Speech

Cl co CHARACTERISTICS OF FEDERAL RESERVE BANK DIRECTORS A Report by Andrew F. Brimmer Member Board of Governors Federal Reserve System federal Reserve Banl of Philadelphia l i b r a r y June 6, 1972 (Note: A revised version of this Report will appear in the June, 1972, Federal Reserve Bulletin.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis CONTENTS Section Page Preface i I. Introduction 1 II. The Statutory Framework 5 III. General Characteristics of Directors 8 IV. Detailed Characteristics of Directors II A. Age of Directors 11 B. Tenure of Directors 12 C. Industry Origins of Directors 13 D. Educational Background 15 E. Characteristics of Reserve Bank Chairmen 17 F. Minority Group and Women Directors 17 Statistical Tables I-X Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis PREFACE Soon after I became a Member of the Board of Governors of the Federal Reserve System in March, 1966, I undertook a series of trips to Federal Reserve Banks to broaden my familiarity with the various elements of the System. In the course of those visits, I quickly became aware of the unique role which directors of Reserve Banks play in the conduct of the System's affairs. But I also quickly became aware of another set of facts about the cadre of directors: while they brought to their assignments a diversity of background and experiences, a few industrial fields appeared to be heavily represented— while a number of potential sources of directors were hardly represented at all. For example, because of the statutory provision governing their status, bankers naturally accounted for a significant share of directorships at Federal Reserve Banks. However, there also seemed to be a significant proportion of directors drawn from manufacturing— and relatively few from trade, transportation, or public utilities. Moreover, there were no female directors, no members of minority groups, and no members of trade unions. As I pursued the matter further, I decided in early 1967 to undertake a comprehensive study of the origins and characteristics of the directors of Federal Reserve Banks and Branches. The purposes of the study were to review the sources of recruitment of directors Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ii and to assess the changes which had occurred over the preceding decade. The initial focus was on the directors serving as of January 1, in 1957 and 1967. In the intervening months, I have worked on the study from time to time. Early this year, I decided to extend the horizon through January 1, 1972. The present report summarizes the results of that most recent effort as well as the findings based on the original analysis. In carrying out the project, I have benefited from the assistance of a number of persons in the Federal Reserve System. In the early stages, Miss Linda Snyder (then a member of the Board's staff) was primarily responsible for assembling the biographical information on directors serving in 1957 and 1967. Miss Mary Ann Graves also worked on the project in its early phase. In August, 1967, I wrote to the Presidents of the Federal Reserve Banks to request their assistance in checking the accuracy of the information we had compiled on directors in their respective districts. I also inquired about their policies relating to rotation and tenure of directors. I am grateful to the Banks and their staffs for the help which they gave. Once the information was compiled, checked, and catalogued, it was transferred to a computer data bank. Computer programs were written, and preliminary analyses were attempted. At that stage, several members of the Board's staff were involved— especially Messrs. Ronald Kozura, Robert Philbrook, Ray Wise, and Ronald Snyder. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - iii - A more thorough analysis was undertaken in 1969, and a draft report was prepared. Mr. Laurence H. Burd of the Board's staff was particularly helpful in that effort. In extending the project this year, I have benefited especially from the assistance provided by several other members of the Board's staff. Miss Harriett Harper assembled and checked the biographical information for directors serving as of January 1, 1972. Mr. Stephen Taubman was responsible for the computer programming and preliminary analysis, and Mr. Joseph R. Coyne assisted in the drafting of the final report. Finally, throughout the life of the project, all of us engaged in the effort have profited from the counsel and guidance of Messrs. Merritt Sherman (now a consultant to the Board and formerly its Secretary for many years), Charles Molony (until recently Assistant to the Board for Public Information), and LeRoy Morgan (the member of the Board's staff with special responsibility for matters relating to Reserve Bank directors). However, while I have received able assistance from a number of persons, the views and conclusions expressed in this report are my own and should not be attributed to the Board's staff nor to my colleagues on the Board. Andrew F. Brimmer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis CHARACTERISTICS OF FEDERAL RESERVE BANK DIRECTORS I. Introduction The individuals who serve as directors of the Federal Reserve Banksand Branches play a unique role in helping to supervise the activities— of