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•
1
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-853
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
•
July 3, 1941
Dear Sir:
There is enclosed a cop,y of a letter, dated
.Tune 27, 191,1, which the Board has received from the
Treasury Departmont, transmltting a. copy of Report
No. 709 of the House of Representntiv3s, dated June
2, 1941, with respect to the destruction of certain
Fiscal Agenqy records, and a form for reporting to the
Treasury Archivist the disposition made of the records
on the list.
Any
questions regarding the disposition of
the useless r1Jcords should be taken up with the Treas1U'Y
Department.
S. R. Carpe tor,
Assistant Secreta...ry.
Enclosures
(House of Representatives Roport sent only with
addressed c;opi<:1S)
TO
THE PRESIDEN'rS OJi' ALL FEDERAL RESERVE BANKS
•
R-853-a
TREASURY DEPAR.TMENT
Washington
June 27, 1941
AUTHORIZATION FOR THE DISPOSITION
OF USELESS RECORDS
TO:
Board of Governors of the Federal Res0rve System
Attention: Division of B~nk Operations
Pursuant to the terms of the act of August 5, 1939, concerning the disposition of certain reeords of the United Sta.tes Government, permission has been gr&.ntc~d in House Report No. 709, 77th
Congress, lst Session, dated JmlC 2, 1941, for the disposition of
the records described in the following list of useless papers:
Federal Reserve Banks as Fiscal Agents - Form A October 24, 1940
Unde1~ the terms of section 5 of the act of
August 5, 1939,
disposition may be made ~~ one of the following methods:
(a)
By sale, upon the best obtainable terms after due
(b)
(c)
ISt causing them to be destroyed;
By transfer (without CO'::t to the United States Gov-
publication of notice inviting proposals therefor;
ernment) to any State o:c depeadency of the United
States of Arnerica or to a.ny appropriate educational
institution, library, museum, historical, research,
or patriotic organization therein, that has made
application ->,:-l* therefor, through the Archivist of
the United States.
You are hereby instructed to dispose of the records described
in the list referred to above, b.r one of the methods indicated in the
preceding paragraph. Records containing confidential information should
not be disposed of by sale as waste paper unless their character as records has been destroyed, hor should they be transferred to another institution without the consent of the Administrative Assistant to the
Secretary.
If records are to be transferred to another institution pursuant to an application received through the Archivist of the United
States, arrangements for such transfer t:Jhould be made through the
Treasury ~xchivist.
2
-2-
R-853-a
If records are to be sold, a separate account should be
kept of the cost of the sale and-the amount of the v~chase price
received, and the mone,ys derived,from the sale should be paid into
the Treasury of the United' States.
A report of the disposition of the records on the list
indicated above should be made on the attached form in duplicate,
and should be submitted to the Treasury Archivist not later than
August 15, 1941.
, {Signed) c. R. Scnoenema,n
:Acting Administrative Assistant
to the Secretary
..
-
3
R-853-b
REPORT OF THE DISPOSITIQN OF USELESS F.ECORDS
To the Treasury Archivist:
The records described in the follO'wing list:
Federal Reserve Banks as Fiscal Agents - Form A
October 24, 1940
approved for di::;position by authority of House Report No. 709, 77th
Congress, 1st Session, dated June 2, 1941, have bf.;en disposed of by
the following method (except as indicated under the item "Remarks"
below):
_
B".r sale :
Cost of sal0:
Purchase Price:
B<J destruction:
By transfer to
(Indicate manner of destruction)
--------(.,..n_a_n-te,_o_f_'_i_n_s-ti, tu tion)
(post-office address)
Date of disposition:
Remarks:
Field Office Form
4
5
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-854
WASHINGTON
ADOREBB OFFICIAL CORRESPONDENCE
TO THE BOARD
July
14, 1941
Dear Sir:
In view of a. :cecent report from one of the Federal
Reserve Banks of diffic·u.lties vrhich it has encountered 1:lf
reason of the fact that certain
Department~
or Agenc.!ies of
the Government in Washington lle.ve employed men in its service without first having taken the
matt~r
up with the Federal
Reserve Banlc, the Board decided to send to the Secretar.r of
State, the Secretar.r of the Treasury, the Secretary of P..griculture, the Secretary of Cownerce, the Office of Production
Management, and the Office of Price Administration and Civilian Supply a letter of which there is enclosed a specimen
COP.Y
fer your information.
Very trul7 yours,
Chester !\Aorrill,
Secretar.r.
Enclosure
TO THb PRESIDEUTS OF ALL FEDEP.P..L RESERVE BANKS
6
R-854-a
Dear Mr.
It has been reported to the Board of Gove1~ors that
there have been instances recently in which Departments or Agencies of the Government in Washington have employed men in the
serviGe of Fedoral Reserve Banks without first having taken the
matter up with the Federal Reserve Bank concerned.
The Federal Reserve Banks are being called upon l:lf the
Government to an increasing extent for services in aid of the
defense program. Since much of this work requires reliance upon
highly trained and experienced personnel, their ret(mtion ll-y the
Federal Reserve Banks may be at least as Lmportant ~s the service they could render to a Government Department or Agency without previous experience in such an organization.
Therefore, it is suggested that when your Department
desires to offer a position to a Federal Reserve Bank employee,
the matter be taken up first with the President of the Federal
Reserve Bank concerned so that the question where such employee
ca~ render service to the best adv~~tage to all concerned may
be determined, in the light of all the cir~~sta~ces, before ~~y
commitment is made. This course would be in line with the poli~f of the President's recent Executive Order with respect to
Civil Service e~ployees in the executive branch of the Government, and the Board of Governors would greatly appreciate your
cooperation with the Federal Reserve System in the mariller suggested in this letter.
Respectfully,
M. S. Eccles,
Chairman.
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R - 855
ADDRESS OFFICIAL CCRRESPCNDENCE
TC THE BCARD
July 16, 1941.
Dear Sir:
There are enclosed for your information
two copies of a series of tables shovring detailed
figures of defense loans and commitments of weekly
reporting member banks as of April 30, 1941,
which were prepared from the data recently submitted by such banks.
Very truly yours,
E. L. Smead,
Division of Bank
EnclosUres 2
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Enclosures with addressed copies only)
8
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-656
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
July 17, 1941
Dear Sir:
The Board has been requested both qy the office of
the Comptroller of the Currency and bJ one of the Federal Reserve Banks to render an op:).nion on the question Vlhether an
officer of a member bank, who is also serving as a director
and as a member of the discount committee of the bank, is to
be regarded as an executive officer within the meaning of the
Board 1 s Regulation 0 as amended effective July 1, 19.39, notwithstanding the adoption of a resolution qy the board of
directors providing that he is not authorized to participate
in its operating management.
Before 1.mdertaking to pass upon this question, the
Board will appreciat<> a statement of your views, accompanied
by a statement of the views of your Cou.'1.sel, with regard to
this matter. Before expressL'1.g your views on the question,
you may fi.11d it desirable to consult with some of your member banks and the member of the Federal Advisory Council
from your district.
For your information in this connection there are
enclosed an excerpt from the Federal Reserve Bank's letter
on this subject, an excerpt from the letter from the office
of the Comptroller of the Currency, and a section of the
"General Form of Bylaws of National Banks" relating to the
Discount Committee.
Very truly yours,
Chester Morrill,
Secretary.
Enclosures 3
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-856-a
EXCERP_T FROM A LETTER FROM A FEDERAL RESERVE BANK
In connection with the question of whether or not this indebtedness constitutes a violation of Section 22 (g) of the Federal
Reserve Act, our examiner submitted the following information:
(1) Prior to the examination a resolution had been
adopted b,y the board of directors declaring Mr.
to
be an inactive officer and without authority to participate in the management of the bank.
(2) For several years Mr.
has been a member
of the bank's Discount Committee composed of himself, the
president of the bank (who is semi-active in its rr.;a..'1a.gernent), and one other director. The committee does not
meet every day, nor on scheduled dates, but only on call
of the president. The committee ha.s and exercises authority to grant loans to and fix lines of credit for the
bank's borrowing customers. It confines its loan-making
activities almost entirely to loe. ns ln excess of $200.
(3) All loans made by the Discount Committee are approved by the board of directors at its next regular
rneeti.."lg.
Our examiner feeJ_s that the making of loans is a function
of operating management within the meanutg of that term as used in
the definition of an "executive officer", as given in Section 1 of
Regulation 0. Accordingly, and upon the basis of the facts recited
hereinabove, he is of the opinion that a.ll members of the Discount
Committee of the
State Bank are "executive officers" of the
bank. However, before taking a definite position of agreement or
disagreement with the views of our examiner concerning this case,
we should like very much to have an expression of the Board's views.
We are unable to find any such expression in the Board's published
or unpublished rulings, based upon the identical circumstances of
the case described herein, although we have noted the Board's interpretation in its letter dated May 4, 1936, X-r-9576, concerning a
remotely similar situation. The fact thr:::t the position taken b,y
the Board in that case is opposite to ths views expressed by our
examiner in the prasent case is one reason why we prefer to obtain
1 s status, instead of
a ruling ~J the Board concerning Mr.
undertaking to pass on it ourselves. Another reason is the fact
that we believe that a number of State member banks in this district use the same administrative macm. nery for their loan-making
activities as the
bank is using.
9
1._0
H-856-b
EXCERPT FH.OM LETTER FI-I.OM THE DF:PUTY
COMPTROLLER OF THF; CUHfENCY
In its supervision of national banks, this office is
occasionally confronted with the question which was raised in
the Board's S-letter-210, Reg. 0-39, concerning which no opinion was expressed inasmuch as the vice president mentioned
therein resigned as a member of thcl discount committee while
the matter was being considered.
Following there is a typieal situation;
1.
Vice President
is an attorney and
is also an inactive of.hcer of the bank but
receives no salar<J from the bank. He does receive a small fee for ec.ch Board meeting attended, which fee is no grentKc than that po.id
to other directors.
2.
The directors have passed a resolution that he
is not authorized to participate in tbe operatin6 management of the bank.
3.
He is a member of the discount committee appointed by the directors in accordance with
the provisions of the bank's b~-rlaws, a COP'J
of which is enclosed, and fully performs his
duties as a member of such committee.
1.1.
R-856-c
EXCERPT FROM 11 GEHFRAt FOR~i OF
BYLAWS OF NATIONP..L BANKS"
Sec. 16. There shall be a committee, to be kno~n
as the discount committee, consisting of the president, cashier, and
directors appointed UJ the board every
months, to continue to act until succeeded, who shall have
power to discount and purchase bills, notes, and other evidences of debt, and to buy and sell bills of exchange; and
who shall, at each regular meeting of the board of directors,
,subr:lit in writing a report of all bills, notes, and other
evidences of debt discounted and pm~chased by them for the
bank since their last report. The board of directors shall
approve or disapprove the report of the discount committee,
such action to be recorded i.n the minutes of the meeting.
12
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-857
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE SOARD
July 18, 1941
Dear Sir:
There is enclosed for your information
a table showing, among other things, the number
and aggregate of deposits of State banks admitted
to membership in the Federal Reserve System during 1940 and tho first six months of 1941, togethor with a statement containing excerpts from
the bank relations reports submitted by the Fedoral Reserve Banks .for the month of June.
L. P. Bethea.,
Assistant Secreta~J.
Enclosures
TO TI1E PRESIDENTS OF ALL FEDERAL RESERVE
BM~KS
R-857-a
STATE BANKS ADMITTED TO FEDERAL RESERVE r~mA:BERSHIP
(Deposits are in thousands of dollars)
Banks admitted
1 Number of nonmember corn.rnercie.l banks with sufficient
1
to membership
cap1.tal stock to meet the ffil.nlmum statutory
Federal
during 1940
requirements for Federal Reserve membership-~Reser-.,re
Total !
ey Sl.Ze or deposits
Number
District
Number
Deposits
Number I Under $1 I $1 -10 . I $10 millions
on Par
---------11-----+------+-----t-----~h':million
millions
and over 1_
List
Banks admitted
to
membership during
Jan. -- June 1941
Number · Deposits
I
0
I'
Boston
New York
Philadelphia
0
25
52,150
6
7,380
C1evela.Yld
Richmond
Atlanta
10
6,150
5
2,200
l
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
30
113,170
8,570
":)"""''
'J'''~
2
93
Total
1
0
1,~g
s3o
• 192,420
0
8
4
I
l
~~3
730
10
0
l
I
I
I
I
i.·
62
2~
I
I
0
12,026
3, 777
141
224
225
~i;~~~
5,298
484
74,483
,1,219
I ~:j~~
I
I
II
45
76
101
~~~ I 415
~{
'
1,008
!
194
5,125
1****188 _ 218,317
1
I
1
I
~~ I ~~~ I
I
~~ ~i:i~~7 ~~~!I ~~~
4
I
I
13s
I
87
126
108
1~b65
200
~
~~37
I
I
8
21
13
I
!
I
II'
I
I
~
2
10
6
g9
5,-2-09--t,---4,-0-9-2-~-----1-,0-10·-r--79
I
I
i
141
224
225
I. g~52
I 43/+
1,079
I
I
:
78
402
174
182
I
1 3,697
---.,v-,*"--.T.,.h_e_s--e--.f"i-Jgu'--r-e_s_a_r_P___J-a_s_o-;f....-..:D-e_c_em~lSr'-e-r---:3""1'-,__,1..,.9:-;!3'""'9-,---;"'th,...e__,l,_a..,t_e_s.:.,.t-.-,-..,---..,.--'----,-~..---+--d.....-at'a hav~ been compiled.
-1H~
~~~r;(-
~-lBH~
These totals inClude, and the distribution by r:...rnount of deposits excludes, 28 banks vrit,h no deposits or
for v:hich deposit figures were not available.
Includ_es one ne1vly organized bar1k vzith no deposits.
Excludes two banks orgr:mized to succeed national banks, one organized to succeed a State member as part of
a rehabilj_tation progrc:Jn, and one organized to succeed a State member whose charter had expired.
R-857-b
July 18, 1941
Not for publication
EXCERPTS FROM BANK RELATIONS REPORTS
FOR THE MONTH OF JUN:E 19@
BOSTON
Visits were made to fourteen member banks, two in Rhode
Island and twelve in northern New Hampshire.
All banks visited reported increases in loans and deposits,
and earnings for the first six-months period were above those of the
corresponding period of a year ago. •
Sales of Defense Bonds
were not large at ar~ point--a number of bankers expressed the view
that no increase could be expected in t,he absence of a vigorous sales
campaign.
NEW YORK
Western New York
}
Oil fields are partic-ularly active as the refineries are
purchasing all the oil obtainable. • • • There arc now approximately
100 strings of tools in operation in this area, which compares to 20
or 25 a year ago. Cr~de oil is currently selling for $2.55 a barrel,
having advanced 15 cents within the last few weeks. The increased
tempo of business and the fact that shipments of Texas and Louisiana
oil have been curtailed due to withdrawal for overseas duties of approximately one-fifth of the oil tankers operating on the Atlantic
seaboard, are said to be responsible for the greatly increased production of the whole Bradford-Allegany field·.
Northeastern New York
Loan demru1d is, in general, showing improvement and the loan
total of $32,100,000 reflects an increase of about 7 per cent in the
last year. The chief increases in bank loans are in institutions
which are active in the consumer credit, personal loan, and mortgage
fields. A number of bankers in the rural areas report that many new
loans have resulted from the purchase of equipment b,y farmers who are
being forced to mechanize their operations due to the shortage in
farm labor. The officers of one smnll bank state that the,r do not
share the opinion often expressed that banks must be satisfied with
lower loan totals as compared with the 1920's and say that loans can
be obtained ~- going after them. • • • Another bank has advertised
J.4
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R-857-b
in the newspapers that rates as low as 4 per cent will be granted on
satisfactory loans of $1,000 and over, which has resulted in an expansion of their list, some borrowers coming from outside of the territory. At two other institutions, loans have increased since the.1
have shown the public that they are anxious to raakc loans.
Paper and pulp mills constitute the chief industrial activity in this territory and their operations have been at capaci~ since
shortlY after the outbreak of the European war, when importations of
Canadian and Scandinavian pulp were curtailed. The cutting of lumber
and of pulp wood in the area is said to be at the highest point
reached in many years, and there is an actual shortage of labor in
this field.
In an area to the north of the village of North Creek, about
twenty-five miles west of Lake George, the Titanium Corporation of
America, a subsidiary of the National Lead Compaey, has purchased a
vast tract of ore land and has started construction of a mining and
smelting project which, it is reported, will cost between five a.'1d
ten million dollars.
Western New Jersgr
Hunterdon County ranks first among all New Jersey counties
in the chicken industry--selling day-old chicks, producing eggs, and
marketing poultry. A large cooperative activity which has developed
during the last few years is the Flemington Auction Market for the
selling of eggs and poultry, which now does a business in excess of
$2,225,000 annually. The successful operation of this organization
has resulted in this plan of selling being widely copied by poultrymen elsewhere •
PHILADELPHIA
Schgrlkill and Luzerne Counties, Pennsylvania
For the first time in several years bankers in this area
are taking an optimistic view of the future of the anthracite industry. Many believe that the prospective shortage of oil in the eastern
and northeastern States, attributable to the lack of transportation
facilities, together with the proposed conservation of oil supplies
for defense purposes, will greatly u1crease the alreaqy heavy demand
for hard coal. This view receives further support through reports
that manufacturers of coal stokers have received such a volume of
orders in the last month that many of them cannot make deliveries
for from four to nine months. • • • A few of the larger operators
15
-.3-
R-857-b
. 16
such as the Hudson Coal Compan,y, the Glen Alden Coal Company, and the
Philadelphia and Reading Coal and Iroil Company were reported to have
reopened or to be preparing to reopen certain mines which have been
idle for several years.
Illegal mining of anthracite, commonly known as bootleggi,."lg,
still flourishes in Schuylkill County, but an increasing number of operators are obtaining leases to the properties on which the,y operate.
In some instances these operators are compelled to sell their output
to breakers operated by the owners of the land.
Mar~ farmers in Schuylkill Coun~ have been quite successful
in growing tomatoes under contract for H. J. Hein.z Company and this
crop a.t present appears to be in good condition. Grain and l".t.O¥ crops
are somewhat stunted because of the dry weather in M~ but no loss is
anticipated as the yield is heavy and p~ices are good. The apple crop
was partially destroyed by late frosts and some loss will result.
CLEVELAND
There appears to be no rnyme or reason to the varying success in the sale of Defense Bonds. In certain industrial communities
where employment and wages are high, bonds are net moving to the extent that they are in other corrum.mities \7here the market would not
appear to be so good. In a few scattered instances sales are reported
to be 11 surprisingly large". Generally, they are somewhat disappointing.
The
that two city
ing to become
that all city
eral Reserve,
the System.
active officer of a recently admitted State bank stated
correspondent banks had asked him his reasons for wanta member of the Federal Reserve System. • • • He said
bankers tell him the,y cannot get along without the Fadand ut the same time wonder wqy the smaller banks join
RICHMOND
Mar:( land
Rain came too late to repair the damage done to strawberries,
peas, and other advanced truck crops tr~oughout the State • • • • The
tobacco crop in southern Maryland has not been affected b,y drought • • • •
Maryland tobacco prices are now at an all-time high level.
Many farmers are accepting the offer of the Federal Government to lend $1.09 or $1.07 a bushel, according to the grade of the
-4-
R-85'7-b
wheat, and if the price of wheat advances next spring the owner is entitled to the advance, but if the wheat remains the same price or drops
lower, the Federal Government owns the wheat.
An order for $'74,000,000 worth of additional bombers and
spare parts has been awarded to the Glenn L. Martin Company, which already has a backlog of more than $323,000,000 in orders.
National defense activities in the Baltimore area are mirrored in a continued sharp rise in the electric output of the Consolidated Gas, Electric Light a~d Power Company. • • • This company placed
a new 33,500 horsepower generating unit in service at Westport last
August, and an additional 6'7,000 horsepower unit will go into,use during the current yeTJX.
The increasing emplqyment of 1nen in defense activities has
been reflected in the filling of many light-work positions around
Baltimore with women workers. A number of office buildings have begun a change over to women elevator operators; women cab drivers are
increasing in number; and girls are being used for messenger service
and office-boy duty.
Virginia
The co~nercial apple crop is indicated about 25 per cent below last year • • • • The peach crop, however, is in a much better condition, with production indicated 50 per cent above last year.
Additional defense contracts during June were announced
calling for expenditures that will include a $6,000,000 Ar~ depot to
be built near Richmond, Virginia, a $2,500,000 Army warehouse at
Alexandria, Virginia, with further construction amounting to approximately $2,)00,000 to be effected at Camp Lee and about $3,400,000 of
new construction and housing facilities at Fort Belvoir.
West Virginia
The wheat yield is indicated at two bushels per acre less
than last year. Corn stands are thin because of poor germination • • • •
The largest crop of cherries in the history of Jefferson and Berkeley
Counties is now moving to market. The crop is expected to total around
J, 000,000 pounds. • • • Thousa.."l.ds of new peach trees set out in the
near past are bearing a record-breaking crop of 490,000 bushels.
Coal production in the first six months is slightly below
the same period last year.
,•
Increased employment at the ordnance plant and various cbemi,.cal pl~nts in the Charleston area has created a business boom and at
the same tune has created a housing shortage.
t.?
-5-
R-857-b
North Carolina
The growth of cotton has not been seriously impaired. Tobacco is improving, but still mostly in unsatisfactozy condition • • • •
Cantaloup producers expect to harvest the largest crop on record this
season. A production of 722,000 crates is indicated, which is 27 per
cent greater than last year.
Good apple and peach crops are
currently indicated.
Passage of the deficiency appropriation bill at Washington
provided for expenditure of approximately $24,190,000 in the Carolinas
for national defense. Of this sum, $14,990,000 will be spent for the
marine aviation base on the Neuse River in North Carolina.
A building and loan association in Raleigh reduced interest
rates on home loans from 6 per cent to as lmv as 4 per cent beginning
June 2, ar1d extended the ma.\:imum ter:a of loans from 11-1/2 to 15 years.
Several firms have announced a second wage increase within
a few months. Sixi:ff-two thousand of North Carolina's 113,469 textile
workers have benefited from the raise i.11 minimum wages.
South Carolina
Coastal tomatoes c...nd cucu.11bers were damaged by flooding rains.
Tobacco stands are irregular. •
Weather conditions were also conducive to an increase jn weevil activity.
ATLANTA
Northwestern Alabama
Current crop prospects are very good and little or no damage
has resulted from the recent drought.
In most of the smaller couunu..'l.i ties, the farmers are said to
be so interested in liquidating old debts and making purchases that
they have deferred for some time before buying Defense Bonds.
CHICAGO
There was considerable discussion at the Michigan bank convention of the Governor's recent veto of a bill to prohibit State-wide
br&nch barJcing.
1.8
-6-
R-857-b
By the end of May, seventh district employment showed an increase of approximately 27 per cent over the corresponding period a
year ago. Pay rolls were up 47 per cent.
A two-month backlog of unfilled orders presents a problem to
furniture manufacturers and few of them can promise immediate delivery.
Most of the factories already are on a capaci-cy production basis.
In the latter part of June the corn in central Illinois was
the finest and earliest :L11 you.rs •
.ST. LOUIS
In northern Missouri the laud is for the most part fertile
and is intelligently farmed. • • • There is broad diversification of
crops. The high prices of milk and eggs have served to lift farm incomes, and farmers are doL'"lg well. Farms are well kept, and equipment
is modern. Shipments of livestock in 1940 were heaviest in a munber
of years. With the exception of winter wheat, which was severely damaged bJ the freeze last Novembel', proopects for crops are exceptionally
fine, and in the recent past have been improved b,y rains.
Almost universally bankers are taking an active part in distritrution of Defense Bonds.
MINNEAPOLIS
Western North Dakota and Northwestern South Dakota
In aL"nost all of this territory one of the major problems
confronting bankers is the profitable employment of excess funds.
Local demand for money is light, with but few exceptions. • • • Quite
general~ banks receive 7 per cent, the legal rate, on chattel mortgage loans. Very few real estate loans are b0ing maae·. With but few
exceptions, bankers indicate they are very conservative in making
cattle loans.
Bankers frequently commented on changed conditions in banl{ing and pointed out the contrast in the territory now served by them
as compared to the situation that existed nome years ago. One banker
stated that his bank is the onl;y one left of 17 that previously operated in that county, and in another case, the banker stc..ted that of 23
banks formerJ.y in that trade area, his b~1k is the sole survivor.
At Dick:L.•son, North De.kota, it was asserted that during 1940
there was no moisture from May 1.3 u.."ltil fall, while this year they had
J.9
-7-
12.99 inches during a
in June.
1'1-d~
R-857-b
period i.n the latter part of May and ear]¥
At New England ln southwestern North Dakota, it was reported
that over one lilillion bushels of whoat were ahipped out in each of the
past two years. • • • It is ~stimated that the 1941 wheat crop will
be the heaviest since 19.32. • • • Ma.ny bankers believe that one of
the most serious questions for this urea is the marketing of the prospective wheat crop. Grain elevators are full. • • • Serious thought
is being given to the erection of snall storage buildings b<J those
able to bear the expense in order to protect their crop.
I.and for range purposes can be lr:.Hlsed chee.ply. In one instance it was stated that the figure agreed upon was only six cents
per acre annually.
Lignite mines are o. source of considerable revenue~ In many
parts of this terri tory, lignite is a.vu.Hable at prices r~mging from
$1.50 to $2.00 a ton. At Dickinson, North Dakota, there is u two million dollar lignite briquet .Pla'1t. In several other towns the production of lignite is ostir.1utcd at about .300,000 tons an.11Ually.
