frsbog_mim_v04_1914.pdf
TRANSCRIPT
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TOR
RELEASE
IN
MORNING PAPERS. JANUARY
1 4 , 1 9 1 7 .
PRESS STATEMENT.
Janua ry
1 3 , 1 9 1 7 .
Afte r hav ing g iven much a t ten t ion
t o t h e
problem
o f c o n -
t r o l l i n g
and.
r e g u l a t i n g
t h e
gold supply
of t h e
Uni ted S ta te s
a n d
t o t h e
q u e s t i o n
of
bank reserves
i n
g e n e r a l ,
t h e
Federa l Reserve
Board,
h a s
p r e p a r e d
an d
t r a n s m i t t e d
t o t h e
Chairmen
of t h e
Committees
on
Banking
a nd
Currency
of t h e
Sena te
and
House
of
R e p r e s e n t a t i v e s
recommendations
f o r t h e
amendment
o f t h e
Federa l Reserve
A c t .
While
i t i s n o t deemed des irable t o g ive o u t t h e t e x t o f t h e amendments
t r a n s m i t t e d j s i n c e t h e y w i l l p r o b a b ly s oo n
b e
in t r o d u c e d
i n
Congress
t h e
fo l l owin g gen e ra l s ta tement conce rn ing them
i s
made publ ic .
When
t h e
Federa l Reserve
Ac t was
d r a f t e d
i t s
p r i n c i p a l
o b j e c t w a s t o dea l wi t h na t i on a l problems of bank ing an d cur rency .
S in c e i t s e n a c tm e n t f i n a n c i a l an d economic condi t ions i n t h e United
Sta tes have undergone fa r - reaching changes which were
n o t
f o r e s e e n
three yea r s
a g o . T he
Uni ted S ta te s
h a s
grown
t o b e a
world power
i n
f i n a n c i a l a f f a i r s
a n d i t
seems necessa ry tha t
t h e
Act ,which
h a s
proved
of
such grea t va lue
i n t h e
t r e a t m e n t
o f o u r
dotiiestic problems
should
now be
amended
i n
o r d e r
t o
e n a b l e
u s t o
d e a l e f f e c t i v e l y w i t h
t h e n e w in te rna t iona l p rob lems which seem des t ined t o p l a y s o import
a n t a p a r t i n o u r e c o n o m ic l i f e . The banking sys tem o f t h e United
S ta te s shou ld
b e
p r e p a r e d
t o
m e e t e f f e c t i v e l y
tw o
c o n d i t i o n s
o f o p -
p o s i t e c h a r a c t e r
- o n e , t h e
e x c e s s iv e
and
u n c o n t r o l l e d i n f l o w
of
g o ld ,
t h e
o t h e r
t h e
e x c e s s i v e
and
u n r e g u l a t e d o u t f l o w
of
g o ld .
The
amendments proposed
a r e
des igned
t o
provide means
of
c o n t r o l l i n g
a n
o v e r - e x t e n s i o n of loans ba sed on new a c c r e t i o n s t o o u r gold stock
a n d t o p r o v id e f o r t h e m o b i l i z a t i o n an d c o n c e n t r a t i o n o f t h e gold
h o ld in g s
o f t h e
Uni ted S ta te s
s o
t h a t
t h e
f l o w
o f
gold back in to
Europe ,
o r t o
South America
o r t o t h e
O r i e n t ,
may be
a r r a n g e d w i th -
o u t
f o r c i n g
a n y
v i o l e n t c o n t r a c t i o n
of
l o a n s
o r
ca usi ng undue
d i s -
t u r b a n c e
t o
l e g i t i m a t e b u s i n e s s .
Of approx ima te ly two and t h r e e - q u a r t e r b i l l i o n s of gold i n
t h i s c o u n t r y t h e r e a r e he ld o r c o n t r o l l e d b y Federa l rese rve banks
about $736,000,000,
of
which Fede ra l r e se rve agen ts ho ld $283 ,000 , -
0 0 0 a s
s e c u r i t y
f o r
F e d e r a l r e s e r v e n o t e s o u t s t a n d i n g ,
an d
$ 4 5 3 , -
000 ,000
i s
re se rv e money
an d
mu st t h e r e f o r e
b e
us e d c o n s e r v a t i v e l y .