the nation's central bank. They also share the responsibility for assuring monetary and credit conditions that will foster high employment and economic growth with reasonable price stability. In establishing the Federal Reserve in 1913, Congress recognized that the decisions to be made by the central bank would require an element of judgment, and the lawmakers took precautions to assure that these judgments would be impartial, informed and in the best interests of the country as a whole. Consequently, the framework of the Federal Reserve is designed to reflect a blend of public and private participation, and also to recognize the local and regional problems that arise in a country as diverse as the United States. In this country, we have a unique central bank— unlike those in most countries where authority is centralized in a single bank with numerous branches. The Federal Reserve Act established a regional system which is now comprised of 12 regional Reserve Banks, 24 Branches and 1 facility (in Miami). The Board of Governors in Washington has the responsibility of coordinating and directing policy so that the overall System can work effectively. The Board is assisted in this task by the Federal Reserve directors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 2 In certain natters (such as establishing discount rates and appointing the chief officers of the Federal Reserve Banks), directors have a joint responsibility with the Board— namely, they initiate the action but the necessary approval rests with the Board. The advice of directors is frequently sought by Board Members and other Federal Reserve officials on business conditions and public attitudes in their areas--as well as on general policy matters. Directors are especially helpful in keeping the Board of Governors and the Federal Reserve Banks alerted to emerging economic developments in their particular areas. It is important to the Federal Reserve in its implementation of monetary policy to have up-to-date information on economic developments. However, there is a time lag in much of the statistical data on which monetary and credit policy decisions are based; trends or changes in the economy usually begin to develop some time before they are reflected in the numerous statistical series. The Federal Reserve directors help bridge this gap, along with other leaders in the business and financial community, by providing the System with economic intelligence at an early stage as developments are unfolding.—^ Because of the public responsibility inherent in the position, it is important that experienced and competent individuals serve as directors in the Federal Reserve System. Over the years, the country has L/ Occasionally, service as a director is a stepping-stone for appointment to a full-time policy position with the Federal Reserve. For example, Governor John E. Sheehan (who became a Member of the Federal Reserve Board on January 4, 1972) was a director of the Louisville Branch of the Federal Reserve Bank of St. Louis prior to his appointment to the Board. And the former Chairman of the Board at the Federal Reserve Bank of Philadelphia, Willis J. Winn, was appointed President of the Federal Reserve Bank of Cleveland in 1971. In all, more than a half dozen men who at one time served as directors have also served subsequently as full-time Federal Reserve policy makers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 3 been fortunate in this respect. The business acumen, experience, and public awareness of the directors who have served the System— and who are serving it today— provide the Federal Reserve with an unusually valuable asset. Directors of the Federal Reserve Banks and Branches (there are 262 Directors in all) meet formally as a group once each month and in some cases every two weeks. During these meetings, the directors decide questions relating to the activities of a Reserve Bank or its Branches and frequently assess economic conditions. Head office directors, on the basis of information presented at board meetings or available to them through local soundings, may initiate a change in the discount rate (which is the rate charged member commercial banks on borrowings from their district Reserve Bank). Of course, the ultimate responsibility to review and determine discount rates rests with the Board of Governors; but when a rate is changed, the Board usually acts upon a recommendation submitted by the directors of 2/ a Reserve Bank. In addition, many of the directors confer formally with Members of the Board of Governors at least once each year. For many years, in early December, the Board has held two days of meetings with the Chairmen and Deputy Chairmen of the Federal Reserve Banks. Newly appointed directors (who assume their duties as of January 1 of each year) 2/ Under law, the Federal Reserve Board could determine a discount rate on its own without such a recommendation. However, the only case in which this was done occurred in August, 1927. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 4 - usually meet in formal session with the Board during the Spring. From time to time, selected groups of directors are invited to meet with the Board to discuss particular issues. Individual Members of the Board of Governors frequently attend directors’ meetings during visits to Reserve Banks. Directors are also invited by the Board to submit their individual views on business conditions and policy matters directly to the Governors in Washington. In other words, there is a great deal of contact on both a formal and informal basis between directors and full-time Federal Reserve policy makers. This contact is not only inherent in the way the Federal Reserve was established by Congress, but it also is fostered and encouraged by the Board of Governors and by the Reserve Banks and Branches. Given the important role played by Federal Reserve directors, as I mentioned in the preface, I concluded in 1967 that we should have a better understanding of the characteristics of this group of public servants. The present study resulted from that conclusion. From an analysis of the characteristics of Federal Reserve directors who were serving as of January 1, 1957, 1967, and 1972, a sharply etched profile emerges. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 5 The typical director at the beginning of 1972, was just under 56 years of age; had served as a director for slightly less than three years; was more likely to be engaged in banking or some phase of manufacturing than any other field, and was likely to hold a college degree. Today’s composite director is younger than his predecessors; has served less time on his board, is more diverse in his occupational pursuits, and has more formal education than the typical director of 15 years ago. II. The Statutory Framework Before turning to the specific results of the research, it might be helpful to look at the requirements, role, and responsibilities of directors as defined in the Federal Reserve Act. As adopted on December 23, 1913, the Act specified the number, classes and manner of selection of Reserve Bank directors. Each bank must have nine directors--three representative of lenders (Class A) ; three representative of borrowers (Class B), and three representative of the general public interest (Class C). The three Class A directors represent the commercial banks that are members of the Federal Reserve and as a matter of practice are usually active officers of member banks. The three Class B directors at the time of their selection must be "actively engaged in their district in commerce, agriculture, or some other industrial pursuit." The three Class C directors are appointed by the Board of Governors as representatives of the public interest as a whole. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 6 - Other requirements are specified in the law* For example, no Member of Congress may be a Reserve Bank director. The Class A directors are representative, respectively, of the large, medium, and small banks in each district* No Class B director may be an officer, director^ or employee of a bank* A Class C director must have been a resident of his district for at least two years prior to his appointment by the Board of Governors. The length of each term of office for all three classes of directors is three years. The pertinent portions of Section 4 of the Federal Reserve Act that relate to the duties and responsibilities of directors are: — "Every Federal reserve bank shall be conducted under the supervision and control of a board of directors." (Paragraph 6). --"The board of directors shall perform the duties usually pertaining to the office of directors of banking associations and all such duties as are prescribed by law." (Paragraph 7). --"Said board of directors shall administer the affairs of said bank fairly and impartially and without discrimination in favor of or against any member bank or banks and may, subject to the provisions of law and the orders of the Board of Governors of the Federal Reserve System, extend to each member bank such discounts, advancements, and accommodations as may be safely and reasonably made with due regard for the claims and demands of other member banks, the maintenance of sound credit conditions, and the accommodation of commerce, industry, and agriculture..." (Paragraph 8). In addition to the qualifications specified in the Act, the Federal Reserve Board has imposed additional rules on directors. All directors are precluded from holding political office. They also must not hold public office (with minor exceptions such as service on school boards). Also no Class C director may be an officer, director, employee or stockholder of a bank; nor may he hold stock in a savings Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 7 and loan association. The Board also will not appoint a Class C or Branch director who will reach 70 years of age before expiration of his term of office. As to length of service, Board policy limits service of Class C directors to six years— two full three-year terms. There are two general exceptions to this rule: (1) a director appointed to fill the remainder of an unexpired term may serve two full terms after that, and (2) a Class C director may serve a third term as Chairman, if he has not already served a full term as Chairman. The Board has encouraged the Reserve Banks to adopt a similar rotation policy in the selection of Class A and B directors, and all Reserve Banks--except one (San Francisco)— have done so. Each Federal Reserve Branch