Southeastern $outh Dakota
In the western part of this area the farmers have had on]¥
one crop of corn in ten years and very little small grain. This year
they had five inches of rain in April followed qy· three weeks of dry
weather and more recently tr.r showers. A fair crop is in prospect.
The one principal hazard which is menacing a"t the present time is
grasshoppers. The hatch was exceptionally large.
The statement i~ commonly made that no one ever loses ll."\Y
money on o. feeder loan a...>1d since the bulk of the rediscounts which
have been offered to us recent]¥ consists of feoder paper, it seemed
desirable to check this statement with some of the old-timers. A
majority of the bankers whose banks have weathered all of the storms
in the last twenty-five years did not endorse this broad statement.
The recent State legislation permitting the establishment
of offices in the same or adjoining counties to transact all types of
banking business except the making of loans has created a number of
serious problems. • • • Twenty-one are alreaczy in operation in the
State and sixty more have either been applied for or are known to be
contemplated. Accounting systems lack uniformity. • • • Under some
conditions the head office and the branch office real]¥ constitute
two banks with only one capital structure. At times a comrnunity without a bank c~'l play two neighboring bm1ks against each other and in
20
-8-
R-857-b
that way obtain a branch office even though the volume of business
is not sufficient to warrant the office. • • • The branch offices
range widely in size. At Tabor, for example, the office has only
$40,000 of deposits and $18,000 of loans, the office being operated
~J one girl at a salary of $12 a week. • • •
NortP~central ~~esgta
The principal industry in tho so-called Iron Range is, of
course, iron mining, and it is expected that this year the total tonnage will be 75,000,000 as against a previous high of 62,000,000 tons.
KANSAS CI'U.
Excessive rains have done considerable darnage: the wheat
crop will be much below whe.t vms expected a nonth ago and heavy ruins
have caused loss from soil erosion. But tho general moisture situation is so greatly improved over recent ye~.rs and prices of farm
products have advanced so rapidly thu.t tnere is little disposition
arzy-where to complain.
Bankers report no shortage of harvest labor. As a matter
of fact, they say little labor is required on small farms under modern
conditions as it is a common practice for a farmer himself to operate
his combine and stop the machine long enough to haul awa.y the wheat.
Almost without exception, the demand for Defense Bonds in
rural commu.."'li ties is very disappointing. Bankers say that farm people
have been hard up for so long and havo such pr,3ssing needs for things
they for years have been unable to buy that there is little prospect
of substantial sules to them in the im.med.iate future. On the other
hand, Defense Bonds arc selling much better in communities vrhere there
are retired people and where employment has picked up sharply.
DALLAS
No report received.
SAN FRAHCISCO
Crops and ranges are
fall has continued through the
conditions are "Cotter than for
sulted in augmentirJ.g the water
in excellent condition. Frequent rainlate spring months, a.>1d ground moisture
a numbor of years. This also has l'ein storage for irrigation purposes.
-9-
R-857-b
PUBLIC rn:LATIONS ACTIVITI.ES OF FEDEHAL RESERVE BANKS
June
Federal
Reserve
Bank
.
'
Visits to Banks
Member !Nonmember! Total
Boston
New York
Philadelphia
Cleveland
14
115
62
70
9
16
1
14
;.o
32
11
157
7
1
2
7
179
99.
0
28
16
11
62
Minneapolis
Kansas City
Dallas
San Francisco
78
.39
0
21
101
60
0
7
jAt tendance
t
I
14
147
90
95
26
16
0
95
11' Not reported
Meetings Attended
I Number
0
32
28
25
Richmond
Atlanta
Chicago
St. Louis
ll1-
1941
6
11,..,
.:.
17
1/
Addresses Made
Number JAttendance
4
0
325
50
361
1,202
1,982
1
0
1
3
50
0
140
885
2,900
1,061+175
3,777
3
2
0
5
324
254
0
780
1.,070
50
4,305
1,917
1-1
0
2
1
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
R-858
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 18, 1941
Dear Sir:
The Board of Governors of the Federal
Reserve System is advised that holiday8 will be
observed b,y offices of Federal Res·Jrve Banks
during the moath of August a::; follows:
August 1
(Friday)
Denver Branch
Colorado Day
August :40
New
Orleans
Branch
Birthday of
Huey P. Long
(Saturday)
On thG dates mentioned the offices affected will not participate :i.n the transit clearing through the Interdistrict Settlement Fund.
Please include transit clearing credits for the
office concerned on each cf the holidays with
your credits for the followL"'lg business day.
Please notify branc:hos.
Very truly yours,
Cjn~?ic.~
~/~,~
A. Nelnon,
Assis-Lant Secretary.
TO THE PRESIDENTS or· ALL FEDEHAL HESERVE B.A.l'TKS
R-859
:80AHD OF GOVEli.NORS
OF TI-IE
YI<:Dlt~RAL RES~RVE SYSTEM
STATEMENT FOR THE P::I.ESS
For release in morning papers,
Sunday, .July 20, 19L;.l
The following summary of general
business and financial conditions
in the United States, based upon
statistics for June a.."ld the first
half of July, will appear in the
Au.g;lst issue of tte Federal Reserve Bulletin and in the monthly
reviews of the Federal Reserve
Be.nlcs.
Industria.l production ilJ.Craased further in June, continuing
the rapid ad-va'1ce that began about n year ago.
Commodity
~rices,
both
in retail a;.-1d in wholesal0 markets, rose cons ide;.· ably between the early
part of JunH and the third wee};: of Ju).y •
.froduct~
Roflecting tho co:1tinued advance in industrial activity at
a time when output
ordina.ri~r
declinos, the Board's adjusted index ad-
vanced from 150 per 0ent of the 1935-1939
averr~ge
in May to 156 in
June and prali!!1:1.nary estimates indicate a further rise in July.
current ltJVe1 compares w:i.th
lOL~
The
bofore the start of the European war
and lll in the spring of 191.,0, vrhen tte current advance in industrial
nctivity began.
Fw·ther increases· in
ou-~put
were reported in
j-u...,.J.e
for a con-
sidern.ble number of industries, particularly those associated closely
with the defense progru.'ll, a..11cl there were no im.portEmt declines.
As in
R-859
-2-
other recent months, activity in the aircraft, shipbuilding, machinery, and railroad equipment industries rose sharply.
Autonobile
production was maintained at the high level of May, owing mostly to
unusually large retail sales.
Output of iron and steel and nonferrous
metals, already close to capacity, did not show an increase to corrsspond with the rise in output of finished metal products and official
statement::; indicatGd growi:r..g concern over shortagec of numerous materials.
Steel ingot production remcined close to 99 per cent of capac-
ity during June, but the rate in the middle of July was slightly lower.
For the year to date output of steel has averaged 98 per cent of the
rated capacity as of December 1940.
Output of textiles and most other nondurable manufactures
in June continued at recent advanced levels, which in some instances
represent capacity production.
crease rapidly.
Output of chemicals continued to in-
Also, there was a sharp rise in rubber consumption,
reflecting continuod heavy demand for rubber products and the fact
that June was the last month before curtailment of rubber
cons~T.ption
'b; industry was to go into effect rmd was the month to be usecl in ap-
I-'ortioning July cons'l.lr.lption among various raanufacturcrs.
Mineral production
increase~
ir:. Jtu1e, ·.vith a marked rise in
c'J.tput of anthracite, some further increaso in output of bitmninous
coal, and a continued advance in crude petroleum production to a new
high leval.
Value of construction cont:.:-act awards in June continued at
the high level reachaci in May and Vc'as nearly two-thirds above a year
R-859
-3ago, according to figures of the F'. W. Dodge Corporation.
for public construction again
inc:;.~eased
Awards
sharply, reflecting c0ntin-
ued expansion in the volume of c.efense construction projects.
Pri-
vate residential builcling contracts declined somewhat more than
seasona.l}y, following an increase in May.
Distribution
Sales of general merchandise showed li·stle change from May
to June.
Department store sales decreased more than seasonally,
while rural retail and variety store sales rcmabed at the May level,
although a declinG is usual at this timo of the year.
In tho early
part of July sales at departmcmt stores rose somewhat and were
2/~
per
cent higher than a yoar ago.
Loadings of revenue freight
increas~)d
further in Jun.e, re-
fleeting continued expansion in shipments of cot.:tl and miscellaneous
merchandise, and by the end of the month ·wert.:: in larger volume than
at any time during the seasonal p8ak last autumn.
Commodity prices
Vlholesale prices of mor.;t groups of comrnodi t1es continued to
advance from the early part of ,June to the middle of .July.
Prices of
foodstuffs showed large increases and there wero substantial aJ.vances
in prices of a number of industrial raw materials and finished products.
Following earlier marked advances, prices o.f hides and cotton gray
goods were reduced by Gov::Jrnrnental action.
Retail prices for foods
and many other corm:10ditics have been rising and in June the cost of
rt-859
li~ring wa::; about
ii. per cent higher than 4 r!lonths earlier.
Pretimi-
nary figures indicate further advances in J\.lly.
Bank credit
Holdings of United States Goverrunent securities
t~r
member
banks in 101 leading cities increased further du-'--:-ing June and early
July, reflecting in part nev1 offerings by the Treasury.
Comrnercial
loans continued to rise sharply.
Notwithstandi:Gg the gr\.::ater volume of bank 1o&"lS and inV·8Stments, cleposi ts of city banks declined somewhat ovor the period,
reflGcting mainly a growing demand for currency ann. a building up of
Treasury deposits at the Reserve Banks.
These
dGV\~lopments
also re-
:oulted .in a decrease .i!l tho volume of excess reserves, which amounted
to about $5,300,000,000 on July 16, compared vrith $6,900,000,000 a
year earlier.
United States GoYernment secnr·ity prices
United State;:; Governmt:nt securities advanced further during
the latter part of
,Ju~l8.
Partidly tax-exempt 1960-65 bonds on .June
26 were at an all-time peak, on a 2.02 yield basis.
they have declined slightly.
Since that time
Taxable bonds generaDy continued to
advance to success::.ve new high levels.
Yields on Trea:m:cy notes
showed little eha.nse during the latter part of June and the first
half of July.
..
....
.
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-860
WASHINGTON
ADDRESS OF'F'ICIAL CORRESPONDENCE
TO THE SOARD
July- 21, 1941
Dear Sir:
The":-e is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased Wire System for t:ne month
of .rune 19L~.
Please credit the ammmt p~rable b'.r
your Bank to the Board, as s~.1mm in the last
column of the statement, to thE< Federal Heserve
Bank of Ricr.:nond in your daily stateoent of
credits through tha Interdistrict Settlement
Fund. for the accou.<"l.t of the Board of Governors
of the Federal Heserve System, and advise the
Federal Reserve Bank of Richmond by mail the
amount and purpose of the credit.
Very tru]..y yours,
0. E. Foulk,
Fiscal Agent.
Enclosure
TO PRESIDENTS 01'' ALL FED:i:'-i.P..1 RESE...l\VE BANKS
EXCEPT RICHMOND
R-860-a
REPORT OF EXPENSES OF i\IIAIN LDii~S OF FE!),~!;R,.,\1 ?.ES:&l.VE
LE!1.SED WIRJ~ SYSTEi:l FOR THE MOUTH OF .TUNE 1941
Nurnber
of fiords
Sent
Federal
J1eservc
Bank
Words Sent
lJ;;r N • Y..
Chargeable
to OthGr
F.R. Banks
Total
Words
Chargeable
34,070
86,JJ+6
20,630
40,548
Boston
Hew York
Philadelphia
Cleveland
33,656
86,146
20,215
40,132
41L:.
fdchmond
Atlanta
Chicago
St. Louis
4'7,3?..8
L,l4
42,7Le9
4.L~
77,106
48,816
455
;,1inneapolis
Kansas City
Dallas
San Francisco
21~, 503
4/..,070
39,892
56,991
414
413
462
415
Board of
Governors
·rotal
/~.15
416
513.36
1,298.0/.1310.85
610.98
r-:·
t~,)
329.63
239.33
1,217.73
249.3:2
2/+,917
40,354
5'7 ,!+06
375-45
6'70.27
608.05
864.79
232.73
273.01
324.9.3
426.00
512,943
7,729.00
11,161.06
1}079,69.3
$.~16,268. 76
~~n.s, 268 • 76
/~,483
Payable
to
Board
of Governo:2s
387 ./~6 $ 125.90
870.'73
427.31
62.78
243.07
302.22
308.76
726.91
650.38
1,168.69
7/~l. 79
L~ol4
4,646
~)
48,242
43,163
77,561
49,230
512,943
1,075,047
Expenses
Paid
by Banks
and
Board (2)
Pro Rata
Share of
Total Expenses (1)
397.28
411.05
49.04(a)
492.47
142.72
397.26
283.12
1.]8.99
~~3 '/+81.10
~9.0£t(a)
$3,432.06
(1)
Based on cost per word ($.015067950) for business handled duri.Yig the month.
(2)
Payments by Bankfl are for personal servieas a.nd supplies and payments by Board
are for personal services and supplies U~l,261.47) and wire re11ta1 ($10,303 .62)
less amount ~404.03) representing reimbursement for the cost of sending messages bctw0en the Washington office of the Leased VJire System and the local
telegraph offices of the 'I'reaSU!"J, Reconstruction Finance Corporation, and
Corrnnodity Credit Corporc.tion. P<;rse;nal services include salaries of main
linG opera.tors a...11d of clerical help engaged in VIork on main line business,
such as counting tho number of words in rn0ssagos; also overtime and suppe:::money and Retirement Sjrstem contributions e.t the current service rate.
{a)
Credit--reimbursable to Chicago.
30
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-861
ADDRESS OFFICIAL CORRESPONDENCE
TC THE BOARD
];.ugust 6, 19A·l
Dear Sire
For your infornation there is enclosed a recapitulation of
an audit submitted to the Secretary of the Treasury by Mr • u. R. Loa.ftaan,
Chief, Division of Public Debt Accounts and Andits, showing the stock
of incor.aplet8 face printed Federal Reserve notes, 3eries of 1928 and ·
Series of 1934~ and of v~form backs allocated to Federal Reserv~ notes,
on hand at the Bureau of E;.;.gra.ving and Printing at Washington as at the
close of business Jun~ 30, 1941.
In his letter t~ansmitting the report to the Secretcxy of the
Treasury, Mr. Lo.:l):'nw.:n stated th 2t t "The audJ. t extended from June Z7 to
July 1, 1941, inclusj_ve, and consisted of a piece count of the stocks
of faces, Series 193/:. (except the stock of $5 denomination), and a package count of the um.foru backs allocated to Federal Reserve notes. All
stocks of Federal Reserve notes, Series 1928, and the stocks of the $5
denomination, Series 19.3A·, with the exception of those ret::dned by the
Bureau for specimen purposes, were piece counted and placed under the
Auditor's seal prior to the audit. An inspection w.:1s made of the seals
on the various bins containing these stocks and the seals vrore found to
be intact.
"In view of the fact that a recent piece count has been made
by this office of the entire stock of each denomination of uniform
backs on hand in the Bureau, a package count and an inspection for denominations of the uniform backs nllocated to Federal Reserve notes was
deemed sufficient at this time.
R-861
- 2-
"The totcJ.. sheets of nll dcnominntions on tho whole of
Foclera.l Reserve notes, faces nnd backs, were :'ound to be in oxccss
of the total required rese:;.~ve of 4,250 ,coo sheets."
Very truly yours,
J. R. Vun Fossen, Assistant Cbief,
Division of Bunk Operations
Enclosure
'IO ALL FEDERAL RESERVE l..OENTS
3:1
I
~E..QAPl!.!!bA!l.QN
Federal Reserve Bo.nk
Faces a
Boston
New York
Philadelphia
Cleveland
Richmond
l•tlnnta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total Faces
Faces a
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
B · ·Total Faces
a~!orm Backs ul.."l...ocuted to
the various donominntions
of Federal. Reserve Notes
R-861o.
FEDERJ.t RESERVE NOTES AND UNIFORM BACKS ALIDCATED W FEDERAL RESERVE NOTES , SHEETS OF 12 SUBJEI; J:'S EACH
AB AT THE CLOSE OF BUSINESS JUNE 30, 1941
Series of 1228
$5
--
68,66o-2J3
$10
1
--
Z7 ,m
208,05~1/3
Z7,872
12,84:1.-1~
1M' 966--2 3
76,633-1/3
7,966-2/J
7,76(:,.2/3
.31,675
128,066-2/3
57~34':?:-2/3
26,132-1/3
8,')66-2/3
V,166--2/3
35,100
564,o24-i15568,500
182,537
319,657-1/J
99,509-2/3
72,482-2/3
39,857-2/3
52,100
186,544
35,1HJ
32,766-2/3
29,433-1/3
52,200
90,469
1,192;997-1/3
656,500
$50
$100
$500 l$l,OCO ' $.5,oorr$1o,ooo r·-futal --
11,34.3-1/3
1,535
300
9,974
.30,105-1/3
24,02£>
·1
12.306
S,124
15,448-2/3
5,851-1/3
8,ooo
3,743
61,358-1/3 36,.341-2/.3 .30.660
3,982-1/.3
5,42.3
5,02l.rl/J
4,546
7,582-1/3
4,1;6.5
2,989-2/3
3,001
23,712-1/3
12,251
8,922
92,731-1/3
110,099-2/3
l42,674
186,303
Series of 1924
399
1
76,71l-1/3
34,63&-2/3
28,040-2/J
$20
6,66')-2/3
--
41,.311-2/J
18'7,929-2/3
60,351-2/3
r:n ,652
57,000
38,33.3-1/.3
72,?(:h-2/3
35,100
37,633-1/3
:?2 ,'266-2/3
18,500
;!)2?3.3-1/3
698 ,YT!-1/3
630,500
2,105 .
45,2/1)-1/.3
1,850
11,108
1,575
1,429
3,62!>-1/3
2,223
1,654
1,075
1,678
2 222
66~;132-i h 75~777j:-.2/.3
1,162
45,552
1,519
2,1.3,3-1/3
2,685
1,766
3,939
2,102
495
1,801
l,JJ8
1,640
149,000
120,500
30
170
200
698
La4
2lt5
152
60
293
34.5
100
252
22A
402
50
?A
34
79
JOO
68
102
11
250
226
4,46.3 2,562
200
337 484
300 1,500
100
80
130 150
1-lDO
2.30
400 li:J1
502 400
400 2.30
200 100
1()0
300
li:JO
200
4.30
4,029 4,525
4-Ql
1.;
9
JiJ
262
441
182
443
25
98
90
90 .·
v~
25
71
34
.32
--
1.3
7
1$
260
417
llO
MS
25
50
46
90
90
49
99
90
1;3
88,53.5-2/3
645
40,.578-1/3
113,401-1/3
58'1?06-l/3
17,86~1/3
' 1.30,072
10,179-1/3
9,88.3-1/.3
40,366
57,900
114,412.-1/3
632,5.48
241,636
745,437
2li:J, 931.,-2/3
191,672-2/3
109,662-1/.3
126 ,2Lt0-1/J
396,01&-2/3
132 9 97&-2/J
9G,981-l/3
63,739-2/.3
101,617-2/.3
45
109._____ _1.9~------~~~4-l-~
2,609,0 1-1 3
1,748 1,42o
2,125,000
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-862
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
August 7, 1941
Dear Sir:
Referring to the Board's letter R-765 of
January 11, 1941, the following change should be
made in the list of nonmember banks that have in
force agreements with the Board pursuant to the
provisions of Section 8(a) of the Securities Exchange Act of 1934:
Deletion
Wisconsin
Cudahy
Cudahy State Bank
(Admitted to Federal Reserve
membership on July 17, 1941)
The last previous change in this list was
given in the Board's letter of May 7, 1941 (R-830).
------L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
34
R-863
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Statement for the Press
For release in morning newspapers
of Tuesday, August 12, 1941
Statement of Chairman Marriner S. Eccles
with reference to the President's Executive Order
relating to the regulation of consumer credit.
August 11, 1941
R-863
The President today h;sued an Executive Order under date of
August 9 empowering the Board of Governors of the Federal Reserve SJrstem
to regulate
cons~~er
credit in order to promotG national defense and to
protect the national economy.
An initial regulation will be issued as
promptly as possible following consultation with representatives of the
trade and the financial institutions affected.
The regulations will re-
flect a policy of flexibility and will be in more or less general terms
until experience and further study establish more precise guides that may
be followed.
Frequent conferences have been
he~d
with the st4ff of OPACS with
special reference to problems affecting prices and civilian supply.
Pre-
liminary conferences have also been held with representutives of the
Secretary of the Treasury and Federal Loan Administrator.
Liaison will be
constantly maintained with all three of these agencies pursuant to the Order,
In effecting a nationwide administrative coverage, under the
authority of the Order, the Board will utilize the services of the
Federal
~eserve
Banks and
24
1~
Branches in administering the Order, thus
making available the long years of practical experience that the Federal Reserve System has had in the field of credit, and enabling details of administration to be decentralized.
Regulation of consumer credit represents another step by
Government in its effort to prevent inflationary developments.
supplementary to other more
in other fields.
funda~ental
~he
It is
measures that are being undertaken
The danger of inflation arises from the
oonstan~ly
growing
R-863
3b
- 2 volume of Government disbursements for defense, giving consumers everincreasing buying power at a. time when the country's capacity for producing
durable goods available for civilian consumption is nearing its limit.
Restriction of consumer credit should dampen the demand for consumers durable goods, such as automobiles, washing machines, refrigerators,
ironers, vacuum cleaners, and many other goods, at a time when their production needs to be curtailed in order to release materials, labor and plant
~apaoity
required to increase production for defense.
The raw materials required for both types of products -- armaments
and durable consumer goods -- are in the main such materials as iron, steel,
copper, zinc, nickel_, lead, aluminum, magnesium, rubber 1 cork, tin, etc.
At present armament demands for SlJCh materials are, and probably throughout
the emergency will be, so great that the surplus left over for production
of consumers durable goods will in many cases only permit a.n output of such
goods considerably smaller than that attained in recent months.
The Order does not cover installment credit fer the purpose of
purchasing or carrying a residential building in its entirety.
It is expected that the initial regulation will be built around
a list of articles such as have been mentioned above, which are of the type
usually bought for consumers' use.
The initial list will not contain
articles ordinarily bought for productive purposes, such as farm implements,
etc.
The initial regulation, it is expected, will apply only to in:;;tallment credit.
It will not apply to open book accounts nor to straight
- 3 loans payable at one time and in one payment, whether or not secured.
ever, installment credit to obtain cash in relatively
sY.~ll
How-
amounts will be
covered by the regulation since this type of credit i[; so closely related
to the purchase of articles of the kind listed.
This coverage will be sub-
ject to such exceptions as may be desirable in the public interest.
Restriction of consumer credit during the emergency will assist
in the orderly transition from the defense to the post-defense period.
By
diminishing the volume of credit used for consumer durable goods, it will
make funds available for investment in defense bonds and other forms of
savings.
When the emergency is over funds so saved can be drawn upon to
replenish the depleted stock of durable goods.
At that time capacity for
their production will become increasingly available as the production of
defense materials is reduced.
It is in the interest of all of the people, in the emergency
period, that the growing demand for consmners durable goods of all kinds
be curtailed as an integral part of a broad coordinated
inflationary dangers.
progra~m
to combat
We should all be ready and willing during the emergency
to got along with fewer of those consumers goods which will be embraced in
the Board's regulation.
By doing so, we can assist the defcmse program,
lessen the danger of runaway inflation, increase our savings and our
purchases of defense bonds, and help to build up a backlog of effective
demand to cushion the impact of post-war readjustment.
R-864
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Statement for the Press
For immediate release
,August 12, 1941
ln order to assist in the preparation of regulations relative
to consumer credit, the Board of Governors of the Federal Reserve Syitem
has engaged the services of Mr. Kenton R. Cravens, who is on leave of ab ..
sence from The Cleveland Trust Company of which he is a vice president.
Mr. Cravens' entire business life has been spant in the field
of consumer credit, relating particularly to the durable goods industries
and embracing sales financing, direct lending and banking.
He has been
Chairman of the Consumer Credit Council of the American Bankers Association
since the organization of the Council and was formerly president of the
Bankers Association for Consumer Credit,
-
R-865
BOARD OF GOVERNORS
OF THE
FEDEF.AL RESERVE SYSTEM
Statement for the Press
August 14, 1941
For immediate release
The Board of Governors of the Federal Reserve System met today
with representatives of the twelve Federal Reserve Banks in connection
with the regulation of installment credit.
Ronald Ransom, Vice Chairman
of the Board, presided, and the meeting was opened with a statement by
Marriner
s~
Eccles, Chairman of the Board, outlining the purposes of in-
stallment credit regulation as a supplementary step in the Government's
program to combat inflation.
In administering regulations to be issued under authority of the
President's Executive Order, the Federal Reserve System will utilize the
twelve Federal Reserve Banks and their twenty-four branches, thus making
available the System's practical experience in the field of credit and
decentralizing so far as possible the administration of the
regulat~ons.
In addition to members of the Board and staff, those attending
the meeting representing the Federal Reserve Banks were:
Federal Reserve Bank
Name
Title
Boston
E. G. Hult
Carl B. Pitman
Assistant Cashier
Assistant Cashier
New York
L. R~ Rounds
L· B. Allen
William F. Treiber
First Vice President
Chief, Credit Dept.
Assistant Counsel
R-865
- 2 Title
Fed8ral Reserve Brnk
Philadelphia.