B u t even assuming that t h e F ede ra l r e se r ve banks we re wi l l in g t o r e -
duce t h e i r go ld re se rves t o 4 0 $ o f t h e i r d e p o s i t s an d n o t e l i a b i l i t y
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** 2 **
(which would b e reg a rd ed a s a minimum and i n normal times would
b e i n a d e q u a t e ) t h e amount of f r e e g o l d , i . e . , t h e amount of
gold tha t
t h e
Fed era l re se rv e banks would lose bef or e reac h ing
t h i s
40
o
minimum, would
be a
l i t t l e more t h an $ 3 7 5 ,0 0 0 ,0 0 0 .
Whi le th i s
i s a
v e ry l a r g e
s um i t s
s u f f i c i e n c y
c a n n o t
s a f e l y
b e
assumed when
we
c o n s i d e r
t h e
wide scope
o f ou r
t r a n s a c t i o n s
i n
w o r l d f i n an ce
a n d t h e
phenomenal growth
of our own
c r e d i t s t r u c -
t u r e
.
I t i s es t i ma t ed t h a t t h e re a r e no w i n t h e hands o f t he
p u b l i c , i * e . , o u t s i d e t h e T reas u ry a n d t h e banks , over e i gh t h u n -
d r ed m i l l i o n d o l l a r s i n gold an d gold c e r t i f i c a t e s , an d t h a t t h e re
a r e a t
p re s en t h e l d
i n t h e
v a u l t s
o f
member banks about $815,000,-
000 of
re se rv e money
of
which $540,000,000
i s
gold coin
o r
gold
c e r t i f i c a t e s . The re s ho ul d
b e
added
t o
t h i s e s t i ma t e ab o u t $ 6 0 0 , -
000 ,000 of lawful money i n t h e v a u l t s of nonmember State banks and
t rus t companies .
NOTE AMENDMENT.
The Federa l reserve no te , which i s an o b l i g a t i o n o f t he
Uni ted Sta tes secured by an ample reserve of gold an d commercial
p a p e r ,
i s
a c c e p t e d
a s
w i l l i n g l y
b y t h e
p u b l i c
a s a
nat ional bank
n o t e
o r a s a n y
other form
of
cu r r en cy ,
a nd t h e
publ ic does
n o t
d i s c r i mi n a t e b e t w een d i f f e r en t fo rms
of
Uni ted St a t es cu r renc y .
F e d e r a l r e s e r v e n o t e c i r c u l a t i o n h a s b e e n s u b s t i t u t e d f o r gold c e r ~
t i f i c a t e s t o t h e e x t e n t of about th re e hundred mi l l io n d o l l a r s .
' Under t h e p r e s e n t l a w th i s go ld i s d ep o s i t ed w i t h t h e
Fed e ra l r e s e rv e ag en t s i n redempt ion o f t he Federa l reserve no tes
i s s u ed ag a i n s t i t . T he no te s o prov ided f o r t h e r e b y i n e f f e c t
ceas es t o be an o b l i g a t i o n o f t h e Federa l reserve bank ; b u t a s
t h e gold does n o t f i g u r e a s an a s s e t o f t h e Federa l reserve banks ,
t h e Federa l reserve banks a r e u n ab l e t o show t h e g r e a t e r s t r e n g t h
which might b e ev idenced i f t h e l a w p e r m i t t e d , a s proposed i n t h e
amendments,
t h e
i s s u a n c e
of
Fed e ra l r e s e rv e n o t e s
n o t
only ag ai ns t
commercial paper ,
b u t
a l so aga ins t go ld
o r
a g a i n s t e i t h e r , p r o v i de d
always th at e very Fed era l re se rv e note must
b e
covered
b y a t
l e a s t
l o of
commercial paper
o r
g o l d ,
and
that there must always
b e
a go ld reserve o f n o t less than 40% a g a i n s t a l l o u t s t an d i n g Fed e ra l
r e s e rv e n o t e s .
RESERVES.
T he c o n t r o l of gold by Federa l reserve banks i n t imes of
abundance such a s a t p r e s e n t , w i l l d e c r e a s e t h e danger of i n f l a t i o n
of d o mes t i c c r ed i t s a nd a t t h e same t ime wi l l enable t h e country
when t h e t i d e t u r n s t o part wi th large sums of go ld wi t h l e ss i n -
conven ience
o r
shock , thus enab l ing
u s
mo re s a fe l y
a n d
e f f e c t i v e l y
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. t o proceed with t h e development o f o u r f o r e i g n t r a d e an d to
g i v e
t h e
ne c es s a ry c r e d i t f a c i l i t i e s
f o r i t s
e x t e n s i o n .
