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New Bridles for Old 203<br />
for collateral against Federal Reserve notes other than the 40 per cent<br />
gold cover, and making the notes secured by all the assets ofthe Reserve<br />
banks.<br />
The bill that went to the President for signature provided the follow<br />
Ing:<br />
(1) Reorganization of the Federal Reserve Board. The name of the<br />
Board was changed to the Board of Governors of the Federal Reserve<br />
System and the membership was reduced from eight to seven, to be<br />
appointed by the President. The ex officio memberships of the Secretary<br />
of the Treasury and the Comptroller General were abolished. Eccles is<br />
authority for the statement that it had originally been intended only to<br />
eliminate the ex officio membership ofthe Secretary of the Treasury and<br />
to leave the Comptroller General on the Board but both were excluded<br />
when Morgenthau's sensitivity was offended that one of his subordinate<br />
officials should be on the Board while he was removed.<br />
The Chairman of the Board was to be designated by the President for<br />
a four-year term.<br />
(2) The executive authority of the Federal Reserve banks was transferred<br />
from the chairman to the governor and deputy governor and the<br />
title ofthese officers changed to president and first vice president. These<br />
officials were appointed by the board of directors for five years but the<br />
appointments were subject to the approval of the Board ofGovernors of<br />
the Federal Reserve System.<br />
(3) The Open Market Committee, consisting of the twelve governors<br />
of the Federal Reserve banks, was replaced by a new committee composed<br />
of seven members of the Board of Governors of the Federal Reserve<br />
System and five representatives of the twelve Federal Reserve<br />
banks, who were to be selected annually by the boards ofdirectors ofthe<br />
Federal Reserve banks: one by Boston and New York; one by Philadelphia<br />
and Cleveland; one by Richmond, Atlanta, and Dallas; one by Chicago<br />
and St. Louis; and one by Minneapolis, Kansas City, and San Francisco.<br />
(4) The Board ofGovernors was now authorized to change the reserve<br />
requirements for both demand and time deposits ofmember banks without<br />
the declaration ofan emergency. Such changes, however, were to be<br />
within the minimum then required by law, and a maximum of not more<br />
than twice the amount.<br />
(5) The law made no change in regard to setting discount rates except<br />
that Federal Reserve banks should establish these rates with the approval<br />
of the Board ofGovernors every fourteen days, or more often ifdeemed<br />
necessary by the Board.<br />
(6) The law did not go so far as Eccles had desired in permitting any
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