office, under the law, must have a board of directors of from three to seven members. As a matter of practice, 17 Branches have seven-man boards, and seven Branches have five-man boards. The law is silent on qualifications for Branch directors. They are generally limited by rule or practice to no more than six-years service. However, a director named to fill the unexpired portion of a term generally may serve six years thereafter. A majority of Branch directors is appointed by the Reserve Bank while the remainder is appointed by the Board of Governors. Under Federal Reserve Board regulations, Branch directors appointed by the Reserve Banks must be well qualified and experienced in banking or actively engaged in commerce, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 8 - agriculture, or some other industrial pursuit. Those appointed by the Board of Governors must be nonbankers representative of the general public interest. Of the 262 directors currently serving the System, 108 serve on boards of the 12 Reserve Banks, and 154 serve on boards of the 24 branches. III. General Characteristics of Directors In general, the analysis of the data shows that the Federal Reserve director of today is younger than his counterpart of 15 years ago; he has served as a director for a shorter period of time; he has a more diverse occupational background, and he has more formal education than the typical director of 1957 and 1967. There is also a growing trend— begun by the Board of Governors in 1968--t6ward representation of minority groups on the various Bank and Branch boards. And late in 1971, the first woman director (at the Los Angeles Branch of the Federal Reserve Bank of San Francisco) was named by the Board of Governors. The analysis yielded a number of general findings: 1. The average age of all directors was 55.7 years in 1972, compared with 58.6 years in 1957 and 56.2 years in 1967. Thus, the declining trend shows signs of leveling off. The decline in the average age from 1967 to 1972 resulted from a decrease in the ages of Branch directors. The average age of directors at the Reserve Banks changed little during the last five years, and as of January 1, 1972, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 9 - it was 57.9 years. The number of directors over 65 years of age continued to decline, but the number under 50 has leveled off following a substantial increase between 1957 and 1967. 2. The average length of service among Reserve Bank directors decreased over the 15-year period, reflecting the Board's increased efforts to encourage rotation. The decline occurred during the first 10 years of the period, however, and the average length of service has remained at 2.9 years over the last five years. The term of the Reserve Bank director with the most seniority (serving on the San Francisco Bank's board) stood at 32 years at the beginning of 1972. 3. The industry origins of the nonbank directors covered in the analysis showed a sharp increase in manufacturing fields. To some extent, this is a reflection of the increased dispersion of manufacturing activity over the country. The number of directors in agriculture decreased sharply between 1957 and 1967, but the number increased somewhat during the last five years. The number of directors in the wholesale and retail trades dropped sharply during the last five years following a rise between 1957 and 1967. Lawyers and contractors, unrepresented in 1957, held a total of eight directorships in 1972. Communications and publishing increased from two to seven directors between 1957 and 1967, but the number dropped to four at the start of this year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 10 - The industrial sources of Board-appointed directors are more diverse than the backgrounds of the Class A and Class B directors at Head Offices and of Branch directors appointed by the Reserve Banks. Undoubtedly the differences can be traced in large measure to the provisions in the Act and the Board's regulation mentioned earlier. For example, as of January 1 this year, 16 men in the field of education were serving the System as directors, and all were appointed by the Board. The directors engaged in the legal profession and in communications and publishing were also Board appointees. 4. The percentage of directors with college degrees increased sharply over the 15-year period, in large part because of the general increase in the educational attainment of Branch directors. The percentage of advanced degrees has remained virtually unchanged since 1967. 