The
United Sta tes should
be in a
p o s i t i o n
t o
face condit ions which
may c a l l f o r a n o u t f l o w o f gold wi thout a n y d i s t u r b a n c e s of
o u r ow n o r t o t h e w o r l d ' s b u s i n e s s , and wi thout making neces-
sary dras t ic changes i n o u r i n t e r e s t o r d is c o u nt r a t e s . The
amendments suggested
b y t h e
Board
a r e
designed
t o
enab le
t h e
Federa l reserve banks
t o
wi thdraw gold f rom ac tu al c i rc ul a t i on
while enabling member banks a t t h e same time t o r e l e as e go ld
which a t p r e s e n t i s t i e d u p in t h e i r cw n v a u l t s . The amendments
a r e based upon t h e thec ry tha t a l l o f t h e indiv idual banks
shou ld s t r eng then
t h e
gold holdings
o f t h e
Federa l reserve banks.
The
c o u n t r y ' s h o l d i n g s
of
gold
a r e n o t
used mos t e f f ec t i ve l y
when they a r e i n t h e v a u l t s of a large number of banks sca t t e r ed
a l l over t h e coun t ry , b u t i t s g r e a t e s t u s e Would come from c o n -
c e n t r a t i n g
i t t o a
g r e a t e r d i g r e e
i n t h e
v a u l t s
o f t h e
Federa l
reserve banks, where i t c a n b e e f f e c t i v e l y p r o t e c t e d w h e n n o t
r e q u i r e d an d effectively ttsdd-when needed. The member bank
does n o t re qu ir e gold with which t o supply t h e ordinary demands
o f i t s d e p o s i t o r s s o much a s cur rency.
I t i s f rom th is poi n t of view that t h e Federal Reserve
Board h a s proposed that Congress increase t h e r equ i r ed r ese rves
t o b e m a i n t a i n e d b y member banks w i t h t h e Federa l reserve banks.
On November 1 7 , 1 9 1 6 , t h e cash hold ings o f a l l member banks
were about 815,000,000. Umder t h e proposed amendment o f Sect ion
19 ,$250 ,000 ,000 o f t h i s amount would b e t r a n s f e r r e d t o t h e F e d e r -
a l re se rv e ban ks. Hence t h e Bo
a
r d b e l i e v e s t h a t u l t i m a t e l y t h e
l a w shou ld r equ i r e of member banks n o more than t h a t th ey shoul d
m a i n t a i n i s p e c i f i e d b a l a nc e s w i t h t h e Federal reserve banks i n
amounts adequate t o supply t h e necessa ry r e se rve bas i s , an d tha t
t h e Federa l r e se rve banks mus t have s u f f i c i e n t r e se rve s of gold
>vith which t o p r o t e c t a l l o b l i g a t i o n s , b u t that there should ,
however,
b e n o
l ega l r equ i r emen t
a s t o t h e
amount
d f
cur rency that
a
member bank should carry
i n i t s own
v a u l t . T hi s
i s a
m a t t e r
of
bus in es s judgment th a t might we ll be l e f t t o t h e d i s c r e t i o n of
each member bank. I t w a s tho ught , however, th at i f t h i s p r i n c i p l e
w er e c a r r i e d i n t o f u l l e f f e c t a t th i s t ime , t h e step might b e
cons ide red t o o e x t r em e , p a r t i c u l a r l y u n de r p r e s e n t c o n d i t i o n s , and
nothing should
b e
done that might tend
t o a
f u r t h e r r e l e a s e
of
reserve money.
A minimum amount of cur r ency tha t t h e member banks
should b e r e q u i r e d t o keep i n t h e i r v a u l t s i s , t h e r e f o r e , p r e -
scribed.
