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tx»euttY« Gffte« of
Office for
OfFZCX OF
Washington, D. C
0
F
X
Jam©a F. Byrne«
Director
Mr.
Tb« F*I),I»C« would ll&e the folloi&tig two *«ntonce» to e# in
serted in the order after the aocond aentence of Section Zi
B&ard shall u t i l i s e tis« a«rrl#«* of tli© other
having fluperrision of banks and eredlt uaiong In n i l
matters affecting institution* under their jurisdiction end, in
respect to such i n s t i t u t i o n s , these egftnciea shall c»rry out the
dip#etlft* t ordtrs, a»d r#gwlatloBfi of th» Board iesutd und«r
t h i s Order. Nothing contfein«d in t h i s Order chall confer upon
tk# B©nrd power to limit or r e s t r i c t th« rlglit of t&# fsditral
Dvposlt Ia»mrane# Corporstlon to lo«a mou#y to or
«aaeta from eny insured bank or receiver thereof in
wltln thii proTl«ioB* of autmetion (a) of S#©tloa £64, TitX*
of th» 0 . S.
WM1» th©r© stay b© »o®« queatloB a» to the B««<I of
thoa© jaetter* out in auch d e t a i l , 1 should l i k e Tory *mch to accept the
auggeetiona of tb© F.D.I,C. If thf»re i s no r«M|l eerioua objection to
(signed)
Benjaojio V. Cohen
Benjamin Y. Coben
X, P. Dreibeibia, Baquire,
Federal Reserve Botxrd,
la»bingtan, D. 0.
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May 19, 1943.
Mr. Bea^amin ?. Cohen,
Office of Economic Stabilization,
The White House,
Washington, D. C.
Dear Mr. Co hem
I have gone over the Federal Deposit Insurance Corporation's
suggested addition to section 3 of the order and there are one or two
thoughts I would like to call to your attention before we try to spell
out tlieir idea in such detail.
The procedure which their first sentence would spell out is an
established one. It was suggested and followed by the Board In the exercise of its statutory functions under the Securities Exchange Act. It
is also the procedure which the Board suggested and follows in connection with the order on consumer credit. Since it is the most practicable
way the Board has found, I would expect and am confident the Board would
continue it under this order.
On the other hand, if we try to spell out the procedure for the
Board to follow in connection with the bank supervisory agencies, it might
be argued th&t the functions of all other agencies involved should be
spelled out in equal detail. This, I believe, would be wholly impracticable.
I have a similar reservation with respect to the suggested
second sentence. You will recall that a similar question was raised in
connection with the operations of the Commodity Credit Corporation under
its statutory mandates. There must be others, and my fear is that if we
spell out in one instance we prejudice the position of other agencies not
specifically dealt with.
I mentioned the suggestion to the Chairman, and he feels very
strongly that it should not be incorporated in the order, particularly,
since your office, in any event, can always control any situation which
may arise.
Very truly yours,
(signed) J. P. Dreibelbis
J. P. Dreibelbis,
General Attorney.
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May 31, 1943,
Mr. Benjamin V. Cohen,
Office of Economic Stabilization,
The Ulhite House,
Washington, D. C.
Dear Ben:
Mr. Dreibelbis has discussed with me the changes to the order
suggested by the Federal Deposit Insurance Corporation as set out in your
letter of May 18, 1943.
The functions and powers of the several Federal bank supervisory agencies overlap in a good many instances. In their activities,
however, overlapping has been delimited to a great extent by procedure
established by mutual agreement. The first suggested sentence attempts
to describe and make the established procedure mandatory. It is the only
procedure which would be natural and practicable under almost every condition which might arise. It has been followed by the Board under the
Securities Exchange Act, the Consumer Credit Order, and in other cases.
I am confident that the Board would follow it under this order, whether
or not it is expressly required to do so.
There are, however, serious objections to attempting to spell
out this procedure. If that is done in the case of one agency out of
many similarly situated, the same issue would be raised as to all. The
omission of a similar procedural requirement as to other agencies might
imply a different rule as to them. To enumerate them all would be wholly
impractical. If any such compulsory procedure should be inserted, its
exact scope and meaning would have to be precisely stated. The difference
between the meaning of "banks" as suggested by the Federal Deposit Insurance Corporation and "banking institutions" as defined in the order illustrates the difficulties involved. This would require a great deal of
language and would raise more questions than it would settle, especially
with reference to agencies whose functions and activities overlap but have
been delimited by practice.
The second sentence also seems unnecessary to me. Here again
to enumerate is impractical and to single out this particular authority
might imply a different rule as to any omitted. I believe also that the
sentence has unfortunate implications* It is scarcely to be assumed that
Mr. Benjamin V. Cohen
-2-
the Board would try to restrict the power of the Federal Deposit Insurance Corporation to come to the aid of distressed banks in discharging
the responsibilities imposed on it by Congress, yet the suggested addition proceeds on that assumption.
In conclusion, I believe that the order already covers the
ground with due generality. The responsibilities which it would impose
on the Board are such that it should not be otherwise. In any event,
under both Executive Order 9250 and the proposed order, the Board, as
well as other agencies, is subject to the directives of the Economic
Stabilization Director. This insures to all agencies that the Board's
actions will be realistic, appropriate to whatever situations may arise,
and in harmony with the national stabilization program. You have my
assurances that the language is unnecessary to achieve the ends for which
its insertion has been requested.