A. H. Willia.i!lS
c. A. S1enkiewicz
R. R. Williams
PresidEc;nt
Vice President
Sh.tistician
Clevelend
F. J. Zurlinden
Ralph Tyler
First Vice President
Kember Le[;al Sh.ff
J. G. Fry
M. G. Wdlace
Vice Presidont
Couns.sl
Athmta
Ualcol:n H. Bryan
Pollard TurmLJl
First Vice ?resident
Counael
Chicago
Paul C. Hodge
Cla.re~ce T. Laibly
As~ista.nt
Richmond
St. Louis
Chester C. D~vis
G. Cra.use
c.
Counsel
Exe.rr,iner
Presldent
H.,;ad of Personnel
Depu.rtment
Minneapolis
J. N. Peyton
E. w. Swanson
T. H. Hode;son
R. D. :::c..ker
President
Vice Presidunt
Assistant Counsel
Aasistm1t Head, Statistic~l Department
Kansas City
D. W. Woolley
Willium Phillips
Assistant Cashier
Assistant Cashier
Dallas
R. R. Gilbert
E. B. J:.ustin
President
Assistant Cashier
San Francisco
Willium A. Day
W. M. Hale
H. F. Slade
President
Vice Fresidont
~ssistant Cashier
40
R-866
BOARD OF GOVEP~ORS
OF THE
FEDERAL RESERVE SYSTEM
Statement for the Press
August 15, 1941
For innnediate release
Following the meeting yesterday with representatives of the
Federal Reserve Banks, the Board of Governors of the Federal Reserve System
met today with representatives of various banking and credit groups which
extend installment credit to the public.
Representatives of' the Treasury
Department, of the Office of Price Administration and Civilian Supply, and
of the Federal Loan Administrator were also present, representing the advisory group designated under the Executive Order on regulation of consumer
credit.
In addition, thr; meeting was attended by representatives of the De-
partment of Commerce, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, tho Rural Electrification Administration, and of
Federal Rosorve Banks and the Federal Advisory Council.
Vice Chairman Ronald Ransom of the Board of Governors presided,
and the meeting was opened with a brief statement by Chairman Eccles outlining the reasons for regulating consumer credit as a supplemental measure
in the Government's efforts to combat price inflation.
Chairman Eccles emphasized that the purpose of the Board was to
issue an initial regulation as promptly as possible covering a limited
list of consumers durabl'J goods which use materials n0eded in defense;
that the purpose of the regulation is not to
curt~il
production, but to
supplement taxation and other fundamental measures designed to reduce the
41
R-866
- 2 -
pressures of consumer
de~and,
particularly for those goods of which there is
or may be a scarcity, relative to the demand, because of defense requirements.
Such steps are essential, he stated, to protect the interest of
consumers and prevent prices from being bid up to inflated l'wels.
Inflated
prices, he pointed out, particularly victimize those of small means.
that the proposed initial regulation of consumer credit will be
are unfounded, he
11
11
Reports
drastic 11
state~.
It is proposed, 11 Chairman Eccles said,
11
in the initial regula-
tion, covering only a limited number of articles and applying moderate
terms, to lay a basis for such subsequent coverage and adjustment of terms
as experience in this field and economic developments may indicate to be
necessary in ords:r to
c~:Arry
out thu purposes of the Executive Order. 11
Vice Chairman Ransom stated that progress is being made in the
drafting of an initial regulation with a view to its being issued next week
to become effective at an early date.
Following is a list of groups represented at and of those attending today's meeting:
American Association of Personal Finance Companies
Irvin Wesley, Vice President, ·Indianapolis, Indiana
B. E. Henderson, Member of Executive Committee and President of
Household Finance Corporation
M. R. Neifeld, Economist, Newark, New Jersey
American Bankers Association
John Burgess, Vice President, Northwestern National Bank, Minneapolis,
Minnesota
CE<rlton Hill, Vice President, Fifth Third Union Trust Company,
Cincinnati, Ohio
R-866
- 3 American F'inance Conferer1ce
E. M. Morris, Associates Investment Company, South Bend, Indiana
Owen L. Coon, General Finance Corporation, Chicago, Illinois
David B. Cassat, Interstate Finance Corporation, Dubuque, Iowa
American Industrial Bankers Association
Charles Sursa, President
Myron Bone, Secretary
American Retail Federation
C. B. Dulcan, Sr., The Uecht Company, 'v'fashington, D. C.
Ralph Goldsmith, Lansburgh & Bro., Washington, D. C.
David R. Craig, President, American Retail Federation
Commercial Credit Company
E. C. Wareheim, Executive Vice President
Commercial Investment Trust Incorporated
A. 0. Dietz, President
Credit Union National Association
Thomas Doig, Assistant Managing Director
William Reid, President
General Motors Acceptance Corporation
Charles G. Stradella, Vice President
Independent Bankers Association
Ben DuBois, Secretary
Mail Order Association of America
R. S. Smith, Assiste.nt Treasurer, Montgomery Ward & Company
Morris Plan Bankers Association
Richard H. Stout, Executive Vice President
R. o. Bonnell
National Automobile Dealers Association
L. c. Cargile
W. L. Mallon
C. w, Bishop
National Bond & Investment Company
N. H. Topper, Genoral Counsel
National Bureau of Economic Research
Ralph A. Young, Director, Financie.l Research Program
43
R-866
. - 4National Retail Credit Association
L. L. Meyer
Arthur J. Morrh
D. D. Bolen
National Retail Dry Go~ds Association
Howard Godfrey, J. L. Hudson Company, Detroit, Michigan
Kenneth C. Richmond, Abraham & Straus, Brooklyn, New York
Irving C. Fox, Washington, D. c.
National Retail Furniture Association
Jack Schram, Chicago
Clarence Haverty, Atlanta
Roscoe R. Rau
National Retail Hard~.re Association
Albert Herrnstein, Vice President, Chillicothe, Ohio
Rivers Peterson, Managing Director.
Reserve City Bankers Association
Donald F. Valley, Vice President, National Bank of Detroit
Retailers national Council
Louis Rothschild
Government Agencies
Treasury Department
Daniel W. Bell
Office of Price Administration and Civilian Supply
Rolf Nugent
F. B. Hubaohek
Federal Loan Administrator
Stewart McDonald
Department of Commerce
Bureau of Foreign and Domestic Commerce
Current Business Analysis Unit
Credit Research Staff
Duncan Holthausen
44
R-866
- 5 ...
Comptroller of the Currency
C. B. Upham
Federal Deposit Insurance Corporation
Morris Tucker
Rural Electrification Administration
Carlton Nau
45
BOARD OF GOVERNORS
46
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-867
ADDRESS Of"f"ICIAL CORRESPONDENCE
TO THE SOARD
August 15, 1941
Dear Sir:
On Monda;r, September J., Labor Dey, the offices of
the Board of Governors of the Federal Eeserve System and all
Federal Reserve Banks ~:md branches will be closed.
The Board is advised that the :following holidays
e.lso will be observed ty Federal Reserve Banks and branches
during Septeraber:
September 9
(Tuesday)
Sen Francisco
Los Angeles
Adrn.ission Day
in California
September 12
(Friday)
Baltimore
Defenders' Day
in I.::a..ryland
On the dates given the offices co::1cerned will net
participate in either the trz.nsi t or the Federal Reserve note
clearing through the Interdistrict Settlement }"'-und. Please include transit clearing credits for the offices r::entioned on each
of the holidays with your credits for the next business day. :,Jo
c1ebits eovering shipments of Federal-Eeserve notes for account
of the Federal i:1eserve Bank of Sun Fr~:mcisco s~1ould bo included
i.n your note clearing of September 9.
Please notify branches.
Very truly yours,
Y(::)Ci'l.lc~J
F'. 'A. Nelson,
Assistant Secretary
TO THE PRESIDENTS OF' ALL FEDERAL RESERVE BAi'JKS
4?
R-868
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEM:F~NT
FOR THE PRESS
Tr1e following surnmary of general
For release in morning papers,
Wo.dnt:sn:;~.y,
~0,
Augu,qt
business and financial. conditions
in the United States, based upon
statistics for July and tb~~ first
half of I.ugust, will appear.· in
the September issue of the Federal Heserve 'Sulletin and in the
monthly reviews of the FE:dera.l
Reserve Banks.
1941
Industrial activity in July and the first half of August was
maintained at the high level reached in June.
Wholesale corr...uodity priees
advanced furt::1er· and <listribution of cotn.'llodities to concnmr:rs was ir: excGrtiona.1.1y large vol.ume.
'Jol.·1me
.JuJy.
Vlt:Jre
of ird.ustrial outpu.t showed :::.i -~-~u~ change from Jmw to
Redu.ctic-ns in ac;ti vity at automobile ':octorJ.es and s tcE:1 mills
la~·go1y
offs;c;t :i.n t,f:r> total by further 1J creases in the macriLery,
dex, which ineJJJ.dcs c..l1owarce for a consic::e.':'&b10 ducl.ino et this season,
advancod fro•:t 157 to 162 ')0r cent of
.J_!
.
Al6 ..:..
5-1939
Steel productjor1, whicr' in June had ceen a.t about 98 per cent
of capn.city, declined to 96 ocr cent
shutdovm.s at some mills.
h~ ,Ju.J:r,
In the f5.rst
again at atout 9g per cent of capacity.
declinerl J.es;J
t~1an
n~Llf
o·,,-jng in part to holiday
of August steel output. was
J'uto;ncbilc
~co•L·.ct::on
in .July
usual but in the first hqJ.f of August t"1ere wets a
It-868
--2-
;:harp .r·ech:;.ction as most plar:ts were closed to· prepare for the shift to
ne1v model production.
Activity ].n the
continued at a high ratG.
:n.onr't~rrous
metals industries
Early in August copper, pig iron, :md all
forrr:s of steel v;·ero placed tmd.er complete mandatory priority control as
it became evident tha.t actual demand for tllese metals could not 1)e fulJ.y
met.
In the vmol, cotton, and ra.yon i;;.;xtile industries and at shoe
facto:ries activit:r in July was maintained at or near the pc;ak levels of
other recent months and production of chemicals rose further.
Output
of manufactured foods increased less than seasonally from the high
level re,lchoci in JunJ.
Coal prorJuctioL dc;clirwd slightly i'1 J:1l,y but as in June y;as
unusually
large~
maintained at
fo:c t:lis time of year.
abo~t
tho
hi;~b
Crude petroleu:n production was
rate thr;.t ht..d prevailed in the previous
two months.
Value of construction cunt::.·act m:ards in July incrco..soci furthe:r to n lc.:;vol more than two-fifths higl:'"2r th:.m
to F. W. Dodge Corrora tir.n report;3.
<:
yoar age, cccording
The rise r-;:,flected chief::..y a con-
ti'1ued increase in ccmtrr.cts for public corlst:r·uctio;:l, mostly
projects.
defen~>e
Private resi::lent5.::1 build:ir.g coYJ.tracts increased somevllat,
although there is usun.lly scme decline :1t this season, while awards for
other private buildinc declined further from aarlior high levels.
Di:Jtributio:l
Sales at department stores and i11 rural areas declined 1:y
much less than the usual seasonal amount in July and variety store sales
48
r
R-863
-3increased further.
In the first ho.lf of .August department store sales
rose sharply.
Total loadings of revenue freight in July and early August
f3howed little change from the advanced level reached in June.
Grain
shipments, which had been larger than usual in !Vlay and June, increased
less tha.'1 seasonally and loadings of coal declined so:nev1hat.
C0umodi t.y prices
The general index of wholesale prices advanced about 2 per
cent further from the middle of J-ul;y to the middle of August, reflectir1g sharp increases in prices of a number cf &gricultural and industrial
corrimodities.
Federal aetion to limit :price increases was extended to
additionu.l tasic materials, including burlap, silk, rayon fabrics, rubber, and suga:-, and in tte early part of August prices of these commodities in domestic markets showed little cl1ange or were reduced.
On the
other hand, prices for paper-bourd, automobile tires, End cotton yarns
aad gray goods were advanced with Federal [tpproval; prices of textile
products not und0r Federal control continued to rise; and there were
considerable increases in prices of lumber, other building mate:r.·iuls,
and chemicals.
On Aug'J.St 16 it was
~:mnouncod
that for Soutil.srn pine
mmcimum prices somewhat below recent high levels woulrt become effective
on Septmaber 5.
_Agricul turo
Agricul tu.rnl
produc~tion
Ln. 1941 may exceocl that in any previ-
ous ;;rear, accorCtin,s to inrlicc:. tions vr1.
crop[:l ::1re unusually large.
Grops of
.t\ll~llfJt
·,rh0~t
1, ant..l
c~1rryovers
of major
anc.1 other lea.:iing foodstuffs
49
R-863
are expected to be exceptionally large, while substantial declines in production are indicated. for the major export crops -
cotto~l
and tobacco.
Although the cotton crop is estimated at 10,600,000 running bales, or
l,Soo,ooo bales loss than last season, total supplies of cotton will
L; about the same owing to a larger carryover on August 1.
Marketings
of livestock and livE:stock products, except hogs, will b0 substantially
a~Jove
last year.
Fank credit
Total loans a."1d investments at reporting banks in 101 leading cities rose further durir..g the five v:eeks ending Aut;ud 13.
Co:n-
mercial loans continued to increase substantially, while holdings of
United Stu.tes Government obl:igu.tions showed little change.
Bank ciey:>os-
its remained at a high levei.
United States Government securit:r prices
After advancing to the llighest levels on record, prices of
both taxable and partially · tax-·exempt Trt-asur;r bonds declinod somewhat
in tho first part of August.
On August 15
th.:~
p<:l:rt:ially tax-exmnpt
2-3/4 per ct:mt 1960-65 bonds yield8d ?.06 pc~r cent, co~11pared Fith the
a~-1-time
lo<.r of 2.02 per cent on .htly 29.
showed little change in the period.
Yields on Treasur-,t notes
til
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-869
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
CONFIDENTIAL
August
19, l9ll
Dear Sir:
There is attached .for your information a
copy of a memorandum (E-1259, Revised) &.nd of four
statistical tables (1, la, 2 and 2a), sumrr:arizing
the inforrnati 0n furnished
b~r
the Federal Reserve
Banks in response to the Board's
te1egr~m
of July 11,
19hl on the res~rve position of member bar~s during
the week ended June 2'), 19ltl.
This information has
not bee:-n made ptlblic by the Board.
Enclosures
?
TO TRF rRFSIDEr;TS Ol' ALL FEDFHAL RFS FRVE Bi>l•KS
(Enclosures with addr(';)ssed copies or:>ly)
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R.-870
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
August 19, 1941
Dear Sir:
The·~~e is attached a copy of the rt;>port of expenses of thz; main lines of the Federal Reserve Leasec1 \fire System for the month
of ,July 19/+l.
Please credit t~e amount payable ~!
your Bank to the Board, as s::own in the last
colur:a1 of +Jhe statement, to the F'edera.l. Reserve
Bs.nk of IUchmond in your daily statement of
credits through the Interdistrict Settlement
Fund for the: a.ccour.t of the Boe.rd o.f Governors
of the Federal Reserve System, and advise the
l'~ed.eral Reserve Bank of Richmond Uf mail the
araount and pm:pose o.f the credit.
Ver.7 truly yours,
~C"-f~-"-" G. ~1,'
,T osephine E. Lall:r, · J
Deputy Fiscal Agent.
Enclosure
TO PRESIDENTS OF ALL FEDERAL HESERVE BANKS
EXCEPT RICimmm
R-870-a
REPORT OF F.XPENSES OF MAIN LINES OF FEDFJ1AL RESLill.V.l
LEASED HIRE S'£ST.EM FOR 'iHE MONTH OF JULY 1941
Words Sent
Y.
Total
Words
Chargeable
F_.xpenses
Paid
b-.f Banks
and
Board {.2}
Pre Rata
Share of
Total Expenses (1)
Federal
Reserve
Ba.--:.k
Humber
of Words
Sent
Boston
New 1oi"k
Philadelphia
Cleveland
. 34,753
83,408
22,805
41,840
348
Chicago
St. Louis
52,163
L,.7 ,244
'72,117
51,227
348
348
399
31~8
52,511
47,592
72,516
51,575
745.92
676.04
1,030.09
732.62
393.80
30'7.41
1,461.04
249.72
MLmeapo.lis
Kansas City
Dallas
San Francisco
22,583
/4-5,130
46,721
63,462
348
344
395
349
22,931
45,474
47,116
63,811
325.73
645.96
669.28
906.43
190.19
274.30
331.21
4.31.28
585,26/.
8,313.64
11,298.97
::L,l72,642 $16,657.32
$16,657.32
Richmond
li tirJJ.tu
Board of
Governors
Total
by N.
Chargeable
to Other
F.R. Banks
349
3L,9
585,264
1,168,717
3,925
35,101 $ 1~98 .61
1,184.81
83,403
328.90
.23,154
42,189
599.29
...g:.
Payable
to
Board
of Governors
287.73 $ 210.88
887.86
296.95
83.43
245-4'7
298.34
300.95
352.12
368.63
4J0.95{a)
482.90
135.54
371.66
338.07
475.15
~13,416.28
430.92(a)
~?2,985.33
(l)
Bs-sed on cost per word ($.01420-4.949) for business handled during the >!lonth.
(2)
Payments h<; BankD are for personal services and supplies and payments ·u-.f Board
are for personal services and supplies {$1,163.48) and wire rental ($10,537.21)
less amount {~)401. 72) representing reimbursement for the cost of sending messages between the Wc:..shington office of the Leased '.Vire Syst.;m and the local
telegraph offices of the Treasury and Hecor.struction Finance Corporation. Personal services include salaries of main line operators a.Cld of clerical help
engaged in work on main line business, such as counting the number of words in
messag·JS; also overtime and supp0r money and Retirement System contributions
at tho current service rate.
(a)
Credit--reimbursable to Chicago.
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
.
R-871
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
A1:..gnst 22, 1941
Dear Sir:
There is enclo;wd fo:c
a table
e~nd
sho·Nin~;,
among
oth:.~r
Y'Jlli'
information
things, the number
aggregate of cierJofJi ts of St. ate
t'c-.Jlk~3
ad.rni tted
to mernbe:rship in the Federa]. Rese;:ve System dur1ng 1940 and the first seven wor,ths of 1S'41, to-
gether vli th n statcme?:}.t containinc
tho
b~1"!:"1.k
cxcm~pts
from
rol:::.:.t:i.ons reports submitted by th0 Fed-
eral Reserve Banks for the month of July.
Assistant
Enclosures
TO THE PHESIDl:t-:U'iS OF iJJ_, FEDEPJ.L It:E:SElWE
BANK~)
.§.'r.:.~TE
1
'RA.N1\S ADMITTED TO FEDEf'A~J RESEEVE l''cEMBEHSHIP
R--871--a.
(I)e-nosits .~·,re 1.~"- t~~z)us:-'TL.t: cf do11c.rs)
Number of n::.::c:::.ru;;.::n:..::Ie::.!.m'-b-e-l-~-c-.o--J-m_n_e_r_c_i_a-1 banks vdth sufficient
1
•
to me;_:}):crshin
C?a;::ital stock to meet the mi:rimwn strtcltory
mc:d:.•ers}-: L·_:, d•l1'i·E'-+
duc·~-~1.:_,
1940
recuirc;ments fer Federal heserve menib(Orshio·::·
+--------~------------------_Jan_!_==-~uJ__y__l:i;'rl_
___ _____
-···-------· ToU l i
Bv size of depo:-,;i ts
Number
Deposj ts
Nmaber
)eposi ts
Nt.u·;}•,;r
r <Wl !h - 10
~p.lO·;~,iiLic;r:s
On Par
Number
~~;t
I
rn.il}
ion
rrtillions
c.n1d
over
List
-----t--------r·--·---·-· ------- ----···-------· ·---------·--·
-----F-·~a'ror~~------··r·· B;::.:.;l\.s t;:,·rt~:_nitt~;d ---..--"- BC:tnks aduittecl
7::
~'
•:o
Reserve
D:Lstrid
Boston
New York
Philadelphia
Clevelr.nd
Richmond
Atlc:nta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Frr:ncisco
!
0
26
7
11
7
l
36
ll
l
l
3~,_:.~!,._\0:,.
1\1\1\
2
0
8
0
ll;J.
lt5
56,270
12, 026
T~
8,210
4
3,777
224
225
7,510
9,410
730
25
18
37,595
1,?5
21,868
.'/'+
:127
.30J
3
5,29a
484
1~15
139
86
65
62
74,lt83
12,412
10, 382
1,229
1,008
578
391
200
78
27
0
123,470
9,260
250
21
9
150
1,090
830
10
24
4
~~
~Ht-
-:HHH*-
101
':lQI
66~.
I
L~20 j
~:i~Z
5,125
~~z II
194
.
Total
I
r-u-,,dP. .
I
I
m
138
---------~--------·~--21~~;~~~,209 ~~~92
0
10 01~
.
-~--17 ' 1c~o
~
-~~-i(·~~~*"
188
87
126
108
~~
37
8
141
21
224
2?5
13
6
7
2
10
3
0
0
0
I
9
I
ar;-~ollnt of
1,079
434
78
402
174
182
__1__----------~------79
1,010
:These figures are as of Decernber 31, 1939, the lc~.t.3st date .for v{1.'1ich su.cll data l1ave been compiled.
These totals incl11de, -1.nd the distrib·utj_on by
for which deposit fipures .·;ere not available.
471.
232
52
de·!Josit.s excludc;s, 28 bo,nks v.d.th
~10
3,69?
deposits or
Excludes tv:o bc:mks or?aniz<''d to s~1ccced nationc>.l b:=tn;<s, onE: organi zc.::d to succeed a State memb.;;r c:s p?.rt of
a rehabilitation nro:-r'un, and on::; org;mized to succ~o;ed a State momber 1Nhose: charter had expired.
R-871-b
August 22, 1941
Not :t'or publication
EXCERPTS FF.OM BANK RELATIONS F..EPOR'I'S
FQJL UIE MONTH OF JULY 1941
Cape Cod, Massachusetts
Lending rates remained unchanged--few loa.11s beiflg L!lade at
less than 6 per cent. Bond accounts were inactive ••••
Several bankers called attention to increasing
their inabilit:l to employ more of' their fu..-,ds locally.
N:~W
reserv~s
and
YORK
South Central New York (six counties)
The investment portfolios of the 47 cor.1I!lercial banks in this
area e.ggregate about $1,.2,800,000 and continue to reflect an increasing
volume of United States Government issues, direct or fully guaranteed,
which nm• amount 'Go Z:29,075,000, or approximately 68 per cent of all
security investments.
In Cortland and Norwich the banks are seeking new business
in the surrounding agrieultural sections, one bank in each of these
cities having engaged the services of men experienced in agricultural
problems and financing to sot up a department to develop closer relations with farmer customers and to sock new business from that source.
Tho employees of &1dicott-Johnson Company are said to have
received two wage increases during the past yet?J.r. The next largest
industri::-.1 concern is the International Business Machines Corporation
at Endicott which has just completed and started operations in a large
addition to its plant.
The farms ill. much of this area have suffered from a long
drought lasting from early sprir.g to mid-SUilli"l.er.... This coudition
together with dissatisfaction about the price received for milk resulted in a milk strike the first week in July among the fu.rmers
identified with the Dairy Farmers Union, and it lasted about seven
days....
The Union is asking for a base price of $3.00 per hundredweight. whereas the C1lrrent price is slightly under ~~2 .00.
-2-
R-871-b
PHILADELPHIA
Central Penns-tlvania {4 counties)
In Sharnokin, which has been most seriously affected by reduced activity, the nu.mber employed in legitimate mining has been re-·
duced from 7,500 to 700 within a ton-year period. The majority of the
mon thrown out of work have resorted to bootleg Ol' illegal mining ••.•
'I'he United States Arrey is establishing a large storage depot in Shamokin
which, when in operation, will give employment to somo 1,000 persons
under civil serv:I.ce regulations at a. yearly salar:r ranging fror.1 $1,400
to ~U, 700.
The Bethlehem Steel Company, the largest employer of industrial labor, op'3rates a large plant a few miles south of Harrisburg.
This company is nngaged in thG manufacturing of steel and steel products such as propeller shafts for large vessels and railroad rails ••••
The r.umber emplo:{ed by the company is estimated to be approximately
6,500 or about twice that of a year ago.
The A.-nerican Car and Foundry Company plact at Berwick is
employing 2·0!:le 6, 000 men as compared with 3, 500 a year ago •
~he Mil'.dlotm".n Air Depot (just below Harrisburg) used by the
War Depc.rtH1ent, a;o a maintenance and supply base for the entire Atlantic
seaboard, has c civilian personnel exceeding 5,000 and it is rumored
that the force will be increased to 6,000 in the ncar future.
The Pe:-msylvania Turnpike from Harrisburg to Pittsburgh has
diV':n·ted m~ny tocu-ists to Harrisburg. 'I'his, with the increaf.:e in activities at the i..i:iddletown Air Depot and the Indiantown Gap I;!ilito.I'Y
Reservation, Psm1sylvania 1 s arnv trn.ining center for National Guardsmen and Seleetivr:. Se1·vice men, hr..s been an iElporta..."lt :factor in stimulating retail ~nd hotel business in Hru:risbu:::g. P:d.o:c to the adjournment
of the State :;-Jegisla.ture, about tho middle of July, i t was reported
that onu H.:trrisburg hotel was turniryg' av<a,y 75 to 100 prospective guests
daily.
·
CLEVZL.AliD
Ll.uru.l sectlu,'lS are comp:!.:.>cini:ng of 1c,sing farm lebor to defunse industries in th0 cities paying much high·:;r wages.
A bruik in r;.orthwcstern Ohio reported tha:t a new kind of wheat
recently introduced in that section of the State had yi8ldod over 60
bushels per acre. This compares with a Stc.te average of approximately
onE:-third that amount.