The
amount suggested
i s 5 o f t h e
demand deposi ts,
so --•
t h a t t h e to t a l r equ i r emen t s - cash a n d r e s e r v e - wi l l r emain p ra c -
t i c a l l y unchanged. Whi le t h e e f f e c t of some o f t h e proposed
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changes wi l l b e t o reduce somewhat t h e re se rve re qu i re me n t s , t h e
r e s e r v e s w i l l h e inc re a se d b y t h e a b r o g a t i o n o f t h e p r a c t i c e
h i t h e r t o o b s e r v e d
of
coun ting i tems
i n
t r a n s i t
o r
f l o a t
a s r e -
s e r v e ,
The
permission given member banks
t o u s e
t h e i r
own
d i s c r e -
t i o n
a s t o t h e
c h a r a c t e r
of
c ur re nc y
i n
the i r va u l t s , w i l l e na b l e
them
t o
r e l e a s e
t h e
gold they
no w
hold , wi th
t h e
impor t a n t r e su l t
t h a t
t h e
s u b s t i t u t i o n
of
Federa l rese rve notes
f o r
gold
and
gold
c e r t i f i c a t e s w i l l
b e
f a c i l i t a t e d
b y
t h i s change
i n t h e l a w .
Wi th ou t some such change member banks w i l l co nt in ue
t o a s k f o r
g o l d c e r t i f i c a t e s
i n
small denominat ions, because
a s
long
a s
they must have gold
o r
lawful money
t o
count
a s
r e s e r v e
i t
would
be
imposs ib le
f o r t h e
banks
t o
exchange them
f o r
Federa l rese rve
n o t e s .
OTHER PROPOSED AMENDMEKTS.
Bes ides
t h e
proposed changes re la t ing
t o
note i ssues
and t o r e s e r v e s t h e Board h a s sugges ted a l so t h e fo l l ow ing :
Amendment of s e c t i o n 11 so as t o p e r m i t t h e Federal
Reserve Board
t o
ra i se re se rve re qu i re me n t s
i n
emerge ncies, ju st
as i t i s now empowered i n c e r t a in c on t inge nc i e s of a d i f f e r e n t
kind
t o
lower those requi rements .
This provision would. , i f adopted, enable t h e Federa l
Reserve Board
i n
prolonged per iods
of
extreme ease
i n t h e
money
marke t
t o
check
a n y
tendency toward excessive loans
o r
other
forms
of
undue extensions
of
c r e d i t .
Amendment of Se c t ion 16 t o permit nonmember State banks
and
tr u s t companies, even though
t o o
smal l
t o b e
e l i g i b l e
f o r m em -
b e r s h i p
i n t h e
Federa l rese rve banks ,
t o
a v a i l t he mse lve s
of t he
c l e a r i n g
and
c o l l e c t i o n f a c i l i t i e s
o f t h e
Federa l rese rve banks ,
provided that they cover a t p a r checks on themse lves sent f o r
c o l l e c t i o n b y t h e Federal reserve bank, and p rov ide d fu r the r t ha t
they keep
a
compensat ing balance with
t h e
Federal reserve bank
i n an
amount
t o b e
de te rmined under ru les presc r ibed
b y t h e
Fe de r -
a l
Reser ve Board , This
i s n o t
in tended
t o
o p e r a t e
as an
e x t e ns ion
of any of t he
p r i v i l e g e s
o f t he
Federa l rese rve sys tem
t o
nonmember
banks
a t t h e
expense
of
members,
b u t o n t h e
c o n t r a r y
t h e
amendment
i s
p ropose d p r ima r i l y
f o r t h e
convenience
o f t he
p u b l i c
and
i n c i -
d e n t a l l y f o r t h e b e n e f i t o f t he member banks. I t i s contemplated
t h a t t h e compensat ing balances which nonmember banks part ic ipat ing
i n t h e c l e a r i n g p l a n w i l l b e r e q u i r e d t o keep with Federal reserve
ba nks , w i l l b e s u f f i c i e n t l y l a r g e t o protect member banks a n d j u s -
t i fy Fe de ra l r e se rve ba nks i n undertaking, t h e s e r v i c e . Any c l e a r -
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m g a nd c o l l e c t i o n p l a n t o be e f f e c t i v e m us t be so comprehen-
s i v e a s t o i n c l u d e a l l checks . A t p r e s e n t t h e p a r l i s t s o f t he
Federa l reserve banks inc lude t h e names of banks checks on
which can bo c o l l e c t e d < i n an y c i r cumstances a t a minimum of time
an d expense j b u t d o n o t embrace a large number of towns i n every
Sta te where the re a r e n o member banks; and in o r d e r t o make c o l -
l e c t i o n s
on
such points many banks
a r e
o b l i g e d
t o
m a i n t a i n
a c -
counts
i n
a d d i t i o n
t o
t he i r r e se rve accoun t s wi th
t h e
Fede ra l
r e se rve banks . A n e c e s s a r y f a c t o r i n any s u c c e s s f u l c l e a r i n g
p l a n i s t h e o f f s e t , whereby ba lance s on ly r eq u i r e se t t l e me n t
i n s t e a d o f t h e to ta l vo lume of t r a n s a c t i o n s * As l o n g a s t h e
c lea r ing sys tem does
n o t
embrace
a l l of t h e
banks th i s o f f se t
i s
l o s t
i n a
cor responding degree
a n d t h e
v a l u e
o f t he
system
dimin i shed i n p r o p o r t i o n .