5. A separate analysis of the 12 Reserve Bank Chairmen showed that their average age has changed very little since 1957; the percentage of Chairmen with advanced degrees is double the System average. The number of Chairmen engaged in various segments of manufacturing— following a sharp drop between 1957 and 1967 (from 8 to 1)— had climbed to 6 at the beginning of this year. The remainder of this report presents detailed analyses of the age, tenure, industrial origins, and educational background of the Federal Reserve directors. Two special sections are also included. One is devoted to the 12 Chairmen, and another traces the emergence of minority group members and women as Federal Reserve directors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 11 IV. Detailed Characteristics of Directors A. Age of Directors As mentioned earlier, as of January 1, 1972, System directors were younger on the average than the directors that served the Federal Reserve in 1957 and 1967. There was a marked decline over the last 15 years in the number of directors over 65 years of age and a substantial increase in the number of directors under 50. The trend toward younger directors, however, has shown signs of leveling off over the last several years. Tables I and II (attached) provide data on the age of directors. On the average, System directors were 55.7 years old at the start of the current year, compared with 56.2 years in 1967 and 58.6 years in 1957. The number of directors under the age of 50 increased from 32 in 1957 to 52 in 1967; it was virtually unchanged at 51 this year. The decline in average age between 1967 and 1972 is attributable to a drop in the age of Branch directors. The average age of head office directors changed only slightly over the last five years (from 57.8 years in 1967 to 57.9 years in 1972). The average age of Branch directors declined more rapidly over the 15-year period than the average age of directors serving Head offices. As of January this year, Branch directors averaged 3.8 years younger than their Head office colleagues, compared with a difference of 2.8 years in 1957 and 1967. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 12 - The number of directors over 65 years old has declined in recent years. Twenty-two directors were over 65 years of age in 1972, compared with 27 in 1967 and 56 in 1957. On average, the Class B and Class C directors were slightly younger than the Class A directors who represent member banks. Class A directors averaged 58.9 years at the start of 1972 compared with 57.1 years for Class B directors and 57.8 years for Class C directors. In line with Board policy, no Class C director was 70 or more years of age while three directors selected by member banks-- two Class A and one Class B— were 70 or more. B. Tenure of Directors On the average, the length of service of Federal Reserve Bank directors declined substantially between 1957 and 1967, but it has leveled off since then. The average tenure was 3.8 years in 1957 and 2.9 years in both 1967 and 1972. However, these averages tend to conceal large variations in length of individual service and by class of directors. As mentioned earlier, Class C directors are generally limited to six years service by Board policy. The Board has urged all Reserve Banks to adopt similar rotations for Class A and Class B directors. Most districts have such limitations, but one Class A director has served the System for 32 years, and a Class B director has been in office for 13 years. Both are from the same Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 13 - district--San Francisco."” These variations tend to inflate the averages. Partly because of the Board's rotation policy, the Class C directors have less average tenure than other directors at Head offices. Their average length of service was 2.6 years in early 1972, in contrast to 3.2 years for Class B directors and 2.9 years for Class A directors. There is nothing unusual about the length of service of Branch Bank directors. They are generally limited by rule or practice to no more than six years service. Data on length of service are presented in Tables III and IV. C. Industry Origins of Directors Major shifts in the industry origins of Federal Reserve directors occurred over the last 15 years. On the other hand, the number of fields represented on Bank and Branch boards increased only slightly. There was a marked increase in the number of directors engaged in manufacturing, a sharp decline in the wholesale and retail trades, and a mixed pattern for agriculture. The number of directors representing agriculture declined sharply between 1957 and 1967 (from 19 to 10), but the number increased somewhat over the last five years (to 13). The sharp increase in manufacturing origins (from 57 in 1957 to 70 this year) reflects the greater 3/ The San Francisco Federal Reserve Bank on several occasions has considered the adoption of a policy limiting terms of directors to three years. However, it concluded each time that special circumstances relating to its board made it desirable to postpone the introduction of the rotation policy recommended by the Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 14 - geographical dispersion of manufacturing, especially during the last five years. There were 53 directors engaged in manufacturing in 1967. Occupational representation on the boards of directors has broadened somewhat over the last 15 years. For instance, the legal profession was not represented at all in 1957. As of January 1 this year, four lawyers served as directors-- two at Head offices and two at Branches. (There were two lawyer- directors in 1967). Four directors were drawn from the construction industry at the beginning of 1972, compared with none in 1957 and only two five years ago. Banking is still the chief source of Federal Reserve directors (accounting for 125 positions or 47.7 per cent of the total in 1972). Of course, this stems from the legal requirement that the three Class A directors at Head