-3-
rt-371-b
RICHMOND
District of Columbia
Emplo;<,rment in the executive service of the Federal Government
in the District of Columbia at the end of May 1941 stood at 177,328 per-
sons, which was 2.6 per cent more than in April a~d 26.8 per cent above
the end of May a year ago. At the end of March 1933, executive service
employment in the District was given to 69,001 persons.
Marvland
Maryland tobacco plantin,g is 3 per cent higher than last year.
The indicated yield per acre is 850 pounds, the second highest' on record. Sales now under way are averaging around 30 cents a pound compared
with 21 cents a year ago.
Maryland is experiencing its worst crab season since 1926.
Virginia
This year:s peach crop hG.s produced the heaviest surplus in
some years in Virginia. It is more tha:1 100 per cent larger than the
crop of 1940.
Virginia's 19/tl ::'luo-cured tobacco yield is estiJnated at
65,450,000 pounds compared with 67,160,000 pounds last year. The 1941
crop at the pegged minimum price of 19.6 cents per pmmd will ;rield
Virginia flue-cured tobacco farmers ;t2,300,000 more than a year ago.
Miners in southwestern Virginia were estimated to have dravm
over $750,000 in their pay envelopes in the week ended July 26. 'l'his
is believed to be the largest single v1eekly pay roll in the history of
the Virginia coal industry.
North Carolina
Stocks of raw silk in the hands of hcsiery manufacturers
throughout the State are only sufficient for one to two weeks of operation. • • • The change-over for a :.rill from silk to rayon or cotton
would 1:1ean a great deal of trouble. The labor cost would be ver-;1 high ••••
Nylon is not available in sufficient qua..~tities to fill more than 15
per cent of the country's hosiery requirements;; and this will on1y be
augmented by an additional 10 per cent when the new nylon plant at
Martinsville, Virginia, h3gins operations sometime this fall.
The OPM has approved plans of the TVA for co:astructiun of a
$50,000,000 hydro-electric plaut in vmster:a North Carolina on the
Little Tennessee River.
-4-
R-8?1-b
Construction of a $20,000,000 gasoline pipe line from Baton
Rouge, Louisiana, to Greensboro, North Carolina, got under way during
July when several contracts amounting to $3,500,000 were awarded.
South Carolina
Growing conditions during the end of July were favorable to
cultivation in South Carolina •••• Boll weevil infestation has been
exceptionally heavy ••••
ATLANTA ..
Little bank relations work was done during July.
CHICAGO
Six State banks were ad.Jnitted to membe::-ship anci. one nonmember
State bank was authorized to commence busiaess as a national bank.
In the past few mor;.ths this Bank hc.s been di.stributing a
booklet descriptive of the c.·pe!'aLions of the ?ecL>ral Reserve BEL"1k of
Chicago similar to the one it C:istributed in 1937. In Februur,t 1941,
a letter was addressed. t.o 849 me:1b~r banks il:. t~o District, enclosing
a cop:r of the booklet and stn:tins t~1at a spcci:.':'ied m-unh::.r, from 100 to
500 ccpies dep:Jnding upon the deposits of the tanL, han beon allotted
to each bank for distribution to its customers. ~i1::: oanl< wa:J advised
that if it wished to participate in the progrDl!l ::;.nd would furnish a
list of its customers, an imprint would be plac.::d on the booklot~ showing that the bank was a member of the Federal Reserve System and the
booklets would be mailed direct from this office vd th n<~ ccst to the
bank. Addi:.im1al copieB over the original allotment were offe:rod to
the member :)anks at a cost of five cents each p.l·.:s cost of mc.iling or
tranGporta.tion charges. Tu date requests have h":on received from 6~~8
banks for 139,514 booklets ••••
Advance inqu~r~es for Trensu..-y Tax Notes indicate a probable
sale of $lOO,OOO,DOO during the month of August.
During the four weeks ending July 26, the total production
of passenger cars and trucks was 426,322 u.CJ.i
. ts. A y·ear ago the total
·was 204,993, and during tho same period of 1939 it wo.s 206,151.... The
metals industry in the District acidad approximately 370,000 employees
to its pey rolls during the year ended Ju11e 30, 191~-1, without drawing
down employm_ent in other industries.... Ttat agriculture has been contributing workers to i~ldustr-y is indicated b<J the steadH:y decreasing
ratio of supply to demand for farm labor.
60
R--871-b
-5-
F'or the first time in the histor-J of the Chicago Board. of
Trade, shippers were asked on July 18 not to send any more grain to
this market unless they had made previous arrangements for storage.
In Wisconsin cheese production increased about 13 per cent
over a year ago, and sales were up approximately /+5 per cent ••••
Farmers are hapgy over the size of their milk checks.
One competent observer reported that farm labor is commanding $4.50 a day, or about ~85,00 on a monthly basis. The farm wage
rates are, roughly, 35 per cent above a year ago.
Reports on corn crops were as follows:
Acres
Indiana
Iowa
Michigan
3 ;9377, 000
Yield ner Acre
47
52
over 9,000,000
1,511,000
38
Production
1135,039,000
474,290,000
5'7,418,000
ST. LOUIS
Agricultural Conditions
In northern Missouri the wheat crop was below no1·mal due
largely to frost damage last fall. In general, yields of other crops,
including other small grains and hey, appear to be good.
In Illinois the small grain crops already harvested have
made fair to good yields.
In Arkansas crops are generally satisfactory. The cotton
crop is not made, but there appears to be a good plant throughout most
of the State.... The corn crop appears to be good in 1:1ost sections.
The tobacco crop in Kentuclr.y has made favorablG progress.
Industry and Trade
Up to date there has been practieally no CUL'tailment of mc'..!lufacturing operations in consumers' goods .industries as a result of inability to obtain materials which are required for the defc:nse progrrnn ••••
Tht; inability to obtrdn cool cars from the railroads has resulted in a
temporary stoppage of mining operations only in a few isolated cases.
Banking Conditions
Banks generally report an increasing volume of inst.e.llment
loans from customers who are buying automobiles and other types of durable consumers' goods.
61.
-6-
R-871-b
As a result of this rapid expansion of deposits, a number of
banks are concerned about the reduction in their capital ratios and are
afraid that they will be requested by supervisory authorities to 5.ncrease their capital. As a result many of these institutions are keeping themselves in an abnormally liquid position ••••
One banker stated with some degree of satisfaction that he
could liquidate his bank within twent,y-four hours.
In mentioning that Government lending agencies were not in
competition with his bank, and did not take a..·w business awey from it,
the vice president of an Arkansas nonmember said his bank had made
1,150 loans to farmers duriJ1g l9.U, averaging around $100 each, at a
10 per cent rate of interest.
MINNEAPOLIS
East Central North Dakota
The crop conditions are almost too good to be true •••• North
Dakota will harvest one of the largest crops in over twent,y years.
The territory visited, particularly the Red River Valley,
has been known predominantly as the "bread basket of the world", and
it has lived up to its name until within the last five or six years.
Additions were being erected on elevators in almost every
town visited, while l~~ber companies are now building portable bins to
hold from 1,000 to 1,500 rn1shels of wheat, so constructed that they can
be skidded to farms by tractors. Inasmuch as farmers receive 7 cents
a bushel for farm-stored wheat, it is estimated that a bin can be fully
paid for through such storage within three years.
More tractors, combines, and other farm machinery, have been
sold this year to the farmers than for many years past.
One banker told our repre$entative definitely that if he
could retire his preferred stock without converting it into common
capital, his bunk would remain a national institution.
Western South Dru<ota
Up to the time of our visit, South Dakota had had more rainfall in 1941 than for several years. Small grain and runge conditions
were excellent.
Hundreds of small dams have been constructed in the draws
-7-
R-871-b
and low spots in the hills, and the landscape is dotted with small
watering places for cattle and sheep.
Most of the banks are paying two per cent on time mone;>r.
In many of the banks, reserves are lower than for many years. The
loan demand is ur1'1sua.lly good. Some of the banks in this region are
discounting with the Federal Reserve Bank. Others n~y do so or may
borrow from their correspondents.
There are almost no loans at a rate below 8 per cent ••••
In a few of the larger centers, competition forces the rates as low
as 6-l/2 or 7 per cent.
£~uthern
Minnesota.
In general, the crop will be better than fair, but no better than. good. This reg-lon is entirely devoted to diversified farming ....
Montana
In some parts of the State agricultural conditions are
reported to be better thEm they have been in the memory of some of
the older farmers and ranchers, and in other parts the.claim is made
that conditions are as good as they were in 1915 when bumper crops
were raised. Wool, livestock, and grain prices are good and it is
reported that considerable money will be made this year.
The copper mines at Butte are operating at capacity. The
price of copper has been fixed a.t 12 cents by the O.P.M. which it is
re!Jorted is too low to adjust the wages of the miners upward to meet
the present and expected higher cost of living. Mlncrs are now being
paid $5.00. The vmrking contract between the miners' urd.on and the
mining company vdll expire in October of tl1is ye·'3.r and the unl.on has
given notice that it expects upward adjustments in w·ages. In order
to meet this a."1d other dsing costs, the operating companies are attempting to get the price administration to increa.se the price of copper to somevmere around 14 cents.
KANSAS CITY
South Central Kansas
There was general disappointment wlth the vj'heat crop as in
many places yields were scarcely more than half what had been expected
a few weeks ea.rlier ••••
R--871-b
-8Oklahoma
In Oklahoma the selling of cotton has been/fictive follow- / a good deaJ_
ing the sharp increase in prices and this is re.lea~nng
of money throughout that State ....
Work has just starsed on the new $14,000,000 a.lrplanc
repair depot near Oklahoma City. The Army engineer :!.n charge of
the project stated that while the project was classed as only
$14,000,000, it was his opinion the ultimate expenditure would run
in the neighborhood of $25,000,000.
yYest Texas
Practically every bank v.isited reported
I}
good demand for
loans .•.•
Prospects for cotton and feed crops are very promising but
the crops are late.
Farmers in genoral are in much better financial condition
than they have been in years.
SAN F'RAi'JCT SCO
No report received.
-9-
PUBLIC
~ATIONS
ti4
R-871-b
ACTIVITIE::J OF FEDE.fh•,L HESERVE BANKS
July 1941
Federal
Reserve
Bank
l
I
Visits to Banks
Member Nonmembe:c Total
I
Boston
New York
Philadelphia
Cleveland
Ri crJnond
Atlanta
Chicago
St. Lotus
Minneapolis
Kansas City
Dallas
San Francisco
22
122
49
39
17
47
27
11
51
4
14
57
35
117
19
19
5
0
25
101
101
62
2
0
'
Meetings Attended
Number j At~.endance
1)
0
39
169
76
50
1)
0
0
2
500
86
4
39
15e
3
2
452'
0
218
1:31
21
5
-
Addresses Made
Number !Attendanc~
3
0
0
3
226
0
0
115
0
820
0
7
0
2
0
560
0
125Y
593
260
3
Lf.
1
0
11
0
l
150
25
300
472
6
5
4
0
y
1~62
1J
Not reported.
2) Not completely reported.
l
R-872
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE'SYSTEM
Statement for the Press
For release in morning newspapers
of Saturday, August 23, 1941
August 22, 1941
Under authority of the President's Executive Order, dated August
9 and issued August 11, the Board of Governors of the Federal Reserve System
has adopted Regulation W relative to instalment credit.
The regulation is
to take effect September 1, 1941, except for certain provisions relative to
administration.
of
24
It prescribes instalment credit terms applicable to a list
consumers' durable goods.
certain modernization loans.
It also contains provisions covering :
In addition, it applies to instalment cash
lending thereby covering credit used for conswn.ptive purposes, designating
as such instalment loans of $1,000 or less.
Within this figure are all but
a small percentage of such loans while those above it are primarily for
purposes related to production.
Ch~nges
in the regulation
in the list of articles included, in
the terms prescribed, and in administrative and other provisions -- may be
expected from time to time as experience with the regulation is gained and
as changing economic conditions indicate the need therefor in order to
assist in accomplishing the purposes of the Executive Order "to promote the
national defense and protect the national economy." With respect to such
changes, the Board will continue to follow its usual practice of consulting
representatives of all croups affected.
R-872
- 2 The regulation, as adopted, permits an 18 months' period for payments on all of the articles listed.
It also provides for down payments of
one-third on new and used automobiles, aircraft, power-driven boats and
motors used therein, outboard motors and motorcycles.
On other groups of
articles embraced within the regulation, minimum down payments are 20 per
cent for some groups, and
15
or 10 per cent for others, excepting real estate
modernization loans (for other than listed articles) on wl1ich no minimum
down payment is prescribed.
The principal differences between the regulation as adopted and
the tentative draft made public by the Board on August
15
are due to textual
amendments designed primarily to clarify or further implement various pro•
visions and to the addition of the following articles to the list of those
covered by the regulation:
new household furniture, pianos and electric
organs, sewing m[lChines, phonographs, water pu."'lps, attic
ventilating fans,
musical instruments composed principally of metals.
As previously stated by the Board, administration of the regulation wi?,l be decentralized so far as possiblt.: through the 12 Federal Reserve
Banks and their
24
branches, to which inquiries relative to the regulation
may be addressed, and suggestions from anyono interested in or affected by
the :regulation are invited.
When the registrr.tion forms required by the
regulation have been prepared, they will bo available to registrants ut
Federal R.eservo Banks and branches.
December 31.
Registration is required
~n
or before
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-873
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
August 22, 1941
•
Dear Sir:
It will be a.pprecia.ted i.f' you will report
expenses incurred in ca.rr;ying ont n;gvla.tions issued by
~he Board of Go,rernors under authority of section 5(b)
of the Act of October 6, 1917, as amended, and Executive Order No. 8843, dt:itud August 9, l9l.tl, on page 10
of the Functional Expense Report, Form E, in a new
function entitled, "Instalment Credit". We !'.rc now revising th(3 neces"Sa.ry pages of' Form E c.nd of the manual
of instructions governin~ its prep~; ration, and they
will bo forwardod to you when comp10ted.
Very truly yours,
')
..1
/
..
'I
~
,~
.I
;
~~~-<)__~~
~, L. Smead, Chief,
Division of Btmk Opcrntions
TO Tim PRESIDENTS OF ALL FEDERAL RSSERVE BANKS
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-874
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 23, 1941.
Dear Sir:
Information coming to my attention from the Office
of Production Management indicates that during the month of
July the Coordinators' offices at the Federal Reserve Banks
and Branches had over 500 inquiries and conversations relating
to the availability of credit. It is assumed that a substantial portion, at least, of the persons making such inquiries
were referred to the Defense Contract officer at the respective
Federal Reserve Banks and Branches.
In order that we may have available information as to
the nature of' these inquiries and the disposition made of them,
it will be appreciated if you will forward to me at your earliest convenience a statement for the month of July setting forth:
(1)
Number of inquiries received by your Bank and
each of your Branches, if any, from the Defense
Contract Service office relating to:
(a)
(b)
(c)
Advances for working capital purposes
Advances for fixed capital purposes
Other financing matters
(2)
In the case of inquiries for working capital advances, which could not be granted by the Federal
Reserve Bank, the number and amounts thereof and
the reasons for unfavorable action.
(3)
Disposition made of inquiries for advances for
purposes other than for working capital.
•.
R-874
- 2 -
It will also be appreciated if you will send me a
similar report covering inquiries received from outside sources,
i.e •• other than throur,h the Defense Contract Service office.
Will you also be good enough to send me reports similar to the above for August?
Very truly yours,
_p
~~
Ernest G. DrapL·
TO THE PRESIDEN'J:S OF ALL FEDERAL RESERVE BANKS
.
?tJ
R-875
BOARD OF GOVERNORS
OF THE
FEDERAL HESER\TE SYSTEM
Statement for the Press
For release in morning newspapers
of Monday, August 25, 1941
Statement of Chairman Eccles
on instalment credit regulation.
August 23, 1941
R-675
It is important that the public b1ow why they are asked to accept and to cooperate in making effective the President's Executive Order
calling for regulation of instalment credit.
Employment and national in-
come are rapidly rising to new high levels primarily because of the huge
defense expenditures.
This means that by and large people have more money
to spend than ever before.
This is happening at a time when more and more
of our industrial plant must be used to produce defense materials.
extent that
pl~~ts
To the
can be expanded, or can work longer hours, or that short-
ages of strategic materials or of skilled help, can be overcome, we can
produce both for defense and for civilian consumption.
.A.>1d the aim of all
policy should bo to increase production to the fullest possible extent.
But we know that there are acute shortages of certain metals.and other
strategic materials.
We know that beyond a point our plants cannot turn out
more and more goods for the public and at tho s&.rne time produce more and
more for defense.
The imperative demunds of defense must have the right of
way over civilian needs.
If there are no restraints upon the public's spending of increasing
income for articles that cannot be produced in sufficient quantity to meet
the increasing demand, the inevitable result is that the prices of these
articles will be rapidly bid up.
inflation.
The consequence is what is commonly termed
Inflation is as destructive as deflation.
the adjustments of our economic machine.
small means.
It shatters all of
It hits hardest of all those of
It would not only vastl;,r increase the costs of defense, but
it would imperil our entire economy and make increasingly difficult the adjustments of the post-war period.
R-875
- 2 The Government is striving in various way.sto combat inflation.
Taxation is a means not only of helping to pay for defense but of drawing
off buying power that would otherwise inundate our markets.
Similarly, the
Treasury has appealed to the public to invest in savings bonds and stamps,
and in tax anticipation notes, to aid in meeting the costs of defense and to
· divert money from the marketplace until such time as we can turn again to
peace time production.
These broad measures have to be backed up by others.
Thus, in the
case. of acute shortages, the Government has had to fix prices, to invoke
rationing and priorities.
Beyond all this,
how~ver,
it is evident that if we,
in effecti draw off buying power with one hand and extend credit with the
other, we have accomplished nothing in reducing the aggregate demand in the
markets.
If you pay $50 in taxes and invest $50 in savings bonds, and then
turn around and borrow $100 to spend, you have not curtailed your purchases
by a penny.
Accordingly, it is of primary importance that restraints be placed
upon the wholesale extension of credit, including instalment buying.
The
vol tmle of instalment credit has been expanding very re.pidly, as it always
does in times of rising national income.
Yet when incomes are at high
levels, that is the time when people should reduce their debts or get out of
debt.
Our people cannot spend their increased incomes and go into debt for
more and more things today without precipitating a price inflation that would
recoil ruinously upon all of us.
Insteud of an ever-expanding volume of con•
sumer credit, we need to bring about a substantial reduction in the total
R-875
"
- 3outstanding.
Civilian demand for goods must be adjusted as closely as
possible to supplies available for consumption.
•
credit is a. necessary measure to this end.
Regulation of instalment
By deferring civilian demand at
this time we can help avoid inflation, we can aid in defense, and we can
•
•.
.
store up a backlog of buying power that will help offset a
po~t-defense
slump •
The impression held by some that regulation of instalment buying
tends to restrict production or to curtail the business of dealers in
merchandise is based on misunderstru1ding.
It is bocause of defense needs,
not because of regulation of instalment credit, that civilian supply is reduced in various lines, such as automobiles.
credit regulation is to help
d~~pen
The purpose of instalment
dsmand for goods the civilian supply of
which hus alroady boen reduc9d and must be further reduced because of defense
In a word, the purpose is to dampen demand, not to diminish pro•
•
duction.
If production could keep pace with both civilian and de.fense de-
mands, we would have no price inflation troubles.
•
We would need none of the
measures o.f control a...YJ.d regulation which are being invoked with the objective of protecting the public.
The regulation issued by the Board of Governors o.f the Federal Re-
•
serve System covers a list of consQmers' durable goods.
-
I(
goods tends to cause inflationary price rises as well as to absorb materials
increasingly needed for defense.
The regulation prescribes instalment terms
that are by no means stringent or onerous.
•
Demand for these
It does not prohibit buying on
instalments, whether it be automobiles or ice boxes.
It is a supplemental
instrument to be used in conjunction with the broader, rnore basic .fiscal and
f •
•
•
R-875
- 4•
other goverl1Jncnt£..1 powers in
•
used as a•1 i:J.strument of
economic system.
. nractices.
co~,1bating
refo~n
price i:J.flation.
It is not beine;
or alteration of tte fm1damcntals of our
In effect, it recognizes what in many lines
ar~
star.dard
The intent is not to disrupt but to protect the economy •
•
The public should be fully aware, however, that the regulation is
II(
,.
subject to change from time to time as expe:-:-ience with its achninis-tration
develops, and as economic conditions require a further dampening of buying
power in order to safeguard the interests of
•
generally •
•
•
•
.
,.
.
•
•
coilSlli~ers
and the public
?4
•
R-876
.
•
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
•
Statement for the Press
•
September 4, 1941
For immediate release
In order to assist in the development of regulations relative
•
to consumer credit, the Board of Gove•nors of the Federal Reserve System
has engaged the services of Mr. Irvin Wesley, who is on leav-e of absence
from the Lincoln Loan Corporation,
Indi~~apolis,
Indiana, of which he is
executive vice president •
•
Mr. Wesley's entire business life has been spent in the field of
consu...'tler credit, and during the last fifteen years he has been in the
personal finance business.
He has been for ten years on tho Board of
Dir,sctors of the A.'tlerican Association of Personal Finance ComphlliGs Wld
•
is at present one of the six members of the
Institutions 11 for the State of Indianc...
ll
-
'
.
•
•
11
Commission for Financial
?ti
BOARD OF' GOVERNORS
Of" THE
FEDERAL RESERVE SYSTEM
•
R-877
WASHINGTON
ADDREBB OFFICIAL CORRESPONDENCE
TO THE BOARD
.
September
•
5. 1941
Dear Sir:
•
Referring to the Board's letter R-765 of
January 11, 1941, the following change should be made
in the list of nonmember banks that have in force
agreements with the Board pursue.nt to the pro vis ions
of Section 8(a) of the Securities Exchange hOt of
1934.:
Deletion
•
New York
Newburgh
•
•
The Columbus Trust Company
(Ldmitted to Federal Reserve
membership on August 29, 1941)
The last previous change in this list was
given in the Bo&rd' s letter of August 7, 1941 (R-862) .
...
v(y t~urs,
~--.- r~,~~--L. P. Bethea.,
Assistant Secretary •
.,,
•
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS .
BOARD OF GOVERNORS
CF' THE
FEDERAL RESERVE SYSTEM
R-878
WASHINGTON
ADDRESS OF'F'ICIAL CORRESPONDENCE
TO THE BOARD
•
September 5, 1941
•
Dear Sir:
The Board has been advised that the Insurance Colllmittee, appointed by the Chairman of the Presidents' Conference at the Board's request, has filed a report under date
of August 23, 1941, recor~ending a definite plan under which
insurance now carried against certain losses may be discontinued and such losses absorbed by the Federal Reserve Banks
under contrz.ctual ap.,reements entorod into with each other
and that copies of this report have been furnished to the
Presidents of all Federal Reserve Banks.
•
A comparatively sim~le plan appears to have been
worked out by tho Committee, the adoption of which, the Committee estimates, would result in average savings to the
twelve Federal Reserve Banks of at least ~250,000 per annum •.
•
In order that the report m~y bo
as practicable, the Board has asked ID6 to
dent of each :F'ederal Reserve Bank that it
view the CoiT~ittee's report in ndvQnCe of
of the Presidents' Confere!l.ce so that the
considered at that time.
acted upon as soon
~dvise the Presihopes he will rethe next meeting
plan mny be fully
Such n procedure will perruit the President of each
Bank to learn thG views of tho other Banks before submitting
the report to his Directors for f'ormnl action.
Very truly yours,
Chester Morrill,
Secrotnry.
TO THE PRESIDENTS OF ALL-
/--.
]'EDEl~L
RESERVE BANKS
?8
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
..
WASHINGTON
R-879
ADDREBB Df'f'ICIAL CDRREBPDNOENCE
TD THE BOARD
September 5, 1941
•
Dear Sir:
Subsection 6(e)(2) of Regulation W excepts from the prons10ns
of the regulation any extension of' credit to l emodel or rehab ill tate
any dw·elling or residence which ihe Defense Housing Coordinator~ or his
authorized agent, sh()ll designate as being for "defense housing" as defined by the Coordinator. 'I'he subsoct:on also states that information
regarding the procedure for obtaining such a designation would be available through any Federal Reserve Baril{ or branch.
1
•
After consultation with members of tho Board's staff, the Divof Defense Housing Coordination has prepared a memorandum of the
procedure to be followed to obtain such a designotion, together with (1)
a form (Form No. OEM- 306) of api.JliCF.ttion fer designation of remodeling
or rehabilitation as defense housing, and (2) a foiTJ. (Fo:rm No. OEM-305)
for use in submitting information :rsgs.rdine mcterial and oquip.ment entering into defense housing remodeling c.:.nd rehabilitation when a priority status is being sought. Five copies of each oJ: these d::;cuments are
enclosed with this letter and 150 additional copies are being sent under separate cover to your head office and 25 copies to ec.ch of :rour
branches ( i.f eny).
J.SlOll
•
•
Vfuen advising the Defense Housing Coordinator t:-mt the memoranand acccmpan:J7 ing forms were r:;groeable to the Board of Governors, it
was stated that the Board und the Federal Reserve :Sanks and their
branches would be glad to be of oll possible assir;tance in facilitating
public ini'ormation with respect to thr:; procedure. It is suggested,
therc;fore, thc.t you take such steps r:s e.ppear to be :lpproprj.ate to make
known to interested persons in your district that the documents are now
available and that you lo'li us know as much in advance as possible when
additional copies are needed.
dum
Very truly yours,
~·h1lH/t~f
Enclosures
Chester J:,iorrill,
Secretary.