Amendment of S e c t i o n 2 2 t h e p e n a l s t a t u t e •* s o a s t o
de f i ne more c l ea r l y
t h e
r i g h t s
a n d
l i m i t a t i o n s
of
d i r e c t o r s
i n
t h e
m a t t e r
of
a c c e p t i n g f e e s
o r
compensat ion o ther than
t h e
o r d i n a r y f e e s p a i d d i r e c t o r s
f o r
l e g i t i m a t e s e r v i c e s r e n d e re d
i n t h e r egu la r cou r se of b u s i n e s s , t h e per formance of which
s e r v i c e i s n o t incumbent upon them i n t h e i r c a p a c i t y a s d i r e c t -
or s .
Amendment of S e c t i o n 13 t o r e s t o r e t h e p r o v i s i o n
which wa s by e r r o r s t r i c k e n f r o m t h e A c t i n t h e amendments of
September 7 , 1 9 1 6 , t h u s r e s t o r i n g t o n a t i o n a l b a n k s , w i t h t h e
app rova l o f t he Federal Reserve Board, t h e r i g h t t o a c c e p t up
t o 100% of t h e i r c a p i t a l a n d s u r p l u s i n t r a n s a c t i o n s i n v o l v-
i n g
impor ts
o r
e x p o r t s .
Amendment of S e c t i o n 17 t o cance l t h e p r o v i s i o n of
t h e
National Bank
A c t
which requires na t ional banks
t o
ma in -
t a i n
- a
minimum deposit
of
Government bonds with
t h e
Treasu re r
o f t h e Uni ted St a t es • Nat i onal banks a r e n o lon ge r r equ i r ed
t o
keep ou t s t and ing
a
minimum amount
of
c i r c u l a t i n g n o t e s ,
and
a newly organized bank i s n o t o b l i g e d t o pu rchase o r c a r r y any
bonds o f t he U n i t e d S t a t e s ; b u t t h e r e a r e a number of n a t i o n a l
banks organised before t h e p a s s a g e o f t h e Federa l Reserve Ac t
w hi ch h av e r e t i r e d t h e i r n a t i o n a l b an k c i r c u l a t i o n i n f u l l ,
y e t t h e y a r e , under a c o n s t r u c t i o n of t h e o l d l a w , r e q u i r e d t o
keep
on
d e p o s i t w i t h
t h e
T r e a s u r e r
o f t h e
U n i t e d S t a t e s ,
a c e r -
tain minimum of Uni ted Sta tes bonds. The Board fe e l s tha t i t
i s j u s t 1b th es e banks th a t they b e r e l i e v e d of t h i s o b l i g a t i o n .
Amendment
of
s e c t i o n
25 t o
authorize member banks
l o -
c a t e d i n c i t i e s of more than 100,000 populat ion a n d which have
7/17/2019 frsbog_mim_v04_1914.pdf
http://slidepdf.com/reader/full/frsbogmimv041914pdf 6/6
1919
967
- 6 -
% c a p i t a l a n d s u r p l u s cf more t l isS $1,000,000 t o e s t a b l i s h
%#*nches i n t h e same c i t y , p n v U M t h e Sta te laws d o n o t
p r o h ib i t S t a t e b a n k s
and
t r u s t companies f rom e s ta b l i s h i ng
b r a n c h e s .
Amendment
of
S e c t i o n
9 t o
a ut hor iz e mutua l savi ngs
banks n o t h a v in g c a p i t a l s t o c k t o become associate members of
t h e
Fede ra l r e s e rv e sys tem unde r c e r t a i n p r e s c r ib ed con d i t i ons .