offices must represent the member banks and the Reserve Bank practice generally of appointing officers of member banks as Branch directors. The 70 directors engaged in various segments of manufacturing as of January 1, 1972, represented 26.7 per cent of all System directors. Forty-six manufacturers were represented on district Bank boards. This is the largest single field represented at the Head offices— accounting for over two-fifths of Bank directorships. The next largest industrial source of nonbank directors serving Head offices was public utilities--at 4.6 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 15 For the System as a whole, education (16) and agriculture (13) are the most popular sources behind banking (125) and manufacturing (70). The number of directors drawn from education has been fairly stable over the years— 18 in 1957, 19 in 1967 and 16 this year. All 16 directors in this field (four at Head offices and 12 at the Branches) were appointed by the Board of Governors. Data on industrial origins of directors are presented in Tables V and VI. D. Educational Background In line with general trends in the nation at large, Federal Reserve directors had more formal education in 1972 than they did in either of the other two years covered by this analysis. But here again the sharpest increase in formal education occurred during the first 10 years of this period. There has been a slower increase since 1967. Educational data are presented in Tables VII, VIII and IX. Three out of every four directors (75.5 per cent) held college degress at the beginning of 1972, compared with 68.2 per cent in 1967 and 47.5 per cent in 1957. Data in Table IX show that the percentage of directors with college degrees was slightly higher at Head offices (78.3 per cent) than it was at the Branches (73.4 per cent). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 16 More than one out of four directors (27.8 per cent) have advanced degrees. This is slightly below 1967 (28.3 per cent) but above 1957 (22.8 per cent). Educational attainment is higher among directors appointed by the Board of Governors than among Bank-selected directors. This was also true in 1957 and 1967. Of all directors at Head offices, only three appointed by the Board of Governors had no college degree in January of 1972, compared with 11 Class A directors and 9 Glass B directors. At the Branches, 11 Board- appointed directors had no college degree (about one-fifth of the 64 Board-appointed directors), compared with 25 (or about 28 per cent) of the 89 Bank-appointed directors. The higher educational attainment of Board-appointed directors is also evident in advanced degrees earned. Seventeen of the Class C directors had advanced degrees in 1972, compared with 13 Class B directors and 7 Class A directors. At the Branches, 18 Board-appointed directors had advanced degrees, compared with 14 Bank-appointed directors. The higher educational standing of the Board-appointed group is to be expected since it includes a number of persons in the field of education, particularly college \ presidents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 17 - E. Characteristics of Reserve Bank Chairmen Since there are only 12 Chairmen of Federal Reserve Banks, it is difficult to draw meaningful comparisons about their characteristics as a group. However, it is interesting to note that the average age of the 12 men who have served as Chairmen varied little over the last 15 years. At the beginning of 1972, the average was 61, compared with 59.3 in 1967 and 60.8 years in 1957. The range in age this year was from 51 to 69. Ten had college degrees, and seven had advanced degrees. These data are presented in Table X. Six Chairmen were engaged in manufacturing or business pursuits; two were in education; two were lawyers; one was an insurance executive, and the other was a retired president of a public utility. F. Minority Group and Women Directors An especially interesting facet of the characteristics of Federal Reserve directors is the emergence of directors drawn from minority groups and from among women. There was no minority group or female representation on the Bank or Branch boards in either 1957 or 1967. With respect to minority groups, the first black person to serve as a director was appointed by the Board of Governors in 1968. He was appointed tb the Los Angeles Branch of the Federal Reserve Bank of San Francisco where the number of directors was increased Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 18 - that year from five to seven. In late 1970, the Board of Governors appointed the first black person to serve as director of a Head 4/ office. The first woman director was appointed late last year by the Board of Governors to serve on the board of the Los Angeles Branch. As of January 1 this year, there were five representatives of minority groups and one woman serving as directors. All six were appointed by the Board. Two men (one black and one Japanese- American) serve at Head offices. The other three men (one black, one Japanese-American, and one Mexican-American) and the only woman serve as Branch directors. One of the black men is Chairman of the New Orleans Branch of the Federal Reserve Bank of Atlanta.