TO THE PRESIDEN'rS OF J\LL l!'EDERAL RESER"'IT'l BANKS
•
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
•
WASHINGTON
R-880
ADDRESS OF'F'ICIAL CORRESPONDENCE
TO THE BOARD
September 6, 1941
•
Dear Sir:
•
•
•
•
This refers to the Board's telegram of tod~, cop,y attached,
requesting that you have computed, in the case of each member bank, the
percentage ratio of its demand deposits, both including and excluding
interbank deposits, on Jur.e 30, 1941 to the corresponding figures on
June 30, 1938.
A supply of forms (tables 1 and 2) for use in making two frequenqy distributions of the banks is enclosed. As indicated in the
Board's telegram, the frequen~~ distributions should be mailed or telegraphed in ti.'Ile to reach the Board's offices by Mondey morning, September 15. If the figures are telegraphed the code words and letters
provided for the purpose should be used to designate the bunks in each
group. For exarr~le, in table 1, the number of reserve city banks with
demand deposits under $10,000,000 may be wired simply as "Jarl A 15,
B 1, D .3, E 5, G 4, I 211 • Code words and letter designations for groups
in which there are no banks should, of course, be omitted.
It is probable that distributions of the dollar amount of deposits on June 30, 1941, and of the changes in deposits between June
19.38 and June 1941, corresponding to· tables 1 and 2, i.e., four additbnal tables, will also be dGsired later on; if so, you will be advised
to that effect by telegraph. Until further notice, therefore, the form
showing the information for each individual member bank should be retained at your Bank.
Very truly yours,
...
Chester Morrill,
Secretary •
Enclosures
(One cnclosure(form) sent with addressed copies only)
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
•
80
·rELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
R-880-a
Peyton- Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Fran~isco
•
Please prepare form showing following information for each
bank in your district that was a member of the Federal Reserve S,ystem
on June 30, 1941:
Name, location, ru1d reserve classification of bank
1.
Total demand deposits, June 30, 1941
2.
Interbank demand deposits, June 30, 1941
3.
Item 1 minus item 2
4-
Total demand deposits, June 30, 1938
•
5 • Interbank demand deposits, June 30, 1938
6.
Item
7.
Ratio of item 1 to item 4 {per cent)
8.
Ratio of item 3 to item 6 (per cent)
..
l,.
minus i tern 5
Item 1 above is to be entered from item 7 in call report
Schedule E, and item 2 above from items 4 and 5 (combined) in Schedule
E.
Items 4 and 5 above should be entered from call report Schedule J.
All deposit figures should be entered in thousands of dollars (disregard amounts under $500).
Ratios should be carried to one point beyond
the decimal (for example, 143.8).
Forms for distributing the banks by amoUnt of demand deposits
and Qr ratio of June 1941 deposits to June 1938 deposits are being mailed.
The
frequenqy distributions should be mailed or telegraphed in time to
81
R-880-a
-2-
reach Board's
later
~
offices~ Mond~
morning, September 15, to be followed
the individual member bank forms.
The forms for banks that were not members of the &JStem on
•
both dates (1941 and 1938) need not be completed, but dates of admission to membership should be indicated thereon.
included in the frequency distributions.
Any
Such banks cannot be
member bank which during
the 3-year period absorbed another bank whose June 1938 figures exe
not available should also be excluded, with explanatory note, unless
the absorbed bank was relatively small compared with the continuing
bank.
If the absorbed bank's figures for June 1938 are available,
thew should be combined with those of the continuing bank.
It is con-
templated that tho data requested will be compiled from records in your
•
possession and that inquiry must not be ma.de of member banks.
..
"
(Signed)
Chester Morrill
Morrill
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
"
R-881
WASHINGTON
AOOAEBS Of"I'"ICIAL COAAESPONOENCE
TO THE BOAAO
September 6, 19.41
Dear Sir:
On Sunday evening, August 31, 1941, the &nerican
Forum of the Air, presented over a coast to coast mutual
network from the Willard Hotel in Washington, D. C., discussed the subject "How Far Should Vie Curb Instalment Buying?". .Mr. Chester C. Davis, President of the Federal
Reserve Bank of St~ Louis, and Mr. Rolf Nugent, Consultant
to the Office of Price Administration, participated in the
program.
•
..
In view of the timeliness of this subject and
the responsibility of the Federal Reserve System for the
administration of its recently issued Regulation W with
respect to conswner credit, five copies of the.radio script,
which have just been received from the printer, are being
sent herewith to each Federal Reserve Bank and three copies
thereof to each branch •
L. P. Bethea,
Assistant Secretary.
Enclosures
LETTER TO THE PRESIDENTS OF ALL FEDERAL RESEHVE BANKS
AND TO THE MANAGING Dillli'CTORS OF ALL BRANCHES
(Enclosures sent with addressed copies only)
•
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
AOORESB OF"F"ICIAL CORRESPONDENCE
TO THE BCARO
..
September 16, 1941
Dear Sir:
There is enclosed for your information a
copy of the Board's Functional Expense Exhibit for
the first half of
19L~l,
which has been compiled from
the semi-annual functional expense reports (Form E)
•
..
•
received from the Federal Reserve Banks and Branches.
Additional copies are being forwarded under separate
cover.
Very truly yours,
E, L. Smead, Chief,
Division of Bank Operations.
Enclosure
TO THE: CHAIRN:EN JJJD PRESIDENTS OF ALL
FEDEPAL RESERVE BANKS
(Enclosures with addressed copies only)
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-883
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
...
September 17, 1941
•
..
Dear Sir:
On Monday, October 13, in observance of Colwnbus Day, which falls on Sunday, there will be neither
transit nor Federal Heserve note clearing and thE: books
of the Board's Interdistrict Settlement Fund will be
closed. 'ThE:; offices of the Board and the followint; Federal Reserve Banks and Branches will be open for business
as usual on that day:
Cleveland
Cincinnati
St. Louis
Little Rock
Memphis
Charlotte
Minneapolis
Nashville
Kansas City
Okh.homa City
Detroit
Please notify branches.
Very truly yours,
CX-zr~z~
~C:..
A. Nelson,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE
•
BAi~I<.S
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-884
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE SOARD
September 17, 1941
•
De£>.r Sir:
•
At the re-quEst of l;J-. William A. Day, Vice
Cheirme.n of the Presidents' Conference, I
t;.m
sending
you here1vi th u copy of the Second Report of' the Committee .
on Handling U • S. Festal
•
l~oney
Ord.,rs, in ordE-r tho.t you
mny have an opportunity to review the rEport before the
next Presidents' Conference.
..
Very truly yours,
E, L. Smead, Chief,
Division of B~nk Op~rations.
Enclosure
TO THE; PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT SAN FRANCISCO
(Enclosure ~1th addressed copies only)
•
SECOND REPORT OF THE
COI\J1JTTEE
O~J
F.ANDLING OF U. S. POSTAL !{OHEY ORDERS
TO
THE CONFERENCE OF PRESIDENTS
OF THE F'EDEFJ>.L
RESI!~HVE
September 17, 191+1
•
•
,
•
•
BANKS
8?
SE-ptember 17, 19L1l
To the Conference of Presidents:
In its report dated Jul~r lt..-11, 1940, th•: Standir.g Com;
mi ttee on Collections recommended that a co:rnni ttee be appointed by
t!H: Conferf'!nce of Presidents to disc;uss with the Post Office Depart ..
ment the possibility of the ResPrvc
Bar~ks'
handling United States
postal money crc.ers undr:r the practice existing prior to August 1, 1934.
whereby money orders for the f'irst
~
days e.ftf'r issue could be present-
ed to any postmaster for payment without fee,
•
Under the practict' exist-
ine: since the.t d&t{;, tl:o Resenr;:; Banks can not collect out .. of .. tovm money
orders at local port offices v:i thout payment of fees equal to those
charged for issuing: the orders.
This recomm.cndution was approved at a
meeting of thE: ConfErence of Presidents hold on Scptcmbf;r
Z7 .-28, l9h0,
and the Committee appointed di scusse.d thE:· mutt<:r with the Post Office
a.nd Treasury Departments on Februe,ry 11, l9hl.
The follo•Nir:g recommE-nde. ti O!"H-' c.rr; containc d
~n
the report,
dated l>~arch lL~, 19!:-1, of the: Co:rnntittee on He.ndling of U. S. Poste.l !/oncy
..
•
•
Orders:
"·"'' ·..
"The Cor:uni ttet2 RECOI:;l;E!JDS thd e.ll Fedc:rcl Reserve Banks advise their memb<-r e.nd ncnmcr.~.ber c lec,ring
b~:;.nks thr:.t !:.fter
(a date to be fixed
by the Conference of Presid(:nts) ·the Reserve B[,r.ks will
not accept for collection and credit, either a.s cash i terns
or as noncash items, any United States postal money orders
except those that are drawn on or issued by a. post office
in a. Federa.l Reserve Ba.nk or Branch city or Washington,
•
•• ~
~·-
1-,.
•
88
- 2 D.C., including thos'"' drawn on or i ssuf"d by c. post ;
office in u. city Gdjf... cor:t to o. F'cdcrr.l Reserve Be.nkf or
Brc.nch city t.hr~t ce.n be collected locally by the Rc~crve
Bank or Brar:ch without thn p~•yrr:ent of & foe. Since the
purpose of money orders is to transrni t smnll sums of
money to pu~r~Do:'s in designr~ted ph:.ces, your Cornnd. ttce bcliev:·s thr.t the orders should be collected fran; tho
desigr:cd;ed post offices by the po.yeos cli:rcctl~r or through
thdr local barks.
"The Cornmi ttce D. lEo REC011<"B1-:DS the. t ell J'ed•2rc..l P.esvrve Bc,nks send their mc!l",ber and. nonrr:.ember clec,rinc bc.nks
o. ci:rcuh.r letter o.dvi sing them of the chc.nge in prl•ctic::~,
the dt~te of issuP o.nd the cff0ctive dc..te of the circuh:. r
to be the se.me for r.ll FedPrul RcSE:·rve Bt.:.nks. A suggested
uniform circulc.r is c.ttccched. The circult:.c:r indic::~tes that
all Foden.l F~eserve Bv.nks c.ro h•kinr:; the sc.r:l!' Lotion regc,rding thr:: collection of postol Loney orders cr.d else indicc.tes rcthfT fully th•:' r<:c..sons why the· Fed~rc.l RcservB Br;nks
r,r<:; di~continuing th0 h€;ndling ·of crc>rtt:.in raonc•y orders. tt
•
Ttc v.bove-n:entior:cd T''po:rt wLs subnitted ct the mooting of
the ConfE"rercc· of Fr,·sicl.onts held or l'.e.rch
17, l9lt.l,
Aft••:r considerf..-
tion t:n d dis cussi or., th:: Cor f'ere!;c(> of Fr:·ei dc,nte
•
•
"VOTED tb~t the report on 'HandlL·:.:· of U, S. foctc,l I\:oney
Ord<:rs• b< ref~rroc.'d to "th" Fn:sider:ts for study, [~fter which
tht: FrcsL·1 '2rh:: r·.r: to s'C':nd thr:ir views to th• Cho.i:nu~r. cf
the Conference, end tl%t if S1.'Ch views c.r~' in ccruerr.c·:nt the
:rcccr:;r:cr..ckti ons cf tb:· rq,ort be rr·tc.de ·:>ffecti ve, but if
such visV"S shcv: substcnti£1 dif'fcrE'nco action Ole tb: repcrt
be b .. lcn c t +;he next Confrc:rcr.cc of .Frcsid~:·rts, !t
The ninutos of th•:' next foll ov.d.ng: r;,ceti:r:g: of th,- Conference
•
•
•
''In~:.struc:h r.s no unifoiT1. c..g:n:·('J!if.nt 1Nc:.s obtcincd by
corresr,ondenec or the report of tbc; Cor-:r:.i ttee on Ht.ndling
of U. S. PostE.l l"onEy Ordc·rs, the subj<.'ct 'NLS reviewed ir..
c,ccordunce -~i. th the resolution adopted by the ConfE'rcnce on
~~;£;~rch 17, i9Ll. Aft\r ccnsiden.ti or: it wns
- 3 VOTED thc.t the substhr..ce of th0 rr-port be t:·.ccepted &:r..d tm.t th(" subj€ct mc..ttr::t, together with
tht=:' com"..E:nts, cri ticisrns und sugg:estior>.s mo.do by
Vf'.ricus Fed('r£cl R0S!'rvc Bcnks, be rf:ferred to tho
Cor:n-;ittee for rcvi.sior. of th,-· rcpcrt c..rr preser.tc-.ti on to the next Presidf'·r.ts' Conference fer fnrther c en si dorc ti cr.• ''
In reviewing tr•.c corrcsp\rdence rr-cE'i ved frcm thr:J Pre sidc:rts
of th!": FedE'rul Reserve
th~:,t
Bt~nks
with r<'-Spcct tc· thP report, it t-.FP<'t.rs
eight of thf: Rcsr.rv<" Berks--Boston, Nr:-·v: York, Richuond, AtlLntt,,
St. Levis,
1d.nr:~·c.polis,
Kt.:.nst:.s City end Dt.llcs--t,pprcvr.· the
~:,dcpticr
of
the Oor.J:li tt~?c' s nccmr.Jc-ndE.ticns vri. thout quc.lifict.tiol", c•.l though St.
lc.r ls-tb:r, ::.nd Nnv Y::.:rk thinks th(' circu.lt::,r ct..n be in:provcd.
report but &ore rL-thfr inclined
should not be
chang~d,
~;r:
Both of
thf· vi<.W thr..t thE?
thes~
prdier:~t
Two
pre.cticr.::
Bankr., however, believe that the
practice of the Reserve Banks shovl d be uniforn: and e.re willing to go
•
alonr vd th the other Federal Reserve B!ll':'ks if' the Connni ttee' s recommend&.tions sholild be adopted.·
OrtE.
Bank--Chicago--is in sympathy w·ith the
Ccrnrni tt€'c' s recomrr:endfiti ons, but i:n view cf present punch-card ex:rc-ri.,
ntents being
und(~rtaken,
does not want to make any ch&ng:c
& 4.;
this time.
The remfiininc Btnk••Cle:vela..l'J.d•-is opposed to r,:E;.king: any che.nge in its
pr,sent
practic(•-~nd
votes against adopting the Ccmmittce' s recorn:mendaticns.
The Re·s(•rve Bt..nks thr•.t seem to hav(.J sc,mu doubt abcut the
•
c~.rnmittee'
•
s r8comr,endati::->ns appt::&.!" to feel that mcr..b€r banks ar0 bE'ing
deprived of a. s0rvice.
lNhilE~ i.t :i:s true~ th&t the br:g11~s ·w}.i~h &re ncvr
collecting postal money orders thrcugh the Fede:rb.l Reserve System would
have to ma.ke other a.rra.ncements if.. the
~
.
C~Ir'Jl'ittee'
s
recow.end~ticne
·I
were adopted,_ it is quite evident· thu t tJ:lo ~:pres~n t;. ser~i ce is being
rendered at the inconvenience of· the. b~rik's .:to v~hich 'l:ho;:; money orders
are b"':ing se!l.t by tpe R~serv€• :9anks. fc:r cc."!'iection,. · It may be the.t
fully as many bLnks an inconvenic•nced by th~ collsQ,ticn cf pcst£tl mcney
c-rders thrcugh the Fedc·ral Reserve Syst!."IT. t.s are ·.·ben<~ri tted by the sor-
Th<" cnly suggesticns wtt;,h respect to spl':lcif'i.e changes in the
Committee's :repo1t r.::le.to to
r:C"m;;er.ber clc::e.. ring be.r:fs,
practice.
•
th~;
circular letter 'lll.'hich the Committee
f<.dvi~ing
The Col'l'lr:'.ittec he.s
thE:Jm of .. the :r-roposed
consider~d
chan~:~e
these· s-ugger;tions
~:md
in
recor..mends
that tr.e attached draf't of' circular be substituted for the draft 'attachccl -to its March 1.1..:., 191;l, report.
While no other changes in the
Co:rrm1i ttce' s report of J,:arch 11-., 19!:1, are recomaencied, tbe Cowd. ttee
again wishes to point Ol)t that the: present practice followed by the
several FcdE'ral Res€rve Be.n1:s with
resp~ct
to the co1lccti or. of postal
money orders is not uniform (see st&.tement attached to J•ilrch 11.!, 1941,
report).
If the recor,me>nda.tions of the Comr')i.ttee e.re not approved by
the Conference of Fresidcnts, it is sug;;ested that the: (.;onferonce consider v•hf'thc.r the method of handline; poste.1 monoy ord.ers should be made
uniform or left to th(,
•
di~crotion
of
c~ach
Feoc:ral Ros(';'rve Ba.n.kr
91.
- 5 Should this report
Pr€':sidents 1 Conference, it is
recelv~
favorable
su1~;ested
consid~ration
by the
that before the plan is put
into effect and member and nonrnm:ber clearing banks notified ther<'of,
formal approval of the Treasury Departrrent be obtained of the tEntative
arrangements worked out between tht- Commi tree- and th£ Treas;_,ry v.ri th
r~spect
to collecting raoney orders deposited with the Fed(:'re.l Reserve
Banks by Government agencies und offich:.ls ¥nick are not drawn on or
issued by
postmast~·rs
in
Fcd~:,re.l
ResC:'rvc Bank or Brt>.nch cities,
RespectfUU.y .Ubmi tted~
J. li. fdce
J. S, Walden, Jr,
E. L. Smead, Chairman •
•
FEDF~.L
RESFRVE BANK OF
(Circul~r No. 0000)
(
- ' 191.;.1)
COLLECTIOI-· OF
U. S. POSTAL Iv:ONEY ORDERS
TO ALL J:Ei BE:R J>J;D NONt.:E1'B:tR CLEARING BANKS:
This is to advise that on and aft<-r
-------------~
, 191.:.1, this Brmk
and oth<-r Ff;derc.l Res0rve Bcnl'.s will not accept for collection frorr. merJ.bte'r
or nonmembt.r clearine btmks, '.'i thcr E•s cash or noncash i ten;s,
ordr,rs the.t c.re not drawn on or issued by a post office in
Be.nk or Branch city, cr Washington, D. C., c.nd
after
post&.l money
F'od<:·ral Res·:;rve
t::.
-------
.......
~ny
We will continue
____...,..___, 19L•l, to accept for collection as ce.sh i toas money
orders thf:.t are drc.vvn on or i sE:ued b;r post offices in the cities refcrrt::d to
above.
Consistent with the f0regoing, direct ::.ondinc r.Kmbr•r br:..nks t:.nd nonmcmbr-;r
clP~C.ring;
bc.rJ1.-:s should net send to ('.ny C'ther Fedf·ral Rcst.rve B(lnk, or
to e.ny Brunch of another FrJdf'rt:.l Reserve
B~;.cnk,
r:.r.y postc.l I.'oney orders not
or i ssucd by the rcspPcti ve post offices in the r.:i th s in v:hich such
drc.vm
011.
other
Fcd-:on~l Rss~·rvc
B!;.rks or Brenchcs r.rr:· located.
For thF: inforF.c.tion of ncrr,ber bt\rks and nonmenbf'r clectring b::,nks we
qutte belov: pe.rc..t~rc<phs 1 urd 2
···f'
sectior ll..:.29 ·.~f 'th€ Pcrtc.l Lr:.vm L·.rd Hogulc.-
ti·~ns, which secti o• is contn.ined ir" '!'i tlc VIII, Chc.ptc•r ';),
of Domestic I<:cmcy
*
Entitlf d "P~·yment
Ord~'rs 11 •
Er,ch Fedcrs.l Reserve B::.:··.1c.'·shcv1d :i.n.s•:. rt herr~' th<: nt.Les cf' citic~:, if cr.y,
c~djt::,cent tc its h(:•Hd cffi.c~· t,.Dc'l })rt.nch cities en vrhJch Ticn-:·y orders ct..n
be ccll(~ctcd lee::: lly by -the R(•scrve Bc.r,lr: cr Brcnch w:i,. thot.:t th~· pt,ymcnt
cf c.. fee,
- 2 "Under such rules and re·gulations as the Pcstrnester General
shall prescribe, postal money orders may be issued payable at
any money-order poe-t office, and on and after the de.te upon
which such rules and regulations become effective all money orders
shall be legally payable at e.ny money-order post office, although
drawn on a specified office; e.nd as compensc. ti on for th(;; extrc.
labor involved in p!'..ying a r:toney order e..t an office other than th:;~t
on which the order is drawn the Postm&ster Generc.l is authorized
to exact ~L fee of the same e,mov.nt ~:<.s that charged for the issue of
the order (act of June 16, 19~4, Public, No. 366, 73d Gong.).
"2. An original domestic money order shall be p~;:.id £.. t its
full face ve,lue if presE:nted c t tho office on which drawn or at the
office of isr1Jc atony time within the prriod of its ve.lidity,·
which is 1 yr-:ar frorn the lc.st day of' the month in which issued, For
the first 30 days c,ftf'r issue f:<ny domestic money ord<'r issued in
the continentc.l United Stc.tcs (except Alask~:<.}, e.nd drEVINn on an of•
f'ice locuted th~:rein, !Jl£-Y be p£dd for its fc.ce value, less the fee
prescribed by the lf~W quoted above, <:ct e.n office other thc.n tho.t of
issue or thc,t en which dre.lNI!., provided the office ut which pres~~rt
ed is located vlithir:. the ·~ontinent~;:.l United Str~tes (excep-t AlO.ska.)."
Prior to August 1, 19~1!, whf:'n the :revised Re~lt.-'.tiom: of' the Post
Office Department bec&.mc cffect:i. vr.·, FeQE"rf;l Reserve Bt:>..nJ.:s eould collect ull
postnl money orders
~t
their locr.l post offices without the
p~:;ymcnt
cf c. fee,
regardless of whEre such orders v:r:r€ issued cr V1hc-·re they v;eore p!:cyuble.
1!'1hen
the Post Office Dep£-rttr.ent rcvis.,:d its R('gulo.ticmf to provide a fee for c£cshing r:.._11y pastel mcnE·y ord•r when pre sEn ted
issue cr
thc~t
14 t
an office other tht:n thr.t of
on 'Nhich dravm, Federc.l Reserve Be.nks, ns o. gene:rr.l rule, begnn
sendir>f r.:cney ordE·rs not drs:wn. on cr issued by postrr.t.stc::rs in F'cderul Hes<:rve
Bank
~nd
Brt..r:ch ci tivs tc member or
pt~r
nomnemb('r ben 1.rs loc1.<ted ;;,t the points
on which the orders wer(: druvvn or c.t which :i. ssu(q £..s cc..sh items fc.r collection
o.nd rcin'ttc.:ncc.
since muny
c.
~hurge
memb~-;r
This pructice h&s not provEn to bt' cnti rely sati sfa.ctcry
£;.nd ptcr
nomner,1b~r b~.;.l"J~:s
fce:J. thut they
c~re
entitled to me,ke
fer thdr S(:rvices il". prcPVt!.ting the money r::·rdors to their
offic<:'s fer pcyment, r:nd scms
bWl~s
locr~l
hs.ve declined tc handle postf',l mcncy
post
7'"
94
3 -
orders for the Federal Reserve Banks unless they are permitted to make ·
a charge for their services.
In view of these developments and since the payees or holders
of postal money orders can collect all of them from their local post
offices, and such of them as are drawn on er iEsued by their local post
offices without the payment of prescribed fees, there is no adequate
~~ason
why the Federcl Reserve Bs.nks should continue to receive for col•
leetion any money orders, oth<':r th~..n thoS(! (specified ~n the first pt;;.ragrs.ph of this· circul£:.r) which can be cashed by the F'ederal
themselves for thdr member
or other collection
~::.nd
Banks
nonmember cleuring bsnks free of feee
ch~rges,
Prf>sident
Res~'rve
R-885
BOARD OF GOVER~ORS
OF THE
FEDERAL RESERVE SYSTEM
Statema,t for the Press
For release in morning papers,
Friday, September 19, 1941
The following summarJ of general business and financial conditions in the
United States, based upon statistics
for August and the first half of September, will appear in the October
issue of the Federal Reserve Bulletin
and in the monthly reviews of the Federal Reserve Banks.
Industrial activity increased further in
A~1st
and the first
half <>f September, and commodity prices continued to advance.
Distribu-
tion of commodities to consumers e:x:panded considerably.
Production
In August industrial output increased somewhat more than seasonally and the Board's adjusted index advanced from 160 to 161 per cent
of the 1935-39 average.
There were sharp further advances in activity
in the machinery, aircraft, shipbuilding, and railroad equipment industries.
Lumber production also increased, while furniture production,
which had been unusually large in July, showed less than the customary
seasonal rise in August.
Output of steel and nonferrous metals continued
at near-capacity rates.
In the automobile industry output of finished cars declined
sharply as plants were closed during the changeover to new model production and output in factoriHs producing bodies and parts also was reduced considerably.
In the first half of September automobile assemblies
R-885
-2-
increased as production of new models was begun but from now on, owing
to Government restriction on passenger car production, output will be
considerably below that during the previ.ous model year.
In most nondurable goods industries production in August continued around the high levels reached earlier this year.
tivity declined slightly from the record level
re~:~.ched
At cotton mills acin ,July, while at
woolen mills there w.qs some increase. Rayor. output continued at peak levels.
In th.::. silk ir.dustry opc:rations were curtailed shar;Jly, as the
Gov~
ernment re4_uisitioned, all supplies of raw silk, <..nd deliveries of silk
to mills declined from 28,000 bales in July to 2,000 in August.
Rubber
consumption also decreased, owing to a Government curtailment program.