The
p r i n c i p a l b e n e f i c i a r i e s
of
t h i s amendment would
b e t h e m u -
tua l savings banks
o f t he
e a s t e r n
and New
England S t a t e s , which
c a n n o t
become members
o f t h e
Fe der a l res e rve sys tem under
t h e
p r e s e n t l a w owing t c t h e l a c k of any pr ov i s i on en ab l ing them
t o
s u b s c r i b e
f o r
c a p i t a l s t o c k
of a
Fede ra l re se r ve bank,
a s
they have
n o
c a p i t a l i z a t i o n
of
t h e i r
own
upon which
a
p e r c e n t a g e
could
b e
ba se d. They would
b e
r e q u i r e d
t o
c a r r y
a
r e s e r v e
b a l -
ance with
t h e
Fe de ra l r e se rve bank ag a in s t th e i r t ime dep os i t s
i n t h e
same propos t ion
a s
member banks;
a n d t h e
accommodations
proposed f o r mutual savings banks a r e l im i te d s t r i c t l y t o t h e
d i s c o u n t
of
t h e i r t h i r t y - d a y o b l i g a t i o n s p r o p e r l y s e c u r e d .
Amendment
of
S e c t i o n
18 so a s t o
g i v e
t o
United
S ta t e s o n e - y e a r
3%
gold no tes
i n t h e
hands
of
Fede ra l r e se rve
banks t h e c i r c u l a t i o n p r i v i l e g e f o r t h e i s s u a n c e of F e d e r a l r e -
se rv e bank no t e s , such c i rc u l a t io n t o be taxed a t t h e same rate
a s ' . c i r c u l a t i n g n o t e s , w h ic h
a r e
s e c u r e d
by 3$
bonds
o f t he
U n i t e d S t a t e s .
I n t h e
op in ion
o f t h e
Board
i t i s
d e s i r a b l e
t o
e x t e n d t h i s p r i v i l e g e
t o t h e
Federa l rese rve banks
i n
order
th a t t h e y
may
have ad di t i on a l means
of
p r o t e c t i n g t h e m s e lv e s
a t times when there i s an unusual demand f o r cur rency .
Amendment
of
S e c t i o n
4 t o
a b o l i s h
t h e
t i t l e
a nd o f -
f i c e
of
deputy Federa l rese rve agent , thus having
tw o
una t ta ched
Cla ss
"C"
d i r e c t o r s i n s t e ad
of one as a t
p r e s e n t ,
aid t o
c r e a t e
t h e
p o s i t i o n
of
a s s i s t a n t F e d e r a l r e s e r v e a g e n t ,
who
s h a l l
n o t
b e a d i r e c t o r o f t h e bank, b u t w h o s h a l l be a sa l a r ie d bonded
o f f i c e r i n t h e Federal reserve agent;
1
s depa r tment , s e rv ing a t
a l l
t imes
as an
a s s i s t a n t
t o t h e
Fede ra l r e se rve agen t
and
q u a l i f i e d
t o a c t f o r t h e
agen t
i n h i s
absen ce . Exper ience
h a s
shown that there
i s
d i f f i c u l t y
i n
f i l l i n g
t h e
o f f i c e
of
deputy
F e d e r a l r e s e r v e a g e n t . T hi s o f f i c e r
i s
r e q u i r e d
t o
have
t h e
s a m e q u a l i f i c a t i o n s a s t h e Fede ra l r e se rve agen t ; he must have
h a d bank ing expe r ience and he must n o t b e a n o f f i c e r , d i r e c t o r ,
o r
s t o c k h o l d e r
i n a n y
bank.
A t t h e
same xime
he i s no t a s a
r u l e
a
s a l a r i e d o f f i c e r ,
an d
rece ive s on ly
t h e
customary fees
p a i d d i r e c t o r s
f o r
a t tend ance upon meet ings ,
and he i s
obl iged
t o b e
p r e p a r e d
t o
assume
t h e
d u t i e s
o f t h e
Fede ra l r e se rve
agen t i n case o f t he absence o r d i s a b i l i t y of t h a t o f f i c e r ,
which involves a t r a n s f e r and a u d i t of s e c u r i t i e s and accounts .
I t i s b e l i e v e d t h a t t h e change sugges ted wil l opera te t o f i x r e -
s p o n s i b i l i t y m o r e d e f i n i t e l y
and
w i l l g iv e
t h e
Board more l a t i -
tude
i n t h e
s e l e c t i o n
o f t h e
Cla s s
u
C
lf
d i r e c to r s o th e r t h a n
t h e
Fede ra l r e se rve agen t .