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BOARD OF GOVER,NORS

OF TH

338

F EOERAL

RESERVE SYSTEM

W S H I N G T O N

OF F I CE

OF T HE

C H I R M N

X-9552

March 25, 1956.

Dear Sir:

In considering

salaries of

officers

at the Federal Reserve banks

for

the year

1956 recommended

by

the

Boards

of

Directors

of the respec-

tive

Federal Reserve banks, the Board

of

Governors

of

the Federal Re-

serve System, as constituted prior

to

February 1,. 1936, decided to ap

prove

salaries of

Governors, Deputy Governors, and Assistant Deputy

r ~ v e r n o r s

for

the

period January

1 to February 1936, and of

other

officers

of

the

bank for

the year

1936

at the

rutos the

officbrs

were

receiving

at

the

end

of

1955, and

in

so doing

expressed

the

view

that

there should be no increases in salaries of

officers except

in excep-

tional circumstances until a thorough and careful

analysis

had been

made of the organizations

of

the Federal Reserve banks.

Since

entering upon

i ts · duties the ncv;

Board of

C fOvcrnors has

had

before i t many important questions

liith

respect to

the

personnel

and

salary payments

of the Federal

Reserve bunks and

the

distribution of

duties between

the

Federal Reserve banks and

the

Ferieral Reserve agents.

After

studying

these

metters

the Board decided to approve

l l

rccommen¢a-

tions

submitted by the respective Boardsof Diructors with respect to

sal-

aries of Presidents

First

Vice Presidents Vice

Presidents

and Assist[illt

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X-9532

Vice Presidents

for

the

perio;:i ivlarch l to fecerr:b. r :' il, 1366, inclusive,

t the .cat':' S which

·1vere being

paid r such oi'ficers prlor to that O.ate,

and

that

no

recommendation involving

ar:

increase

in salary

shoula

be a -

proved in

the

<..bsence of unusual circumstance

e

or· a change in position.

Before t.1ki.ng

this action

the Board

decided to ask the Presidents

of

the

Federal

Reserve banks to

ins t i tute 11romptly a

thorough survey

of

the

organisations

and

salary

payments

of

their

respective

Federal

Reserve

banks a-::10 ix1

order

t wt the Board

might ful ly

acquaint the Presidents

.

with the ;ulicies

t

had adopted

with respect

to

these

and other matters,

i t

asked

them to come to

~ ~ ~ a s h i n g c o n

for a conference

with

the

Board

of

Governors

m Monday, March

16.

At the conference the Board

to le

the

Presidents that t had

already

inst i tuted a thorough

survey

of i t s own

organization here in

Washington.

In

connection with

the

distr ibution of

duties

bet':veen

the Federal

Reserve banks and

the

Federal Reserve agents,

the

Board had in m : i ~ d a

procedure

lookin6

toward

the

placing of

the

Chairmanships

largely

upon

an

honorarJ basis , with

the thought

thut the

rout-ine

dutier

with

respect

· to the issuance of Federal Reserve notes and the holding

of

col l te r l

security therefor

would actually be

performed by assis:tant Federal Re

serve agents who would be experienced

in such

work and

who

vwuld

receive

salar ies commensurate with the duties and responsib i l i t ies to be ~ s s u m e d

This

would make

t possible

for

the Board to

obtD.in outstc::.nding

men

of

recognized

prestige and

influence

in

their communities

to

act

in

the

capacity

of

Chairmen and

Feaeral

he

serve

agents with

·the

understanding

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t ~ J a t it would

not

be necE: s sary

for

them to

devote

the i r fu l l time to

the

position. The procedure

contemplated

would result . in the

t ransfer

of the

bank

examination

work

; nd t h ~ reseo.rt;h

work

hcn:tofc.re handled

bJ'

the

Fedoral Reserve agents to the

br ut K tng

O e p ~ : ; l · : J ; n c n t s

.·i th the un-

d e r s t c n o . i n : ~ however

that

such funct.ilJnS would ::J S heretofore be con-

C:: ucted unJ.3r tlte general supo31·vLdon of the

i ~ o a r d

of Governors.

Hore-

tofor(; t ~ s ycu

know; l l appointments

of Federal l eserve Examiners hav,

been

m j ect to

the

n.pproval

of

the

Board

of

Governors

anci

the

Board

would

expect

such a:)pointments,

including

part icular ly that of

the

person

n

charge of th·.: exc.mination function, to continue to b< sub-

jec t to i t s approval.