Shoe production, which had been unusually large, increased less than seasonally in August, and output of manufactured food products and chemicals
showed seasonal increases from the high levels prevailing in June and
July.
At mines coal production in August, as in other recent months,
was unusually large for the season, and output of crude petroleum rose to
a record level of 4,000,000 barrels daily in the latter part of the month.
Iron ore shipments down the Lakes amounted to 11,500,000 tons, the largest monthly total on record.
Value of construction contract
aw:~.rds
showed a further sharp
increase in August and was about four-fifths h.rger than a year ago, according to F'. W. Dodge Corporation reports.
The rise from July was sub-
stantial for all general types of construction but was most pronounced
•
R-885
-3for publicly-financed projects.
Awards for residential building contin-
ued to increase.
Distribution
Sales of general merchandise rose sharply in August and were at
an extremely high level for this time of year.
The Board's seasonally ad-
justed index of department store sales advanced to 133 per cent of the
1923-25 average as compared with 115 in J1llY and an average of 103 in the
first half of this year.
In the early part of September department store
sales declined from the peak reached in the latter part of August.
Railroad freight-car loadings in August were nu1intained in the
large volume reached in Jl.IDe and July.
Coal shipments increased., follow-
ing some reduction in July, while loadings of grain, which had been large
since last spring, declined.
Commodity orices
Wholesale prices of most groups of commodities continued to advance from the middle of August to the middle of September.
Prices of
grains, other foodstuffs, and cotton showed large increases and there were
advances also in prices of a number of industrial commodities not covered
by
Federal price ceilings.
Fragmentary dn.ta available indicate that re-
tail prices of foods and other conunod.i ties rose further during this period.
Agriculture
The outlook for agricultural production in 1941 showed little
change during August.
Crop prospects
wer~
reduced slightly by drought
but aggregate crop production is expected to be two per cent larger than
•
9'"1
R-885
-4last year and the largest for any year except 1937.
Total marketings of
livestock and livestock products will probably be the largest on record.
Preliminary estimates of the Department of Agriculture indicate that cash
farm income, including Government payments, will be about
~310, 700,000,000,
compared with $9,120,000,000 in l9h0.
Bank credit
Commercial loans at reporting member banks in 101 cities continued to rise substantially during the four weeks ending September 10.
Bank holdings of United States G-overnment securities showed little net
change, while holdings of other securities increased somewhat at
City banks.
New
York
As a result of the expansion in loans and investments bank
deposits continued to increase.
United States Government
sec~ri t,y
Prices of Treasury bonds
ll'.D.rke"t
incr0r~"sed
in the latter part of Aut;,rust
but subsequently declined somev:-hat in the first part of September.
On
September 15, the partially tax-exempt 2-3/4 per cent 1960-65 bonds were
yielding 2.06 per cent compared with the record low y:idd of' 2.02 per
cent •. Yields on Treasury notes showed little ch<mge in the period.
BOARD OF GOVERNORS
R- 886
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OF"F"ICIAL CORREIIPONDENCE
TO THE BOARD
September 19, 1941
Dear Sir:
There have been forwarded to you today under separate cover
the indicated number of copies of the following for.ms, a copy of each
of which is attached hereto, for the use of State bank members and
their affiliates in submitting reports as of the next call date:
Number of
copies
Form F.R. 105 (Call 88, Short form), Report of condition
of State bank member.
Form F.R. 105b {Revised August 1939), Loans and advances
to affiliates and investments in and loans secured by
obligations of affiliates.
Form F.R. 105e (Call 88), Publisher's copy of report of
condition of State bank member.
Form F.R. 220 (Revised August 1935), Report of affiliate
or holding company affiliate.
Form F.R. 220a (Revised December 1938), Publisher's copy
of report of affiliate or holding company affiliate.
Form F.R. 220b (Revised February 1938), Instructions for
preparation of reports of affiliates and holding company
affiliates.
No change has been made since the last call for reports in
any of the forms listed above, with the exception of technical changes
in the captions of items 32(b) end 32(c) on the face of form F.R. 105
(Short form), which changes had previously been made in the long for.m.
----L. P. Bethea,
Assistant Secretary.
Enclosures 6
.....-.,...... ..
BOARD OF GOVERNORS
i.OU
OF' THE
FEDERAL RESERVE SYSTEM
R-887
. WASHINGTON
ADDIIIEBB OF"F"ICIAL CORRESPONDENCE
TO THE BDAIIID
September 19, 1941
Dear Sir:
There is attached a copy of the report of r:;:;~penses of the main lines of the Federal Reserve Leased Wire .System for the month
of Augt.~st 191+1.
Please credit the amount payable by
y·our Bank to th.::: Board, as shovm in the last
column of the statement, to the Federr:;.l Res~rve
Bank of Richmond in your da.ily statement of
credits through the Interdistrict Settlement
Fund for the aceount of tbe Board of Governors
of the F'edera.l Reserve Syst<:ml, ,;md advise the
Federal Reserve Bank of Richmond by rr._'lil the
amount and purpose of the credit.
Very truly yours,
~~
Fiscal Agent.
Enclosure
TO THE PHFSIDENTS OF ALL FEDERi:\.1 HESEFcVE BANKS
EXCE.f"r EUCl-lMOND
R-887-a
.tu.i
REPORT OF EXPENSES OF MAIN LINES OF FEDEfiJiL RESERVE;
LEASED WIRE SYSTEM FOR THE MONTH OF AUGUST 1941
Words Sent
Federal
Reserve
Bank
N-umber
of Words
Sent
by N.
Chargeable
to other
F.R. Banks
Boston
New York
Philadelphia
Cleveland
19,796
38,116
266
266
Richmond
Atlanta
Chicago
St. Louis
47,426
/+1, 792
71, 95l:.
46,377
266
266
304
266
Minneapolis
Kansas City
Dallas
San Francisco
19,192
45,419
41,644
60,560
266
266
281
266
23,3hl
266
8l,lL~5
Board of
Governors
Total
Y.
631,469
1,173,231
2,979
Total
Words
Chargeable
Payable
to
Board
of GovernQrs
Expenses
Paid
by Baaks
and
.Qoard (6:}
Pro Rata
Share of
Total li~penses(l)
28.,607. $ hll.93 $
l,l.68.46
81,145
288.88
20,062
552.68
38,382
312.50
$
251.33
329.38
99.43
99.66(a)
37-55
223.30
?2,258
46,643
686.75
605.62
1,040.49
671.64
412.37
276.23
1,286.11
237.96
274.38
329.39
245.62(b)
433.68
19,458
h5,6S5
Ll,925
60,826
220.19
657.85
603.70
;575.87
230.74
274.30
336.86
431.28
6~~1,469
9,092.91
11,289.?9
h7,692
L~2,058
~ ?
~2
.L'
_o8, .l.
1
49-45
383.55
266.84
444.59
1,176,210 ~:16' 936.97 $16,936.97 $2,542.16
99.66(a)
242.62(b)
$2,196.88
(1)
Based on cost per word ($.014399614) for business handled during the month.
(2)
Payments by Banks are for personal services and supplies and payments by Board
are for personal services :tnd supplies ($l,l63.h8) and wire rental ($10,510.71)
less &'Ilount ($384.4.0) representing reimbursement for the cost of sending messages between the Washington office of the Leased Wire System and the local
telegraph offices of the Treasury and Recor;struction Finance Corporation. Personal services include salaries of main line operators and of clerical help
engaged in work on main line business, such as counting the number of words in
messages; also overtime and supper money and Retirement System contributions
at the current service rate.
(a)
(b)
Credit--reimbursable to New York.
Credit--reimbursable to Chicago.
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-888
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
September 22, 1941
Dear Sir:
In the Board's letter of Septanber 2, 1941, S-296,
each Federal Reserve Bank was requested to advise the Board
as to the steps that have been taken to establish and maintain contact vnth the various State Defense Savings Bond organizations and to furnish i t wit,h a brief statement each
month of the activities of the liaison officer in connection
with the Defense Savings Bond Program.
The first replies to the above-mentioned letter
have now been received fron1 all Federal Reserve Banks, and
there is enclosect a summary thereof in order that you may be
informed as to the part other Federal Heserve Banks are tak~
ing in connection with the Defense Savings Bond Progrc-un.
It is our present intentior. to forward to you regularly surnrua.ries of the montl-'J.y reports of the Federal Reserve Bank liaison officers as long as it is felt that they
may be of interest or assistance in connection v;ith the Defense Savings Bond Program.
~;;,·~
~-(~.-~
L. P. Bethea,
Secretary.
Assistani~
Enclosure
TO THE PRESIDENTS OF ALL FEDF.R.Al.. RESEHVE BANKS
COPY TO LIAISON OFFICEP..S.
R-888-a
l.Od
SU~~~ OF AUGUST 1941 REPORTS OF ACTIVITIES
OF FEDERAL RESERVE LIAISON OFFIGERS IN CONNECTION WITH
. DEFENSE SAVUmS BOND PROGRAM
Boston
Telephone contact has been made with the State Administrator for
Massachusetts, and some publicity was arra.."lged for September 9, on the occasion of Secretary Morgenthau's visit to Boston. The Bank's liaison officer has offered his services to the Massachusetts Administrator in any w~
that he can be of help.
Some correspondence has been had with the State AWninistrators in
Con.YJ.ecticut, Rhode Island, Verm-:>nt, and r,1aine. No Administrator for New
Hampshire has as yet been appointed.
New York
The liaison officer is taking an active part in the organization of
the New York State Committee, his assistru.1ce having been solicited 'biJ the
State Chairman.
Letters have been written to the State Chairmen of New Jersey and
Connecticut, offering the Reserve Bank's cooperation nnd expressing its willingness to help in ~~ w~ it can. W.~ile friendly and appreciative replies
have been received, there has been no further development.
The Bank's Research Department has been assisting the New York State
staff in selecting and preparing infor.nmtion which is desired in formulating
plans for the sale of Defense bonds and stamps.
The Bank Relations Department has alsr) been of assistance to the
State organizations in working towards 100 per cent qualification of eligible
banks as issuing agents.
Philadelphia
The work of the liaison officer has been largely confined so far to
dealing with emplqyers desiring information regarding pay roll deduction plans,
businessmen who are interested in giving savings stamps as premiums, and individuals who are contemplating making regular purchasas for the purpose of
building up a retirement fund.
Some confusion has resulted from the fact that organizations have
not been set up in Penns,ylvaniu and Delaware, and emplqyers who are instituting p~ roll deduction plans find it difficult to get in touch with the proper representatives of' the Defense Savings Staff in W~shington. In come cases,
however, the liaison officer has been able to suggest pay roll deduction
104
-2-
R-888-a
plans for consideration and has assisted in editing the prelimina!"J announcer::ents. In addition he was in close touch with six large companies no7l operating pay roll deduction plans a.l'ld gave them help in getting organized. He
was also of assistance in expediting the delivery of advertising material to
the retail trade in order that merchants might have pro:r:;er displays for their
s:~.v:ings stamp ca.rnpaign scheduled for the week September 15-20.
One of Philadelphia's leading newspapers has inaugurated a plan
whoreb<J its neY:sboys aro to sell Defense Savings Stamps direct to their customers. Every newsboy is to carry a supply of albums and ten-cent Defense
Savings Stamps.
Cleveland
Ohio. Recently the State Administrator opened an office in Cleveland and tho liaison officer has discussed •'ith him the progress of the campaign in Ohic-. The Ohio Bunkers Association has been ver:; active in urging
banks to qualify as issuing agc·nts a."ld the liaison CJfficer sends each week to
the Secretary of the Associn.tion tb~ na.mes of queclified agents that have been
added to the list. The Superintendent of Banks nus also been interested in
this matter, and inquiries received from banks for information with respect
to qualifying as issuing agents indicate that they have been urged to take
this action by the Superintendent of Banks.
West Virginia. Letters hav-e been forwarded to the State officials
offering the Reserve Bank's assistance. The names of banks that have qualified as issuing agents are being furnished to the Cow~issioner of Banking in
response to his request.
Pennsylvania and Kentucky. No appointmen+.s have as yet been made
in these States, but it is understood that chairmen and administrators will
soon be appointed.
Ricr.u'Ilond
The State organization of Defense Savings Staff has been completed
in only two States in the District, North Carolina and South Carolina, in
each of which a State Chairman, State Administrator, and Deputy State Administrator has been appointed. In the District of Colwnbia, Virginia, and West
Virginia, State Chairmen have been app)intod, but no appointments have been
made of State Administrators and Deputy State Administrators. No appointments
have been made as yet for Maryland.
On July 30, Messrs. B. M.. Edw:::.rds and G. F. ~Ulton of the Treasury
Department held a. mooting in Ricb..mond in the office of the Secretary of the
Virginia Bankers Association for the purpose of selectine names of persons
who might be invited to serve e..s members of the State organization in Virginia.
The Bank's liaison officer attended the meeting and took part in the deliberations.
100
-3-
R-888-a
Richmond (Cont'd)
Tho Managing Director of the Baltimore Branch arranged for 15 bank- _
ers and other prominent citizel)S from vari·:Ju.s section;:; of ~~itll"'Jl~nd to meet
with Messrs. Edwards a.'l'ld Milton at the Baltimore Branch building on August
26, to discuss a State organization. The meeting was fully attended a~d the
results of the conference were gratif,ying.
As soon us the Treas1..li'y' authorized the Reserve Bank to releasG the
names of qualified issuing agents, a list v:as prepared as of the close of
business AuguEt 2, 1941, and weekly supplement8 have been iss1.led since 'that
time.
The liaison officer h&s communicated v!ith each State Chairman appointed in the District, offering tho fullest cooporation and assist~ce of
the Bank and inviting him to call whenever ~e or members of his staff m~
have need for its services. The State Chairmen have been sent copies of the
list of qualified issuing agents in thci~ respective Stutes, and supplements
are being sent to them as issued. The list and supplemc~nts hnve also been
sent to the Secrctar.r of each State Bankers Aasociation in the District as
well as to State Banking Commissioners and others entitled to have them.
Atlanta
The liaison officer made seven speeches during July and August to
civic clubs, b~~kers meetings and trade associations, to a total audience of
approximate~ 600.
The taJ~s dealt in general with the problem of Defense
financing, emphasizing in particular the necessity for public support of the
Defense Savings Bond Program. The Managing Director of the Nashville Branch
also addressed a group of about 150 members of the American Legion during August on "Why We Should Buy Defense Savings Bonds".
The Reserve Bank has cooperated with the Georgia Administrator in
special publicity for the promotion of bond sales, and the officer in charge
of the Fiscal Agency Department has been photographed in the local press together with the Ad1ainistrator as. selling savings bonds to various fraternal
organizations.
A considerable volume of telephone inquiries from the general public have been answered by the liaison officer c.nd other officers of the Bank,
regarding various questions relating to Defanse Savings Bonds. F..xplanations
have been made to several business concerns rogarding salary deduction plans.
Lists of qualified agents have been furnished to Bankers Associations and
Building and Loan Associations that arc engaged in urging possible selling
agents to qualify.
The Reserve Bank, by telephone calls, personal visits and letters,
has been in touch with tho various State Administrators in the District o.nd
has volunteered its servj_ces, but no attempt has been made to press such
J.Ub
-4-
R-888-n.
Atlanta (Cont 1 d)
services on the Administrators, leaving to them the determination of when and
how the Reserve Bank can be helpf\ll. The Reserve Bank has been cordially received in every instnnce.
Chicngo
The liaison officer is sending a letter to each State Administrator
in the District, with the exception of Illinois and Iowa, extending his cooperation in connection with the sale of Defense Savings Bonds. The Illinois
A~~ini.stratcr has his office in the Reserve Bank building and is seen daily,
while the Iowa Administrator has not as yet been appointed.
A number of conferences have been hc~d with the Illinois Administrator, Rnd the Reserve Bank has supplied him with material,and literature to
help hiu1 in his vwrk, but t.he stc.tus in the case of the other Stutes is that
of just ngetting acqunintedu.
St. Louis
The Reserve Bn.nk has written to the State Chairmen and State Administrators, offering its cooperation and asking whether there is anything that
can be done "bJ the officer::: and personnel of the Head OfficE:: or its Branches
to assist in Defense Savings Bond sal·~S. The liaison officer intends to visit the offices of the Def8nse Savings Sb.f'f of each State in the District in
order to pror;1ote closer relations, obt:1in firsthand information as to the work
being done, and to coordinate the efforts.
Lists of qualified issuing agents have been furnished to bankers'
associations, building and loan associatLms, and others ~ntorested. Material has been furnished to an officer of a l,;cal bunk who was asked to address
an organization on the subject of Defense Savings Bends. A request has been
received f()r someone to address a convention in St. Louis on the same subject,
and a speaker will be supplied. A number of firms ha-..re inquired about the
pay roll deduction plan, and informatiun in regard thereto has been furnished.
A pay roll deduction plan has been instituted for the Reserve Bank's employees ..
The American Bankers Association's Defense Savings poster has been
reproduced on the cover of the Bank 1 s "I,lonthly Review of Conditions", and consideration is being given to including in the "Monthly Rwhw 11 periodic information relative to progress in Defense Savings Bond sales, as well as reproducing additional postars on the cover. The err.ployees 1 mGnthly publication,
"Four-Fuur News", has been sprinkled with reminders to buy Defense Bonds.
The weekly "Field Organization Ncv;s Letter", issued by Defonoe Savings Staff, has proved very interesting and helpful. These letters are being
studied with a view to compiling plans that can be utili:zed by various organizations.
-5-
R-888-a
Minneapolis
The Bank's liaison officer cm:tacted the Chief national Banl~ Examiner and the superintendents of banks in all States in the District, except
Montana, and prevailed upon them to issue letters urging all bmks lUlder
their supervision to qualify as issuing agents. Ever;y officer of th.;; R0sc;;rve
Bank lent his support in such oases as banks offered objections ann the results were gratifying.
A dafinite method of proc8dure has been established to interest emplcycrs and employees in a salary deduction plan for the purchase of Defense
Savings Bonds, as follows:
The liaison officer prevailed upon the Life Undorwritors 1 Association to appoint a pormancnt committGo to handle tho solicitation of employers and to follow each case to its conclusion. This committee picked 50
general agents, managers, Qnd top-flight producers who were chosen because of
their long elCporience in contncti.rlg the ei,,ploye::· cb.ss, their perfection in
selling, and their trained persistence in accomplishment. The group ·:ms invited to a lmwheon at the R::s0rve Bank o.nd was addressed by the Reserve
Bunk's President, who emphasized the Trc::.:.1.sur:r' s edict that there should be no
high pressure salesr,mnship. The he::1d uf the Minnen.poli:;; Comrni ttec also spoke
and the Chairman cf the life insurance agi:mts 1 committee presented the dete:ils
of the plan.
1.
2.. The Reserve Bank is holding a s..::ries of luncheons to which are invited the heads of all conce:ms employing a sufficient number of employees to
make the salary deduction plan worthwhile. The practical, economic and patriotic backgro~~d is explained and the salarJ deduction plan laid before them.
Each emplO'Jer is requested to sign a card designating the man in his organization to whom the salary deduction plan may be presented in detail.
3. The Hcserve Bank agrees to prepare letters on firm letterheads for
the signature of the president of each compa.11y, directing the attention of emplO'Jees t::> the desirability of the bonds. The na.i'TlO o:~ each employee is to be
typed on a pay roll deduction order card.
The Press indicates full support of the salary deduction plrm and
ho.s been present at the preliminary luncheons. While the pla..~ is entirely experimental, if the <:mthusiasm n.ncl. cooperation to date is any indication of the
outcome, it is believed it will have mr.rke<l ~:uccess. If successful in ~\Unne
apolis, it may be established in other largo cities in the District.
Kansas City
Contact has been established with Defense Savings Bor:d organizations
in Colorado, Kansas, Misi3ouri, ·New Mexico ::md Oklahom~:., and they havo been advisvd of the Reserve Bank's deoire and vvillingness to cooperato with them in
1.08
-6Kansas City (Cont 1 d)
connection with the Defense Savings Bond P:::ogra.."'l. No advice of the appointment of State Administrators for Nebraska or Wyoming has been received.
The Bank's lir.ison officer has been working closely with the local
Defense Savings Bond Committee and with similar co1mnittees in Colorado and
Kansas, and information, supplies and assistance has been furnished as requested. Lists of qualified issuing agents have been furnis!.ed weekly to
bankers 1 associations and to others interested. State Ba.."lkers 1 Associations
ru1d the State Bank Commissioners are cooperating active~ and it is hoped
that a more satisfactory showing of State Banks qualified as issuing ag~nts
may be reported in the near future.
Dallas
Irnmcdiately following the appointment of the Texas State Administrator the Reserve Bank's President contacteu him and offered the services of
the Bank in carrying on his work. Subsequently, the President attended a meeting of the Dalla<> Clearing House Association for the purpose of discussing
the manner in which the Dallas banks :;w. y participate in the sales program a..."ld
be of assistance to the State Administrator.
The Bank's liaison officer hns contacted the State Administrators
in .all States of the District, except Louisiana, where no appointment has been
made. The liaison officer hr;.s v.lso c,::mt~ccted :-:m officer of a Dallas Bank who
is representing the American Bankers' Association in its efforts to promote
Defense Savings bond sales in Texab.
W~b.ile the Reserve Bank hc.s tc::1dered its full cooperation to the
State Administrators and to the A.B.A. representative} it he.s not yet been
called upon to render a...TJy service or t0 P'-~rticipate n.ctively in the Sf'..les program.
San li'ro.nciscc-
Tho liaison ,;fficer is now enr;'lgcd in compiling the roster of personnel of the various organizations estublished in the District. It is the
intention to maintain charts of each State's organization and personnel of all
collt'Ilittces. Inquiry is being made through tha proper chnr. m;;ls regarding the
professional and business antecedents of appointees, as it is believed that
·the importa.."lce personu.lities play in activities of wide scope make it very desirable to be aco:uuinted with those participating in leadership.
No official notification has boon received <jf appointments of State
Chairmen, Stnte Administrators, or Deputy State Administrators for California
or Uta..~.
l.U::J
BOARD OF GOVERNORS
CF" THE
R-8{)9
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS DF"F"ICIAL CORRESPONDENCE
TD THE BOARD
September "-), 19./.el
Den.r Sir:
Our ar,tent:ion has be·:m cal:Led to severaL
errors in the
of I'ed\cra_l. F:.0Serve Bank
accdn::SS0S
branches shown on tb'3 next to 1<· st pe.ge: of hegula-
tion W.
wr~
th;~
ha:ve' th:.:;r;:;forc,
·~a.refi.ll~~y
cheekud all
addrcsse:•s and mimeographed the: col'rectod list.
Should :rou
Six coph=s of this list ar,;, encloDed.
hc.ve occauion to r'-'prio.t R:)gulat:ion v·; or to ust; the
.list in any other forra, it i.s highly
this
~evised
d~)sirabld
list be used.
j..J.
.P. IJeth.ea,
Af::st~~tant S8cretctr~,y··.
Enclosurt~S
6
['() 'rHE PEI:SJ.DEIJTS OF ALL
f1~DElU'.L l\ESEH.V~~
BAPKS
thut
ADDRZSSES OF FEDERAL RZSEF:.VJ.; B.Al-4'KS
M1) BRA..~CHES
HEAD OFFICES
Boston
!lfew York
Philadelphia
Cleveland
Fichmond
Atlanta
Chicago
St. Louis
lJinneapolis
Kansas City
Dallas
San Francisco
30 Pearl Street, Boston, Massachusetts
33 Liberty street, New York, New York
925 Chestnut Street, Philadelphia, Pennsylvania
East 6th Street and Superior Avenue, Cleveland, Ohio
9th and Franklin Streets, Iiichmond, Virginia
104 Marietta Street, Atl~~ta, G3orgia
230 South La.Sall·;; Stro':-;t, Chicago, Illinois
4ll Locust Street, St. Louis, Missouri
73 South Fifth Stre..;t, Minneapolis, Min1'1esota.
lOth Street and Grand Avenue, Kansas City, Missouri
v1ood and Akard street a, Dallas' TeYJlS
Sacramanto and Sansomo Streets, San Francisco, Cslirornia
BRA!llCHES
Buffalo
Cincinnati
Pittsburgh
Baltimore
Charlotte
Birmingham
Jacksonville
Nashville
NeVT Orleans
D~troit
Little Rock
Louisville
Memphis
Helena
Denver
Oklahoma City
Omaha
El Paso
Houston
San Antonio
Los Angeles
Portl.:!lld
Salt Lakt:: City
Sea.tt,l;;:
270-276 U:.1in Strr:ot, .i3uf.ft\lo, Hew York
4th an(l Race Strc.:t:ts, Cincinnati, Ohio
Grant Stro~t and Ogle Way, Pittsburgh, Ponnsylvani:l.
Ct:l.lvert o.nd Lt.xington Street~:~, Ba.l·timore, Muryl:md
First National Bank Building, Che.rlcttt-, North Carolina
18th Street and 5th Avenue, North, BirminghE>.m, f~11bama
Church and Hogan Str€sts, Jacksonv~~, Florida
228 Third Avenue, r~orth, tlashvlllo, Tennessee
Caronde1ot and Commcn Strc.ets, ·Ner; Orlea.."ls, L0uisi:ana.