Very truly yours,
If. S. Eccles,
Chairman.
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Confidential
Draft
6-19-43
Y
RSHUTCOK
of mrnna wrm
NATIONAL STABILIZATION PHOGRAM
IHfiQBAS the effective conduct of the present war and
the maintenance, of the national stabilization program authorised end directed by the Congress in the act of October 2,
1948 (56 Stet. 765), require that means be available readily
to control t&© use of credit for buying, carrying, or trading in eoaBiodities, real estate, or securities in order to
assist (a) in preventing hoarding and harmful speculation,
(b) in curbing profiteering end unwarranted, speculative, end
abnormal price advances, (c) in protecting and promoting the
sound and constructive interests of cosaaerce, agriculture,
and industry, and of consumers, home owners, and investors,
and (d) in supplementing end supporting other governmental
measures to restrain inflationary tendencies.
HOi, THMJOfOBB, by virtue of the authority vested in
&e by the Constitution ®nd the statutes, and particularly by
section 5(b) of the act of October 6, 1917 as amended from
time to time including th® amendment made in the first War
Powers Act, 1041, and in order, during the time of the war and
the period of the national emergency declared by me on May %7$
1941, to promote the effective conduct of the war and protect
the national economy, it Is hereby ordered as follows:
^ C /»
" A
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^ ****
Section 1. f© curry out the purposes of this order
the Board of Governors of the Federal Beserve System (hereinafter called the Board) is hereby designated as the agency
through which there shall be investigated, regulated, or prohibited transfers of credit or payments between, by, through,
or to any ban&ing Institution, which constitute or arise directly or indirectly out of any extension or use of credit
for or incidental to buying, acquiring an interest in or
control of, carrying, processing, holding, distributing, or
trading in commodities, real estate, or securities, or
evidences of ownership thereof or interest therein, for
temediate or future delivery, the Board, in carrying out
the provisions of this order, shall have the powers set
forth in paragraph (1) of subdivision (b) of section 5 of
the said act of October S, 1917, In effectuating the purposes
of this order the Board may aleo utilize all other powers vested
in it* fhe Board is authorized to prescribe definitions not inconsistent with this order for any terms which it may use in
its directives, orders, or regulations issued pursuant to this
criers frovide<L that, for the purposes of this order and
unless the Board gives more restricted meaning*: (1) "extension
or use of credit* includes but is not limited to options, denands,
liens, pledges, and similar claims against, or for the delivery
©f» property or aioaeyj (Sj *fcejaktag Imstitistioa* steams way
person as defined 1B the said act of October 6, 1917, or
smy agency of the aoTemment engeged, either primarily or
Incidentally, as principal, agent, broker, or otherwise, In
the business of tranaferring credits or receiving deposits,
or of m&letis* receiving, feoltlug, or clcatiiag extensions of
credit or payaenta which constitute or arise out of extension!
Of cr«dit. Nothing herein shell be construed to ai*«nd,
superfdde, or repeal any powers h«retofore delegated to the
Board or to any other agency under the aforesaid paragraph {1}
of section 5(b) of s*id act of October 5, 191?. None of the
tfci*
he
by thm Board
laftwey that will interfere with the Treasury Dep#rtment 1m
«x«rGl«« of ita i'unctiocfl with respect to the public
revenues, borrowings, credits, taxation ami finance.
mm
Section S« In earrylng out the
of this
order the Board shall consider and make due provision for the
legitimate and boma fide credit aeedo of eosaieree, agricultui*»,
and industry and of consumers, home owners, and, investor* to
the extent that the extension or use of such credit is consistent
with the national stabilization program; and any action of the
Board shall not apply to credit outstanding on the effective
date of this order except to the extent thet the Board may
deem It necessary In effectuating the purposes of this order*
AM*L4«ti*«i
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Seetioa 5. In admiaiateriiig this order* the Boa^d may
r
utilise the services of the federal Reserve Banks, Federal
.^ w.wrr. .|;i crrr^
a»y other agencies, federal or State, which axe available tad
iiiii.Sm..
mi mini i l r f n m w
a^ro|riate»
umiiiiii i
i
•
TTI II r m «mi»i m
i,uiLij.L.n>i"H
iiiiiliwiiiiiiniiiiiiim
JIMJ
i mni in ....in.
It shall delegate to such banks or agencies all
or sueh part of the administration of its directives, orders,
or reg^alatioas as It or the leoaomlc Stabilization Director
determines will promote simple and effective administration;
and any such bank or agency, to which such administration has
been delegated, ©ay, la order to e&rry out nay functions so
delegated, utilize all other powers vested In it.
Section 4. The Board shall, so far as practicable,
utlllme the information of, and eoastilt with, other Federal
departments aad ageaeies w M e h have activities or functions
related to the asttioaal stahiliaatiofi program, and la exereisifig
the powers conferred oy this order, shall he governed "bj the
general policy directives of the leoaomio Stabilisation Director.
, 1943,
@FedFRASER