The Board of

Governors t

the Cont'et'ence

hc:...a in

Washington on

March 16 and 17 asked

the

Presidents to :reviev their entire orgtJlizc-

t ions

Nith a vim1 to

effectint;

economies

~ v h e r e v e r ;JOssible to

do so

1vithout impairing

the

eff ichmt

open:tion of

th.:, bank;:;. The Pr8siden·i,s

were c.lso asked to furnish the Board

with

reports r:1s to how they would

propose to effect the

t ransfer

of

certa in

d u t ~ e s nov: handled by the Fed-

eral Reserve

a.gents

to the banking departments; of the personnel they

would

expect

to

place

n charge

of

thG ceveral operations;

and of the

economies which

would be effected

by

making such t ransfers, in addition

to the economies

which

v10uld be effect:a by placing the Chairmanships of

the Federal Reserve banks lar6t:ly uc>on an

honorary

basis.

The

Board

would

likE to havo the report to

be

submitted by

each

President include en organization chart

which v:ill

bring.

out clearly

the

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X-9552

pr::.ncipal f

mc-Gions

or

units

into which the

bar k

is to be divideJ.

after

the transfer of certain duties from

the Agent s

clepar·tment to

the

bank.

Such

charts

should show the name of the officer in charge of each unit

and be accompanied by a brief description of

the

duties of each

officer

of the bank.

Separate

charts should be pr:;pared for the head office

and each branch. In making these studies it .:.mportant t.hat careful

thought be given to the operations

now

handled by branches of Federal

Reserve banks

with

particular

reference

to

the

necessity for

the

branches.

I f th8 branches are considered necessary a review of

their operations

should be made

to

det8rmine whether any of the

operations

now

being

handled by ·them could be transferred

to

the head office at a substantial

saving in operating cost and

without impairing

the services which the

System

is now

rendering

to

member banks and through them

to

commerce,

industry, and

agriculture.

Pursuant to a recommendation made by a sub-committee of a confe:nmcc

of representatives of l l ·Federal Reserve banks the Board has approved

a

revisea

personnel

c l s ~ i f i c t i o n

plan which will necessitDte

the

Fed

eral Reserve banks classi.f .-jing l l non-official positions in accordanco

with

the revised plan. Under this

plan

the duties of each

non-official

position of

the bank will be described briefly and this, together

with

the

organization

charts, should give

the

Board

of

Gover·nors a complete

picture

of

the organization adopted by the F ederal Reserve banks follow

ing

the completion of

the

survey which

the

Board

has requested

the Presi

dents

to undertake.

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· ·

X-9532

ln

mak.;.ng

the

survt:y th Board

will

expect

the

management

of

each

Federal

Reserve bank to

give

careft:<l

e ; o n ~ i d t r a L i o u

tu

the

qualifications

and

salary

of each

o f f i ~ e r anJ

employee

of th?

bank

and

to

the

need

for ~ h e i r services. As

you have been

p r v i o u ~ l y

advised, the

Board

expects that salaries )aid

to

employees

of

the

F t ~ d e r a l

Reserve banks

will

not

be

out of

line

with

sttlaries

:f.letid

for

corresponding

work by

local

member banks• With respect

to

sal··

aries of officers, the Board realizes that the

duties required of

officers of

Federal Reserve banks

are

substantially

differ8nt

from

those required

of

officers

in

the

la.rger mE- mber

banks unci

for

that

reason the

salaties

paid

~ ~

local member

banks, particularly

to the

senior

officers

of

such banks,

cannot,

of

course,

be

considered

as

a guide

in fixing salaries of the

senior

officers of the

Federal

Reserve banks.

The

Board hopes that

the survey

which

the

Presidents

of the

banks have been asked to

make

will

be undertaken

and

carried

for-

ward

as

promptly

as 9racticable

and

that

the

r sults of

the

survey

will

be communicated

to

the

Board

a t

an

early date.

Tho

Board

of

Governors hopes that each

member of

your board

will

take an

active

interest

in

the survey

of

the personnel and

op-

erations of

the bank, and that

they will lend

every

possible

assis-

t nee in effectin;; such reorganization.:; ano economies as may be

con-

sistent with

the proper

1 unctioni:1g uf

thu

bank.

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X-9552

t is

requested

that a cor;;y

of

this let ter be furnished to each

member of

your board and to

the

chief executive

officer

of your bank.

TO

ALL CHAIRMEN

~

ery truly. yo u r.s . . .

U'fl: { t

M

s.

Eccles

Chairman.

4

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