160 Fort Street, H:~st., Detroit, Mi.chigan
121 West 3rd Str~ot, Little. Rock, Arkansas
5th and Markvt StrGE!i:.s, Louisville, Kt.ntucky
3rd e.nd .Jcfff.;rson Str-:ets, l4tt"::mphis, 'fon.'iessee
Park Av~nue arJd I.awrcuce Street, Hi;flen:l, ::..Lontana
· 17th and Arapahoe, D~;tV3r, Ce:1ora.d·:>
226 w.::st Third StrctJt, Oklo.hcDUl. City, Okle.holl'.a
1701-5 Dodge Stroot, Omur.a, Nebraska
351 Myrt.lc Avenue, El Paso, Tc;r..as
1301 Tti:xa.s Av~nua, Houeton, Texc>.s
NavarrrJ ::nd VUlita Streets, San Ant0nio, T;;.xao
409 Wof!t Olympic Bc·uluvard, Los Angole;s ·' · Calif:)mi "!.
6th and Oc.k Strt:ots, Portland, Oregon
70 Ea.st Sc.uth Tcmplt. Street, Salt Lak3 City, Utah
Second Avenue :u:1d Spx-ing Strc:et, Scat.t1..:., W:::.shington
R-890
:1i.i
BOARD OF GOVERNORS
01<, THE
FEDERAL RESERVE SYSTEM
Statement for the Press
For release in morning newspapers of
Wednesday, September 24, 19L~l.
September 23, 1941.
As a. further step in the Government's program for combating inflation, the Board of Governors of the Federal Reserve System, after consultation with the Secretary of the Treasury, has today increased reserve
requirements for member banks to the present statutory limit, effective
November 1.
This action, unanimously agreed upon, increases reserve re-
quirements by about one-seventh.
The requirements beginning on that date will be:
for demand
deposits, 26 per cent at central reserve city banks, 20 per cent at reserve city banks, and 14 per cent at country banks; for time deposits, 6
per cent at all classes of member banks.
This action will result in a re-
duction of excess reserves from about $5.2 billion to about $4 billion for
member banks taken as a whole.
At central reserve city banks excess re-
serves will be reduced approximately from $2,400,000,000 to $1,700,000,000;
at reserve city banks, from $1,850,000,000 to $1,500,000,000, and at country
banks from nearly $1,000,000,000 to $800,000,000.
The action will leave the banks as a whole with ample funds to
meet all bank credit needs of the defense program and all l.egitimate requirements of their customers.
A survey made recently by the Board showed
that a. large majority of the member banks wil.l be able to meet the increased requirements out of existing excass reserves and all but a few of
R-D90
- 2 -
the remainder by drawing upon a portion of their deposits with city correspondents.
The Board determined that penalties for deficient reserves prior
to December 1, 1941 shall be based upon reserve requirements in effect
October 31, 1941.
The following table compares the new requirements with present requirements which have been in effect since April 16, 1938.
Member Bank Reserve Requirements
(Per cent of daposits)
Classes of deposits
and banks
On net demand deposits:
.Central reserve city banks •••••••••
Reserve city banks •••••••••••••••••
11 Country 11 b.ar...ks ••••••••••••••••••••
On time deposits:
All member b~~ks
...................
Present
: requirements
22
3ftJ.
17 l/2
12
5
Uew
requirements
26
20
14
6
t.1.3
R-891
STATElVJENT FOR THE P::ESS
For release in morning newspapers of
Wednec.:day, September 24, 1941.
In
colli~ection
September 23, 1941.
with the action taken today by the Board of Governors
of the Federal Reserve System. to incr:.;ase reserve requirements, the Secretary
of the Treasury and the Chairman of the Board issued the follmving statement
in which the Board of Governors concurs:
"The Treas'J.ry and the Board of Gov0rnors will continue to watch
the economic situation and to cooperat,:- with other agencies of the Government in their efforts, through priorities, allocations, price r&gulation,
and otherwise, to fight inflation.
Reco:nmendati.ons on the question of what
additional powers, if any, over bank r.;s0rves tne Board should have during
the present emergency and what form these powers should· take will be made
whenever the Treasury and the Board, aftor further consultation, determine
that such action is necessary to help in combating inflationary developments."
:1.1..4
R-892
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
AOORE&S OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
September 26, 1941
Dear Sir:
In accordance v;i th the practice followed in recE:nt years, a.
supply of form F'.R. !;.56, revi~ed Septem.ber 19hl (copy enclosed), is
being sent you under separate covc:r for use in connection with the
prBpa.ra.tion of mer4ber bank operating re.tios for 191.;1. The printing of
this work sheet was del!:.yGd for a time pending consideration of suggested revisions of tho earnings e.nd dividends report for:rr,. The only
revision that has been decided upon is tho addition of a column in
which tota.l-yoa.r fit;:ures are to be rEported. This chango will reduce
the time rE:suired to conpile the work sheets.
It is requested that, upon completion of the operating ratio
tabulations usually rna.do at your Ba.r1k, these work shE·ets be sent to the
Board. As in past years the data will be t.rans~'rrred to punched c&rds,
which in turn will be used in making: tabvla:'Q.or,s for publication in
th'' BullE: tin. !lrcd for other purposes. lr: ord~r tha. t e.ny nan;ora.ndum
ratios used this J'ear mE..y be computed accurately without addi tiona.l
work, particulc~r attcntio:r. should bE; paid to the distir.ctiorc between
very snw.ll amounts or ptercente.ges tend absolute z("ro items (see instructions or: rever Sf' side of thE" fcrm).
To £.void the inconvcni<:nce of bdng without the in forma ti or:
shoi'll1 on the work sho?::ts during the period thf; t it is being recorded
on punch€d cards herE·, you may wr..:nt to consider the possibility of
havil".£ the data reproduced on Recorda.k fi11!1. Such reproduction was
employed at the Bo&rd' s offices this r'r.r f...s c. merms of kH'ping re£:.dily
ar:.d perme.ncntly available the ir. forma ti en shc·v.ln on the opE: rt:.. ting re tic
forrr,s for 19!,0, f:..nd the process v.'!?.s found to beth st:;_tisfactcry and
inexpensiVf·. If your B~:~nk duplict.t~s these forns r:e:xt year by the
Recordak precess, you may net care to have th"' crl.ginc.l v•ork sheets
returned tc you; E-lse, thf: Banks th&t have heretofore prep~:red duplicc~te
forms mt:cnuRlly for th0 Bo0.rd1 s use mcy nc lc;ngc:r :wed to. de this c.r.d
mr..y reguirF fewer blunk fcrmc th8.n wer-s urcd in the past. Conseqt:E:ntly,
2 it 111rill be appreciated if you vlill advise whether or not you will want
the work 8heets returnE·d and how nany blank forms (if any), in addition
to the suppl~r now being sent to you, v:ill be needed.
Very trvly yours,
L. F. Bethea,
Assistant Secretary.
Encl osvrc-
TO THE PRESIDENTS Cf ALL FEDEEAL PESEFVF BiJ·'KS
1J..ti
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-893
WASHINGTON
AOOAEBS OFFICIAL COAAEIIPONOENCE
TO THE I!JOAAO
September 26, 1941
Dear Sir:
There is enclosed for your information
a table showing, among other things, the number
and aggregate deposits of State banks admitted to
membership in the Federal Reserve B,ystem during
1940 and the first eight months of 1941, together
with a statement containing excerpts from the bank
relations reports submitted b.Y the Federal Reserve
Banks for the month of August.
Very
tru~
yours,
L. P, Bethea,
Assistant Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
STATE BANKS ADMITTED TO FEDERAL
I
I
I
I
I
Federal
Reserve
District
I
1
31
8
1,730
75,880
8,920
0
8
4
Cleveland
Richmond
Atlanta
11
9
1
7,510
10,280
730
25
18
3
s..,. LOU1S
39
12
124,180
9,540
250
62
21
9
10
2
640
1,960
830
123
242,450
-~'""*** 188
I Minneapolis
I
I
Kansas City
Dallas
San Francisco
Total
-r.-
'**
***
~~~
1
2
6~*
MEUBrutSHIP
R-893-a
(Deposits are in thousands of dollars)
I
Number of nonm.e.mber com:nercial banks with sufficient
Banks admitted
capital stock to meet the minimum statutory
to membership
requirflments for Federal Reserve membership*
during 19/+0
Total
By s1ze of deposits
-~ Number
On Par
Under ~1
$1 - 10 $10 millions
Number
Deposits
Number
71-*
List
and over
millions
million
Boston
New York
Philadelphia
IC~icago.
!
Banks admitted
to
membership during
Jan. - August 1941
Number
Deposits
P~~K~VE
2L~
4
I!
I
I
I
I
II
I
0
12,026
3,777
I
I
141
224
225
45
76
101
87
126
108
37,595
21,868
5,298
475
394
484
327
301
415
139
86
65
74,483
12,412
10,382
1,219
664
420
1,008
578
391
487
I
I
I
14,197
21,154
5,125
194
459
253
138
218,317
5,209
4,092
282
I
I
I
I
I
I
141
224
225
8
21
13
6,..,
I
,..,
4
I
474
232
52
200
78
27
10
3
0
1,079
434
78
28
29
37
0
0
9
402
174
182
1,010
79
3,697
These fi.fUres are as of December 31, 1939, the latest date for which such data have been compiled.
These totals include, and the distribution by ain.ount of deposits excludes, 28 banks with no deposits or
for which deposit figures were not available.
Includes one newly organj_zed bank ·with no deposits.
Excludes two banks organized to succeed national banks, one org~nized to succeed ~ State member as part
of <'t rehabilit::J.tj_on program, and one organized to succeed .!1 State member whose ch.!lrtcr had expired.
118
H.-893-b
September 26, 1941
Not for Publication
EXCEP..PTS FROM BANK RELATIONS REPORTS
I'OR THE MONTH 01" AUGUST 1941
BOSTON
Visits were 1:1ade to 28 ba.'1ks and two branches located in
small agricultural co~nunities in western and central Maine ••• The
only complaint heard at an,y bank was that of inability to lend more
fund.;; locally.
Nt.:n YORK
Three small banks in Chautauqua County (southwestern corner
of New York State) have deposited a total of a~)proximatel.y $500,000
on time certificates of deoosit with banks in various sections of the
cotmtr./, on which interest' of fron1 1 to 2-1/2 per cent is received.
These funds are placed only in insured banks and the individual deposits do not exceed $5,000. One banker mentions that he is allowing
these deposits to run off as they mature.due to the criticism of the
supervisor.y authorities, but the other bankers remark that they can
see no basis for such criticism and will continue this practice.
Oil pric-es recently advanced 23 cents a barrel to $2.98, the
fifth increase so far this year, and the highest price at which oil
has sold since April 30, 1930, when it was $3 a barrel. These increases in price are said to be necessary in order to spur new development work and increase the production of crude oil to help bolster the
East Coast's dwindling petroleum supply. However, effective August 23,
Price Administrator Leon Henderson issued an order imposing a schedule
of ceiling prices on Pcrmsylvania crude oils, which sst a limit of
$2.75 a barrel on the oil produced in this area, thus cancelling this
23 cents increase.
PHILADEJ:..PHIA
In recent years many communities in the Philadelr)hia suburban area have experienced an unusual growth in population as improved
transportation facilities have encouraged new residents to locate here.
Because of excellent water transportation facilities, many large industrial organizations have located tn the southern part of the county
which has as its boundary the Delaware River.
Seven new ship ways are under construction at the yards of
the Sun Shipbuilding and Dry Dock Company at Chester and, while the
R-893-o
-2-
number of vwrkers emplo,yed by this company has ·oeen increased from
5,UVJ to more than 9,000 within tf;e past year, it is estimated that
an additional 7,000 men v.:iLJ. be given eE~ployment by Oc·:~ober lst of
this year when the ex_t.:ansion program is expected to be completed.
CLEVELAND
Comment that the temts of Reg·..._lation W are less stringm:-L
thrm anticipated is almost universaL Displaj' adve:.·tisir.g issued by
substr:::.ntial instalrnent houses frequ,.::ntl::r refers 'UJ the tsrras nf the
regulation c.;.s :rmoderate and sound". Ti1e principal merchants e<.ppear
to welcome the regulation .;;ince it "tenrls to bring the gyp into l1n~n.
The head of a retnil merchants org<miza+Jion of S!.J.bstar.tia.L size st':ttes
that the regulation does not reach one cl.'lSS of ins 1.:,alment. seller
who-=:e
ac+l-"l.tl··"'S' "'ho11'd
be re.a·,,la+f·•d--+·•,c,
J"c.·•reler
'-"
t.A....L
l.lV ·'~~·~81··--,=-·r·J·,.._.v
..• •
~J.i,
1 .J
V
;
....
~ ..J.~
I
_..~\.·• .1~'
\J
·\
,...
.L,l.,ti:)I.,J..-....l..J.J.,....,..
U
•
Not oLe bank in ten apparently has made any effort to keep
up with the flood cf material wr.ich has been sent to them, dealirw
with the Dubject o~· foreign funds controL .•. 1Ne are definitely of
the opinion that a statr;:.::-.erl':.. .in as simple terms .s..s it is possible to
couch it of even the important thing;, to consider in the determination of v,hether a person is a llm:l.tiom~.l" of a blocked countr,y or is
a "generally licensed national" would be of tremendous hel.p to bankers, and we are contemplating the is:ma:r1ce of a ::ircular along those
lines.
In Mar-y-lc.nd all banks visi -!::,ed ha'Je tak(:n cognizance cf the
foreign funds control order. Som0 have made a thorough check of
the.ir accourrts, while others intend to do so at an early date.
A nurriber of banhs in the northern mixed farniing section of
MD.rylanc.i are operating largely as banks of depost t, partly <:t.s a. result of the character of the population whieh traditio~ally abhor or
have religious scruplr;;s against debt.
Mor~) th::m 20,000,000 pounds of American leaf
been shij_)ped to England during the past tlvo months.
tob~wco
h'i<::
Boll-vreevil infestation in the Cnrolinas, as •vell as the
cotton South, is the worst this year of any time since 1922. Fig·hting thi~ pest thb year is imder difficulties because of the scarcity
of spraying machim;.s, since priority makes it dif':ficult to secure
these machines. Calch:un ar:;;0nate, used in the destruction of the
c":eevil, is also difficult to obtain. It seems likF:ly V}n.t the crop
119
-3-
R-893-b
estimate of .September l will be still lower than that of August l.
In many places damage is reported an;;rwhere up to a third of ti1e crop.
North Carolina 1 s 1941 flue-cured tobacco crop was estimated
at 469,940,000 pounds on August l. ... Rapid gro·wth ana. a'onorma..L.ly
fast ripening of the crop produced comparatively thin, light-r;ei~:ht
leaves, but <-;;. good color. A larger proportion of the crop than usual
lVill be of good cigarette quality. Prices have been unusually strong,
with the averages for early marketings of poorer tobc>.cco running between 26 cents and 29 cents a pound. It is estimated, however, that
it vfill take $25 a hundred or more to offset the tren12nd:)us decline
in weight and the severe loss in quick rip8ning.
The North Carolin~ employment situation has been retarded
to an unknown extent by the curtai]Jnent of the use of siLl< in hosiery
mills. The latest info!'J'll.ation available, ho•,vever, indicates that.
this unemployment will not become serious and that substitute materials can be obtained in a short while.
ATLi\NTA
Cotton is the principal. agricultural crop in northeastern
Georgia. From prese::.1t indications the current crop ':.rill average only
about 50 to 75 per cent of last year's production. The weather conditions in most sections visited have been unfavorable and ti1e boll
weevil hr>.s presented the usual problBm to cotton growers. Some farmers had better crops because they had poisoned earlier for boll 1:v~evil
and, too, many of them pla..'1ted an earlier variety of cotton vvhich matured before the boll vme-.ril did much damage. The price for the current cotton crop is ex.pected to be considerably aboye that received
last year so that despite the shortage of the present crop, the cash
return to the fanners mny be equal to that of last year.
The peach crop in northeast Georgia was plentiful. However,
weather conditions were such that the fruit was ready for market simultaneously- with the crops of middle and south Georgia and South
Carolina, ·which condition resulted in an over-supply and low prices.
The Surplus Commodity Corporation relieved the situation considerabzy
by entering the market.
The textile mills and associated indus':.ries, located throughout the north Georgia area, are reported to be operating on a full
time basis.
CHJ:CAGO
Approximately 100,000 copies of Regulation W were mailed to
banks, loan companies, newspapers, and firms engaged in the extension of instalment credit,
120
-4-
R-893-b
During August preparations v.ere nw.de to assist the Treasury Department in its census cf all foreign o;med property subject
to jurisdiction of the United States. All banks in t.he district
were notified of the census, and their assistance in disseminating
information regarding the necessity of filing reports was sought and
is being vnllinely given. The task of filling these reports (Form
TF!:l.-300) is for the large banKs of the district a tremendous one,
and several of the Chicago banks at least have set up separate departments or formed committees to enable them to complete the job in
their ovm organizat-ion. In addition to contacts with the banks, both
member and nonmember, constant contact has been maintained with the
general public through means of letters, releases to the press, or
personal interviews.
Despite th~ late su..lJllller dryness which interfered with a
normal sizing of apples, peaches, a~d pears, Illinois fruit raisers
expect a ba.n.'1er production this year.
A special study of milk rr~rketing in the Chicago Market
Area, whicb. was made by this 2anl~, showed that the costs of some essential feeds have risen as much as l;.4 per cent in the last year.
Farm labor costs have also risen fjharpl.f in this district. The average paid in addition to board and room for July 1941, was $55, and
the average without bo~rd and room was 073.
ST. LOUI0
In southern Missouri, herds of beef and dairy cattle <:1.re
being enlarged and improved •••• Crops of wher. . t nnd oats made satisfacto!"'J yields, but in many parts of the section late grain crops
and pastures r. nve suffered from a prolonged drought.
In western Tennessee ~md northern Mississippi the cotton
crop has deteriorated in the past month, particularly in the southern
part of the section, owing to excessive r::J.inf::tll and insect drunage.
Weevil activity is reported to be high in some sections and there are
scattered reports of damage from the Iowa corn borer.
MINNEAPOLIS
The wheat crop wtll be bountiful in northern Montana ••••
Over 90 per cent of the wheat farmers n.re members of the AAA allotment plan. Practically all of them expect to borrow on their stored
v.rheat.
Livestock is one of the brightest spots in the economic picture of Montana this fall. The wool clip was sold at 32 to 35 cents
121
-5-
R-393-b
a pound, larabs are being contracted at 9 -~o 10 cents, calves are selling at ~~42 a hea.d .s:nd range cows at tr10 a head. Fef'Od is abundant and
there is a l&rge reserve of hay on hand. l"ihile the livestock population has returned to normal, there is less danger now than in past
ye&.rs of over-produc'cion in view of the wide-spre;d extent of Federal
grazing areas >Ihere the number 0f animals on tl-:e range is controlled.
The universal opinion a1nong bankers was that people are not
taking the war seriously. They are pleased with high prices fol.' farm
products, but the;r cannot. conceive of the necessity of making sacri. i'ices or buying defense bonds. A few banks are advertising dE:fense
bonds in the: form of ne~';spaper ads, and this advertising is haviu>:
.some eff·3ct.
Calls v•ere made upon 31 editors of newspapers in western
Minnesota. The comment most generally heard was "I like the stuff
we get from yo"J. because :it is brief and to the, point an<~ can be fitted
in without too much alterat:i.on."
KANSAS CITY
Among country banks the!'e is a tendency to sa~r that the ir;stal.m•:;nt credit regulations are unfair to farmers •.. , The farmer's income is irregule.r a.'ld the provision ·t-hat as many as four instalinents
may be skipped is not liberal enough to meet his situation ...•
Nec~rl;r all city dealers of tl:e better clc,ss are 100 per cent for thB
regulations, and for st:ronger ones if necessal'Y, but. some cou.ntr-J
de;:d_ers v.t10 sell (;,}Jv.:;st entirely to fa:::·mers ma:tntD.in thut t~1ei::c tnstalment business v-ril1 be ~vrecked.
Water for irrigation in northeasten~ Colorado h:1s been plentiful throughout the sea.son a~d all irrigation c:::·cps ha.ve produced
7rell. The sugar beat crop in the area covered is consid.ercd :.o be of
good tonnage and sugar content. \'he dry land arec.cs ha.ve received more
moisture and had generally better growing conditions than they h:tve
experienced in the past ten or fift·een yea!'s.
The general feeling is that pr·ices Hre too hich to feed on a
scale comparable to the pa:~t few ye.'lrs. Most estim.ates indicate th?t
there viill be about one-third less lhrestock fed in northeastern Caloracto during the coming >"linter.
DALLAS
Demands fo:c bank credit have been steactily increasing in v:est
central Texas as the result of high livestocb: ;:;rices this ye2..r and the
122
-6eagerness of ma~w farmers to ina.ugur~:~.te or expand cattle and sheep
operations. Most banks are showii1g a re1uct<i.lice to increase their
loan accounts at thiG tiJ,,e, fearing a recession in tre prevailing
:high prices of livestock.
SAN FR.ANGISCO
No report received.
PUBLIC RELATIONS ACTIVITIE:S OF
FEDEfiA~
RESERVE
BAi~KS
Ai.l§;"USt 1941
Federal
Reserve
Bank
Boston
New York
Philadelphia
Cleveland
Rictnnond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas Cit;>r
Dallas
San Francisco
Member ! Nonmember
12
98
34
16
16
20
~.
•-'
'
12
~
28
118
43
·endance
11
hO
BLJ.
19
7
39
3
1
3
~·
h
121
399
0
0
iJ
0
4
325Y'
110
116
4
0
44
')
260
101
59
20
28
~
boo
28
6
J.._.l
600
2
4
119
'~;:;
·'-'
16
l
13
2~322./
J''7
·'-·
150
25
1,501
Not reported.
N0t compl~tely reported.
i.:-0
1
0
2
2'h
c
22
11
2
17
7
Addresses Made
Tota
42
21
10
97
59
38
J}
Mtetings Attended'!
Visits to Bn.nks
l
l
4
0
0
219
0
0
0
5
505
BOARD OF GOVERNORS
124
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-89/j.
AOOAE&a OP"F"ICIAL COAAI:BPONOENCE
TO THE BOARD
September 26, 1941
Dear Sir:
There are enclosed for your information
a
CO}{/
of a letter addressed to Governor Ransom
by the President of a Feci.era.l Reserve Bank under
date of Septombvr 17, 1941, a copy of our reply,
and a copy of a
p!~oposcd
draft of a letter which
might be nsod in answering requests for advice as
to the legality of forms of inutalment contracts.
Ver;r tru.ly yours,
Che:; ter iJorr ill,
S<_;cret&.ry.
Enelosures 3
125
R-894-a
FEDERAL RESERVE BAliK OF
September 17, 1941
Mr. Ronald Ransom
Board of Governors of the
Federal Reserve System
Washington, D. C.
Dear Governor Ransom:
Since writing you today, I have again talked with Mr.
____ and his associates in reference to instalment credit.
This procedure, which is developing, is disturbing.
Dealers have a form of contract that they have used for a number of years; they may have copiod i.t from someone else or they
may havo had their ovm attorney p1•epare it, it may comply with
Regulation W and it IT!ay not. In so:ne cases they change the
terms so that they think it will comply with Regulation W and
then send it in to us; in fact., in some cases their attorneys
have done ·sni.s and asked for our approval. Like all contracts
of this cha..racter, a large percentage of it is in fine print.
'l'o attempt to pass upon contracts from a legal as
well as Regulation W stundpoint is an impossible task. (As
near as we can estinate there are some 15,000 or more dealers.)
We of cour:Je n.re writing a courteous letter in each case explaining why vre cannot assume this legal responsibility but,
nevertheless, it is crep.ting a bad feeling a'1d. I do not know
what we can ao about it other than what wo are doi:1g.
If you have any suggestions please write me.
Yours very truly,
126
September 26, 1941
_ , Pr·:;sident,
Federal He serve· Ba.nk of
Ntr.
Dea.r M.r.
--..
This is in response to yot<r letter of SepteFJter 17, 1941,
regarding requests made UJ variOl.<-S dealers that the Federal Ee~>er-..re
Bank examine forms of instalm.-.::nt contracts subr'li tted ll.f such dea.lers and advise whether they coifii)Jy wl th Eegu.lation VI and are otherwise legal.
It is unfortunate tJ:;.,_t :four inabilit;r to conply wi tn such
requests is crea-c.~ng bad feelit;g but we agree with ycr.1 that it is
neither feasible nor app:::-opriate for a Federu.l F.eserV'e Bank to undertake to giva such legal advice.
It is noted th<'t you e.r8 writing a courteous lot ter in .
each case explaining wh;; yo·:1 cannot assume this rer:pondbili t;r;
and it is believed th::1t, if sueh letters are phr!lse:d in such a way
as to enable thG pc:rsons to vrhor.1 they are adclrt"3i3Secl to ur:derstc;.ndclearly why the Federal HeserYc:; Bnnks cannot. comply with sucb. X'd-quests, it will tend to reduce u.ny rc~:ulting btcd feeling to a mini-
mum.
In an effort. tcJ b': helpful in this cor;.;1ection, a draft c.f
a letter which mlght be used for t:his purpose ~ls enclos,:~cl for ycur
cor,si:ioration. It is belieYod that frJrm lette:::s shm.J.ld no".:. b::.. u:..:ed
fer· t:d.s purpose and that individuo.l letters SDould be v,Titten in
each cas:J.
Very truly yours,
cl· f:;.
crre·1\
( I.J
... .i. ... u,
Chester Nlo:cr:i.ll
Chester i;lorrill,
SecrGtary.
127
R-894-c
Dear Mr.
Vfe have received your letter of
, enclosing a
form of instalrnent contract and requesting our advice as to
whether i t complies with Regulation Vi o.f the Board of Governors
of the Federal Heserve System relating to Consumer Credit, a.'1.d
is otherwise legal.