—^ Three Federal Reserve districts have drawn directors from minority groups or have selected a woman— Philadelphia, Atlanta, and San Francisco. Four persons in these categories serve the San Francisco district— one at the Head office and three at its various Branches. These six directors represent 2.3 per cent of all Bank and Branch directors. As of January 1, 1972, their average age was 53.5 per cent, somewhat younger than the average for the system as a whole. Their education ranged from no college to a Ph.D. They represented farming, services, education, insurance and manufacturing. 4/ The appointee was the late Whitney M. Young, Jr., then Executive Director of the National Urban League, who was appointed a Class C director.of the Federal Reserve Bank of New York. 5/ He is Dr. Broadus N. Butler, President of Dillard University in New Orleans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 19 Along with my colleagues on the Federal Reserve Board, I hope that this beginning in representation of minority groups and women as Federal Reserve directors will spread in future years to take advantage of the unique expertise and experience these individuals can bring to the Federal Reserve System. - 0 - Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE I Age of Reserve Bank Directors, 1972 By number in each age group Bank Total Under 40 40-49 50-64 65-69 70+ Average District Class A 36 0 3 28 3 2 58.9 B I/ 35 1 5 22 6 1 57.1 C 36 0 1 32 3 0 57.8 Total 107 1 9 82 12 3 57.9 Branch Bank-appointed.. 89 3 23 58 5 0 54.3 Board-appointed 2 13 47 2 0 53.9 Total 153 5 36 105 7 0 54.1 System 260 6 45 187 19 3 55.7 —I There were two vacancies — one Class B and one Branch — as of January 1, 1972. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE II Age of Reserve Bank Directors 1957, 1967, 1972 Age (years) 1957 1967 1972 Average System 58.6 56.2 55.7 Branches 57.6 55 54.1 Head Office 60.4 57.8 57.9 Head office director less branch director 2.8 2.8 3.8 Number of directors Over 65 56 27 22 Under 50 32 52 51 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE III Tenure of Reserve Bank Directors, 1972 (Years) Number Tenure Category of directors Average Longest serving member Class A 36 2.9 32 B 1/ 35 3.2 13 C 36 2.6 8 District 107 2.9 1/ There was one Class B vacancy as of January 1, 1972. TABLE IV Tenure of Reserve Bank Directors 1957, 1967, 1972 (Years) Tenure 1957 1967 1972 Average 3.8 2.9 2.9 Longest serving member 27.0 32.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE V Industry Origins of Directors, 1972 INDUSTRY RESERVE SYSTEM DISTRICT BANKS BRANCH BANKS Percentage Percentage Percentage Number distribution Number distribution Number distribution Banking 125 47.7 36 22.2 89 57.8 Manufacturing 70 26.7 46 42.6 24 15.6 Education 16 6.1 4 3.7 12 7.8 Agriculture 13 5.0 4 3.7 9 5.8 Public Utilities 7 2.7 5 4.6 2 1.3 Wholesale and Retail Trade 6 2.3 3 2.8 3 1.9 Services 5 1.9 1 .9 4 2.6 Legal 4 1.5 2 1.9 2 1.3 Construction 4 1.5 1 .9 3 1.9 Communication 4 1.5 - - 4 2.6 Insurance 2 .8 2 1.9 - - Transportation 2 .8 2 1.9 - - Not Classified 2 .8 1 .9 1 .6 Subtotal 260 99.2 107 99.1 153 99.4 Vacancy __2 .8 __1 .9 1 .6 TOTAL 262 100.0 108 100.0 154 100.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE VI Industry Origins of Directors 1957, 1967, 1972 Percentage in— 1957 1967 1972 Agriculture System total 7.3 3.8 5.0 Manufacturing System total 21.9 20.3 26.7 District Banks 32.4 26.9 42.6 Branch Banks 14.5 13.3 15.6 Wholesale-re ta i1 System total 5.0 6.5 2.3 TABLE VII Education of District Bank Directors, 1972 Class A Class B Class C College degree Percentage Percentage Percentage Number <distribution Number distribution Number distribution None ii 30.6 9 25.7 3 8.3 B. A. 18 50.0 13 37.1 16 44.4 M.A. 2 5.6 4 11.4 6 16.7 LLB or JD 5 13.8 7 20.0 5 13.9 M.D. — — 1 2.9 — — Ph.D. — — 1 2.9 5 13.9 Not classified — ... _ _ 1 2.8 TOTAL 36 100.0 35 100.0 36 100.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE VIII Education of Branch Bank Directors, 1972 Bank-Appointed Board-Appointed College degree Percentage Percentage Number distribution Number distribution None 25 28.1 ii 17.2 B.A. 38 42.7 32 50.0 M.A. 4 4.5 5 7.8 LLB or JD 10 11.2 3 4.7 Medical 0 0 2 3.1 Ph.D. 0 0 8 12.5 Not classified 12 13.5 3 4.7 TOTAL 89 100.0 64 100.0 TABLE IX Educational Attainment of Reserve Bank Directors 1957, 1967, 1972 Percentage with degrees 1957 1967 1972 College District Rank directors 55.7 75.5 78.3 Branch Bank directors 41.6 63.2 73.4 System directors 47.5 68.2 75.5 Bachelor's System directors 24.7 40.0 47.8 Advanced System directors 22.8 28.3 27.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE X Selected Characteristics of District Bank Chairmen 1957, 1967, 1972 Category 1957 1967 1972 Age (years) Average 60.8 69.3 61.0 High — — 69 Low 57 49 51 Number In manufacturing 8 1 6 With college degree — -- 10 Per cent of total — — 83 With advanced degree — — 7 Per cent of total — -- 58 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Andrew F. Brimmer (1972, June 5). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19720606_brimmer

@misc{wtfs_speech_19720606_brimmer,
  author = {Andrew F. Brimmer},
  title = {Speech},
  year = {1972},
  month = {Jun},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19720606_brimmer},
  note = {Retrieved via When the Fed Speaks corpus}
}