1 May 18. Section 8(k) of Regulation W doeseecli empt a new loan made by a bank after May 6 on thelifc'ttY of the loan value or cash surrender value ofabl; Insurance policy if loan is not for purpose of en-

borrower to pay off a policy loan made by the8111'er Prior to May 6."



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Telegram to Mr. Clerk, First Vice President of the Federal Re-.

e1'7' Dank of San Francisco, reading as follows:

i "Your wire May 20. Section 10(b) (of Regulation 11)1.8 applicable to consolidations of instalment obligationsie,819-ting from conversions of charge accounts, and new,1784alment sales may be consolidated with such obligations.

aPPreciates that in Some cases payment on new pur-t4'8a is postponed, but requirement in clause (i) of Op-bl':?11 2 that payments be as large as on the old obligations'1-tig consolidated is intended to prevent serious avoid-*" by this means."


Letter to Messrs. Walter Womack and Paul A. Mason, Long Beach,

altO1111a, reading as follows:

of v "The President has referred to the Board your letterth:LaY ,19/42 inasmuch as the Board is responsible for- a 'nistration of the controls over consumer credit.

8, "You suggest that the Federal goverment lend its1:4PPort to a plan by which a central bureau would beset4 to act as a coordinating agent between employees in de-

Ilael industries and their creditors.'It would seem, however, that the problems to which

ceg Plan is addressed would be a matter of community con-tin the areas where it exists and that therefore the

be ci..,4.°n what solution would be most desirable could bestor r,:ermined by the local legal aid offices, credit bureaus,'Ter similar organizations.

YOur interest in this matter is very much appreciated."


Lettertheto Mr. Carter B. Cordner, Executive Vice President of

5.1'st ThriftNI - of Los Angeles, Los Angeles, California, reading as

wv_1942, " e wish to thank you for your letter of May 19,

Which reports criticisms of Regulation W that have


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"Come to your attention and expresses the feeling thatthe regulation should be liberalized.

d "In view of the purposes for which, under the Presi-ent's Executive Order of August 9, 1941, control of con-

rer credit has been undertaken, it was inevitable fromoeginning that the regulation would have to be broadened

i;'..tightened from time to time. Whenever that is done,,j1s quite natural that there should be some additional1-1;(?tests, but the Board has hoped that in times like thoseich have ,o11oed Pearl Harbor people generally would un-

derstand.

support the actions taken. NotwithstandingeePti such as your letter mentions, this seems to havebeen the case.

R "You will have noticed that there are exemptions in,egul.ation Wwhich are designed to take care of the most

4ritorious instances of necessitous loans. On the other2

d, the need to conserve every resource which can be

Utilized for war purposes is increasing so rapidly that7. general liberalization of the regulation could not beJUstified at this time."

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Thereupon the meeting adjourned.

ino-vb-q)Secretary.

Chairman.


19420527_minutes.pdf

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