We always desire to be as helpful as possible and wish
very much that we could comply with your request. However, the
necessity of giving prompt answers to a large number of specific
questions arising 1mdcr Regulation W is taxing the capacity of
the staff trai!led for that woriq and it is physically impossible
for them to examine every instalmer.t eontract which might be submitted and advise whether it conforms to Regulation W. You will
realize, of' course, that we could not do this for you and refuse
to do it for every om; else who requ8sts it.
In the circumstances, we would suggest that you rely
upon the advice of your own counsel, who ohould be able to study
your form of contract in the light of Regulation Vl and the interpretations which have been issued th0reunder and advise you not
only whether your form of contract complies with the Regulation
but also whether it complies with the State law and is other-•vise
valid and enforceable.
If there is any specific que~>tion about which your
counsel feels unable to give you definite advice after studying
Regulation W and the interpret&tions there1mder, we shall be
glad to endeavor to answer any specific question which you or
he may find it necsssar<J to submit to us as promptly as the circwnstances will permit.
Ve~J
truly yours,
128
H-895
BOARD OF GOVEBliORS
OF THE
FEDEit.AL RESERVE ~'Y STEM
STATElv1ENT
:mR
T~m
for immediate ralease
PRESS
September 29, 1941
Statement of ii4arriner S. Eccles, Chairman of the Board
of Governors of the Federal Reserve System, before the Banking
\
and Currency Committee of the House, September 29, 1941, with
reference to the Price Control Bill.
129
R-895
i'J:r. Chairman anc'.. members of the Con1i1li tt'3e:
In appearinr{
here~
today at the Co:mni ttee' s request, I should like to make a brief statement of
personal vimvs as to the part the1t price control hat:' to play
iT(/
in an;y adequate
Governn~ont
program for dealing with price inflation.
I.
have lVJt had <.m opportuni t,v to prepare a comprehensive statement cover-ing tho raa..ny aspects of this impo:ctant subject hlt on varioL<S
c,~;casions
I have undertaken c;o set forth my own views on the problens of combating
inflation as weJ.l as deflation, and this Co11rrni ttee, ooth in these heurings and in the past, h£u already cov-erod so much of the ground tLat it
is not n0cessar;v tc tukG your tirw;; in tro.versing it [;.gain.
of tbu subject as you may wish to havo
m0
Such aspects
discuss can be brought out in
It is desira.ble from rTJ sta1.1dpoi11t, ho1:vever, to outline 1Jri8fly the fr[;.;nev:ork as I see it, into which the pendin;; bill tits as a part
of a broad, i!ltegrated Government program to deal with inflution.
Yvu
are all aware ti:w.t price inflation threatens to develop v:i th accele:;:·ating rapidity becau;3e our vast defense expenditurss ·us putting buying
po':ver into the hands of the public at a faster rate than goods cnn be
turned out to satisfy both the
our expanding defense
increa;:>in~;
requirement~J.
c::.viliruJ. demand as -.:ell a;:;
Vie knmv that this condition is bound
to bec.ome L1ereu.singly o.cute as more c:md more of our pr,Jdilctive cap::-,ci ty
is devotoci, as it must bo, to 1mpply:Lng defense rc.thcr than civi.U.a;:1 requirements.
There is no need to remind this Comm:i:ttee of the consequences
of an uncontrolled inflation.
Y(m are fully ccgniznnt of its ruinous
R-895
-2lr.~bor,
effects 11pon the entire econorrw and parTicularly l:pon
ers and the great mass of our worki.-·1g popu.latiun.
130
the farm-
Nor is it necessa:r.r
to emphasize to you that the first line of attack upon the problem is
to increase productbn to the 15reatest possible extent.
That is why i t is so urgent, in the natiom:t.l ir.terost, that
we t<.ti:.ize all of our productive Hiachinery, the smallest as well as the
largeDt units, and all of our avail'lble Ejan pov:er in producing continuously first fo:c d8fense, because our natiu''lnl safety depends upon it,
a~1d
secondarily for civilirui needs.
and the rrttempt to scttl8 disput<)S
For this reason industrial strife,
l1)!
tho methcds of lockouts and strilws,
are intolerable in tir:1.es ol national peril.
Yet wo kr-.ow
t~.at
successful as
W3
may be in using our produc-
tilre resources f•llly, auute sz1ortages of d.viiia..-r1 goods are inevitable
in more and p:oro li·::1es.
bt1sic metals
~md
feel the pincb.
both for
defen~~e
We have
o.lread~t
e:r;.countc:n'ed
other strat2gic cnterin.ls, aud we
se~trr~ities
~"l<::::ve
not yet begtm to
Beyond a poL1t we cannot produce ;nora and more goods
and for civilian consu.r:lption.
Our na tio:1a.l security
requires that our civilian populati:m foret;o at this time many
that, hov;ev.;r desirable, are not essentiaL
of the
of raany
necessitie~>
~oods
Fc1·tunately o1....r abundance
of li,·e is f;o grt:!at that our
people~
aru not obliged,
like our Allies and tLair <.memies, to go on food end clothing rations.
Nevertheless v:o ;1ave got to get along wi t~1 fc::Jwer cJn·able consumers 1 goods
r.
1
-.
essential ror c...e.rense.
more tho.n we do as yet, that
V'8
:-:mst bG
We have got to reali:.>e, far
p:r'~pared
to postpone bu;'ring of
R-i)95
-3-
131
civilia.'1 goods which cannot be produced in sufficient qus.ntity at this
time to meet the. rising demand.
When the emergency is over arid produc-
tion can again be turned to supplying civiliar1 wants t/·1e deferred demand.
will be an important factor in offsetting a post-defense slump.
For the prssent, however, tho most important aim of public policy on the economic front, next to procuring rr:aximum production, is to
dampen civilian demand for goods which cannot, be produced in sufficient
quantities.
We cannot leave this to chance or
part of the buying public.
~o
volunt:::.ry n.ction on the
The in:;scapable result of letting the situa-
tion take care of itself would L€ a price inflation of staggering proportions and demoralizing 8ffects upon our oconom:lc: S',Ystem.
can only be dealt; with
effectivel~r
b.r a
coo.rcHnat~~d
The situation
:md ec.mpr::;rlC:nsive
series of Government ::1easures of which the, bill you are con3idering is
an essential, integral part.
The means available tv the Gov3rn:aen t for d.ealing v.ri th the pro blern fall :i.nto two broad categcries--generrcl over-all or ::Jroud functional
controls on the one hand and selective contrcls on the other.
Taxation,
fiscal and monetary policy belong in the category of over-all, fw1ctional
controls.
Price-fixing, priorities, regulation of conswaer crcdi t, are
necasso.ry, supplemental controls that are selective in character.
It has been
nw
view for a good many years that in f::Jrmulating
and carrying out Government economic policy t.:; deal with either il:.flation or deflation we should. rely first of all upon the broad, ovGr-all
functional
cr~n trols.
They oporn te on the econorcy- as a wbole, imlirectly
rather th::m directly; they ru·e in keeping with demccrntic pl·ocessc;s Dnd
132
H-895
-4-
give private enterprise and initiative the fullest possible scope consistent with the general welfare; they serve to create a climate favorable or unfavorable, as conditions
traction.
m~
requiro, for expansion or con-
They are our main reliance now, and I believe
But ti1ey are not enough.
properl:j,~
so.
They need to be supplemented by such direct
measures as arc necessa...ry to rc:ach oonditions arising from shortages.
The pending bill is the most important mea.sure of direct control, and
should in rrry judgment be sufficiently broad and flexible to allow for
wide administrative discretion in deuling with future contingencies.
The point that I
de~ir<::
to emphasize, however, is that the
economic area to which we must apply direct controls depends in large
part upon how promptly and eff'ectivel;7
"Ile
use the functional measures
to draw off buying power-and at the same ti:ue :1elp pay for defense.
If
Congress fails to enact adequate tax legislation, particuJ.'ll'ly corporate
and individual income taxes, as well as excise taxes on scarcity goods;
if we leave the credit doors wide open, so that bank credit and c:onsumer
credit continue to expand,
i.~
our people indulge in buying sprees instead
of conserving their funds--and there is no better wa:;,r than
b.f
subscrib-
ing to defense bonds--then the on.l_y alternative is to widen continually
the area to which direct controls must bo applied if we ar·e to avoid a
ruinous inflation.
puch controls as are proposed in the bill
~;:;fore
you
are vitally nccassary to reach scarcity conditions, if prices of civilia.'l
goods and the costs of defense are to be held within reasonable bounds.
I
a..'il
fully in accord with the objectives of taxation policy
which the Secretary of the Treasm-y decb.r•3d when he presented his tax
R-895
-5-
•
program to Congress; I believe that the Government program
foi~
133
dealing
with lnflation approaches the problem from the right end--though we
have done too little too late so far.
I do not believe that we should
approach the problem from the other end by blanketing the econo!!\y with
direct controls, first, a.'1.d appl,ying over-all, functional controls secondarily.
I see no good reaeo11 for attempting the impossible task of
repealing the law of supply an.d demand altogether, of' und1Jrtaking to
police not merely those prices which have to be policed because of
scarcities but all pricGs, the bulk of which do not need to be policed.
I would leav-e the problem of how far price control should go in the
hands of one administrator, giving him ample jurisdiction and discretion.
Whether or not you include within the terms o;f this bill a
declaration of
poli~
or discretion to deal with labor end farm prices,
the fact is that you cannot leave wages and salar:i.•3S which are the main
factor in prices to rise indiscriminately and be realistic about preventing inflation.
You cannot, in
TI\Y
judgment, realistically put a high-
level floor under farm prices and no ceiling.
The bill before you should be
prompt~
enacted.
. - "'
134
BOARD OF GOVERNORS
CF THE
FEDERAL RESERVE SYSTEM
R-896
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
September 30, 1941
Dear Sir:
Enclosed for your consideration and comment are several copies of a tentative draft of a Registration Statement as provided for
in section 3(c) of Regulation W. This draft has been prepared qy the
staff but has not yet been acted on by the Board.
After Registration Statements have been filed qy all registrants with the Federal Reserve Banks, it is contemplated that some
s.ystem of regular periodic reports, to be filed bJ specified classes
of registrants, will be instituted. It is not intended, therefore,
that the Registration Statement be the sole source of information to
be obtained from registrants. The statement calls for nothing more
than basic data which wi:l-4. serve, among other purposes, as a "bench
mark" for future reporting.
It will be appreciated if you will conside~ this tentative
draft at your early convenience and let the Board have the benefit of
any suggestions within a week after receipt of this letter, using your
own judgment as to whether to consult persons outside yotU' Bank.
Copies of the enclosed draft are also being submitted for
comments and suggestions to the various interested Government agencies
and to the principal national trade associations whose members will
have to register.
Ver'J truly yours,
Enclosures
Chester Morrill,
Secretary.
tO THE PRESIDENTS OF ALL FEDERAL RESERVE BA."lKS
Draft of 9/30/'q I
Form F. R. _
Date
"
REGISTRATION STATEMSN!
This statement Is filed with the Federal R~serve Bank of the District in which the a~sin office of the
undersigned is located for the purpose of beco•lng licenaed as a Registrant In accordance with the provisions
of Regulation· W issued by the Board of Governor's pursuant to E>cecutive Order No. 881t3 Issued by the President
of the United States relating to consumer credit.
----------------------------------------------------------------------·--------------(Name of Registrant {print or type)}
(Street Address)
(City)
(state)
(Before answering questions please consult the instructions on the reverse side of this form.)
10
11.
Indicate by check mark whether Registrant is an individual _____, p.rtnershlp _____, corporation _____ , er
other ----•
General nature of business
(Place 3 check mark by the principal business
of Registrant)
A. Financial busi~ss
1. Sales finance company
2. Commercial bank or trust company
3. Industrial bank or loan company
'q• Personal finance or small loan company
5. Credit union'
6. Other financial business (specify)
e.
111.
Dealer, contractor, or other business
7. Dep.-tlllllnt or genet" a I store
s. Automobile dealer
9. Furniture or house furnishings store
to. Househo14 appliance or radio store
Electric or gas utility co~any
12. Hardware or automotive accessory store
13. Dealer or contractor in heating, plumb•
ing or aircondltioning equipment
J'q. Dealer or contractor in other constl"uction or repair materials
15. Manufacturer (specify type of product)
"·
16.
IV.
V0
Other (specify} ____
Credit outstanding and salea
A.
Registrants in classes I to 6 pleaee report the unpaid balance of retail and
personal instalment paper held on September 11 19~1
I. Retai I Instalment
paper purchased. • ••• $
R11tai
I Instalment sale
2.
credit extended directly $
3. lnstala11mt cash loans. •. $
B.
Registrants in classes ·7 to 16 please report the folfowing data relating to their
retail sales&
4. Sales, 12 months·endlng
August 31, 1941 • • • • • $_________
s. Of the salea reported in item 4, approximately ____ per cent was for
cash, ____ per cent on charge account
or open book credit, and ____ per
cent on instalment credit.
6 0 Unpaid balance of retail
instal~nt credit held
September 1, 1941. • • • $_ _ __
7. Unpaid balance of other
retail credit (open accounts, etc.) held
September I, 1941 • • • • $_ __
Did you have any branches on September 1, 1941?
If so, how many?
(Please attach a list of branches and their addresses, unless the Registrant is a bank insured by F.D,.I.C.)
Is Registrant controlled by any other company?
(Name of controlling company)
(City)
(Address)
(State)
(Please print or type here the name and official title
· of the person whose ai gno.ture appears at the right)
If so, please fi II int
(Type of business)
(Authorized signature)
~
... 1
-
136
INSTRUCTIONS FOR REGISTRATION STATEMENT
(Numbered to correspond with questions on ReglstPatlon Statement)
Nue of Rtgistran~··fn case the trada name of Registrant is different froll the legal name of proprietor,
pleaee give both naMes.
!!!..... fnllhlment credit Ia credit for which the agreed rotpayment is in two or more parts. Instalment
nlu are sales 111ade on instat111ent credit.
Where the Registrant hae no 11mount to report write "none"• Buslneues which were not in operation
on Septembe~ 1, 1941, please answer question Ill for such date as is convenient, clearly Indicating the date
used. A business concern organized to succeed another concern doing similar business should report for the
concern succeeded, if possible.
'
.!J.!:.!••..aatai I instalment credit {Items I and 2) should Include the unpaid b.alances of alI Instalment
credits arlsjng from !ht ceUII ule gf an~ tecurtd by Jrtjs;l!lfe whtJh!£ or oot f!s}td in RtSHif!laa p, such as
autoaabiles, trucks, household appliances, furniture, clothing, jewelry, etc., and it should include loans for
building repair or modernization (whether or not insured under FHA Title I and whether or not secu,ed). Any
such retail instalment ~aper purchased fro• or rediscounted for dealers or others should be reported in ltea
111-A~I ~• loans made directly to consumers for the purchase of and securfd by auch articles should be reported.
in III·A~2. Qg n2t lnc!yde any loans made to dealers and finance companies on their own promissory notes, even
if secured by the pledge of Instalment paper.
Personal instalment cash loans should include the unpaid balances of all secured and unsecured
loans which were made to Individuate and used for auch pwrposea is consolidation of debts, ~dlcal attention,
general personal expenditures, etc. (but do not include any loans reported In item 111-~2).
Any hypothecated paymtnta or deposits which are for the purpose of retiring loans should be deducted before reporting the unpaid balances of such loana.
111-B.~.--Give net retai I sales figure (gross sales less returns and dillcounte}, but do not deduct trade~
Ins. A store should include sales of leased departments. A Registrant which is engaged in manufacturing or
other b,usiness should report only the ulu which it lUkes at retail. An electric or gas utility colllpany should
ellclude sales of electricity or gaa and report only its other retai I sa lee.
A C$ncern which was in business on Septeaber I but was not In ope~ation throughout the 12 aontha
ending August 31 1 19ijl, should report sales for only th~t p~t of the period for which It operated, indicating
clearly the length of such period•
111-8•5.-·Do not Include as cash sales the down•pay-.nt on Instalment sales. Sales on open accounts
should represent ••ekly, end-of-month or other open credit ulcs. con instalment sales include the dow,..payaent
(whether cash or treda.in} as well as the amount deferred. Include total lnatslment sales r•sJtdlesa of whethtr
the Raeer is dlsc2unted qr sold or htld.
111-8·6 and 7e••Re~all Instalment paper should repre$ent the unpaid balances of all Instalment receivables arising from retai I aales by the Registrant, including sales of automobiles, trucks, household appl ianoesl.
furniture, clothing, jewelry, building repair and modernization (whether or not insured under FHA Title f), etc,
Retail instalment paper reported by a Registrant should include such paper even If pledged aa security for loans to the Registrant but should not Include paper sold to a bank, finance co~~~pany, or other fl•
n::~ncial business with or without recourse.
"Other" retail credit ahould be reported similarly. In cue a
Registrant, in addition to holding receivables arising out of Its own retail sales (reportable against items
6 and 7 in group Itt-e), also holga reselvabi!J which ttr• RUr~hated or phlph !CQS8 from len~lng by the BesiJtrant, the receivables Gf the lstte~ types should be reported against the appropriate ite~s In group 111-A.
(Some Registrants..•sueh as some 111anufacturers or public uti llty co~~~p,nles--aay have no retail sales or retail
credit to report under group 111·8 but should report their purchased paper or loans t.~nder group III•A.)
In case the Registrant is unable to determine el<actly, withQut undue inconvenience or eKpense, 1
the division of Its receivables between Instalment and open book credit, it may be estimated.
Y,.-':'Fur the purpose of this registration state•ont a Registrant is "controlled by any other co~~pany" If
SO per cent or more of Ita stock Ia owned or contf'o I Ied by the othe~ company,
Authoriz!d Slgnatyrt--Thls report may be signed by any off1clal ordin..-lly authorized to sign atateaente.
for the Registrant,
BQ!t~--Section 3(d) of Reguiatlon Wprovides In part as follows:
"The license of any Registrant may, dter.rea•onable notice and opportunity for hearing,
be suspended by th• Board, either In its entirety or as to particular activities or particular
offices or for specified periods, on·any of the following Jroundsl
(1} Any material mis$tatement or omission willfully or negligently made
in the registration statement, , 0 0 • , 11
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
137
R-897
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 3, 1941
Dear Sir:
There is enclosed for your information a copy of
a decision (B-19319) rendered by the Comptroller General of
the United States to the Federal Works Administrator under
date of August 9, 1941, to the effect that the owner of an
insurance agency not regularly engaged in the business of
financing may not be recognized as a "financing institution"
within the purview of the Assignment of Claims Act of 1940.
This decision refers to an earlier decision ty the Comptroller General (20 Corap. Gen. 415) which was enclosed in a letter addressed to you under date of February 15, 1941 (R-784).
Very truly yours,
L. P. Bethsa,
Assistant Secretary
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
B-19319
R—891—B.
138
COMPTROLLER GENERAL OF THE UNITED STATES
Washington
August 9, 1941
The Federal Works Administrator,
Federal Works Agency.
%
dear Mr. Carmody:
I have your letter of" July 30, 194-1, as follows:
"Fred M. Garrett, of Louisville, Kentucky, has filed Notice
of Assignment with the Public Buildings Administration, of this Agency,
of all moneys due or to become due under Contract No. WA2pb-1253, dated
May 17, 194-1, between the Lockwood Company, Inc., of Louisville, Kentucky,
and the Public Buildings Administration, for interior painting and miscellaneous repairs to the Versailles, Kentucky, Post Office.
"Upon receipt of the Notice of Assignment, the Public Buildings Administration requested Mr. Garrett to furnish evidence to show
that he is a 1 financing institution' within the meaning of the term as
used in the Assignment of Claims Act of 1940.
"By letter of July 19th, Mr. Garrett addressed the following
communication to the Public Buildings Administration, signed (under
oath) 1 Garrett Insurance Agency, by Fred M. Garrett, Owner':
"'I have your letter of January 15th in reference to an
assignment to a financing institution and you have requested
me to clarify why Fred M. Garrett would qualify as a financial institution.
"1 Fred M. Garrett is the sole owner of an insurance
agency in Louisville and any insurance agency in Louisville
that expects to continue in business is forced to be a financing institution by the fact that practically all of the
banks, building and loan and other financing institutions
are actively engaged in the insurance business and coerce
insurance from people borrowing money. This applies to
National Banks, State Banks and building and. loan associations; and, as a result, Fred M. Garrett, as an individual,
extends the time of payment, accepts notes, makes advances
to contractors and does other business of the normal financial institutions in order to protect his insurance business. I have already advanced $1000.00 on this Versailles,
Ky., contract.1
,
—2—
R—897—a
139
"Your decision is requested es to whether Mr. Garrett may be
recognized as a 1 financing institution' within the purview of the Assignment of Claims Act and payments under the said contract made to him
accordingly."
In so far as here pertinent, the Assignment of Claims Act of
194-0, 54 Stat. 1029, provides:
"That sections 34-77 and 3737 of the Revised Statutes be amended by
adding at the end of each such section the following new paragraph:
"'The provisions of the preceding paragraph shall not
apply in any case in which the moneys due or to become due
from the United States or from any agency or department
thereof, under a contract providing for payments aggregating $1,000 or more, are assigned to a bank, trust company,
or other financing institution, including any Federal lending agency: * *
Even though it be assumed that an individually owned business
may, in a proper case, qualify as a "financing institution" within the
meaning of the Assignment of Claims Act of 194-0, it would appear that
Mr. Garrett's financing activities are only such as are incidental to
the carrying on of his business as the owner of an insurance agency; and
that he is not regularly engaged in the business of financing, apart from
such credit as may be extended by him in connection with his principal
business. Compare 20 Comp. Gen. 415. Obviously, a business does not become a "financing institution" merely ttj reason of the extension of credit
to those with whom it deals in the course of its primary business activities.
Accordingly, it does not appear upon the present record that
Mr. Garrett may be recognised as a "financing institution" within the
purview of the Assignment of Claims Act of 1940.
Respectfully,
(Signed) Lindsay C. Warren
Comptroller General
of the United States.
140
BOARD OF GOVERNORS
R-898
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
October 1+, 191+1
Dear Sir:
For your information, I am enclosing a copy
of ny letter dated September 21 to lir. Floyd Odium,
Director, Division of Contract Distribution, Office
of Production I,Management with respect to the removal
of offices of the Division of Contract Distribution
from the Federal Reserve Bank buildings, and a copy
of lir . Odium's reply of October 2, 19l:.l.
In view of the request contained in the last
paragraph of Lir. Odium 1 s letter, I think we should continue, for the immediate present, to serve the Division
of Contract Distribution in the same manner as we have
However, I hope
served the Defense Contract Service«
to be able to. arrange a meeting with Lir. Odium, Chairman Eccles, the Presidents of at least two - or three
Banks and myself within the next week for the purpose
of going over this whole problem with Lir, Odium and
arriving at some definite solution of it.
Very truly yours,
Ernest G. Draper.
Enclosures 2
TO PRESIDENTS OF ALL FEDERAL RESERVE BA&KS
141
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Washington
k-898a
September 2], 19hl
Honorable Floyd S. Odium,
Director, Division of Contract Distribution,
Office of Production Management,
Social Security Building,
Wa shington, D. C.
k'y dear I.'r. Odium:
As the member of the Board who has been acting as liaison officer
between the former Defense Contract Service and our Board, I have just read
with particular interest a newspaper account of your press conference held
on Friday, September 26, from which I take it that you feel that the newly
established Division of Contract Distribution would function more effectively
if the offices of the division were not continued in the various Federal Reserve Bank buildings.
As you know, the Defense Contract Service was established at the
Federal Reserve Banks upon the request of the National Defense Advisory
Commission and since the Office of Production Management was established
that service has been continued in accordance with its wishes. This has
been in accordance with the policy of the Federal Reserve System to cooperate
in every way possible in furthering the defense program, and you may be sure
that we are anxious to cooperate with you in every way that you may desire
in this situation.
If the understanding conveyed by your press statement is correct
that "present offices in Federal Reserve Bank buildings will be removed to
other locations", we will advise the Presidents of such of the Federal Reserve Banks as are now providing office accommodations for this service and
request them to give you every possible assistance in facilitating the
establishment of your offices at new locations. I would appreciate it if
you will give me some definite word in this matter as soon as possible *
With best wishes to you, believe me,
Yours sincerely,
(Signed)
E . G. Draper
5 . G. Draper.
-'-
OFFICE OF FROIUCTIOiv IvMAGBl'MT
Social Security Building
Washington, D. C.
R^898b
142
Office of
Floyd B. Odium, Director
Division of Contract Distribution
October 2, 19^1
Honorable Ernest G. Draper
Member of the Board
Federal Reserve System
Washington, D. C.
Dear Governor Draper:
This is in reply to your letter of September 27 about
location of the field offices of the Division of Contract Distribution.
For operational purposes we plan to have our field organization set up on State lines. We will have one main office for each
State and as many subordinate offices as the industry requirements of
that State make advisable. We expect to group these States according
to Federal Reserve Districts so that the financial part of this
program can be worked in harmony with the Federal Reserve Banks and
so that the Federal Reserve Banks will know what is going on generally
when some problem comes up to them from a financial standpoint. All
of the field offices will be divided into four or five groups for
intermediate supervision and the whole thing will be decentralized
as much as possible.
We have no present intention of moving at an early date
the present offices, There will be some of them moved where criticism
has been directed to the location from small businessmen, and maybe as
time goes on we will find it advisable from the operating standpoint
to move most if not t-.ll of them, but we want to concentrate on the
problem of n e w offices before we seriously consider any changes with
respect to present offices. We may have from 100 to 200 offices before
we get through.
Furthermore, we would like to work out some arrangements
with Federal Reserve Banks whereby they will in effect act as our paymasters for all of the offices just as they have been doing in* the past.
When this whole program has become a little more clarified,
I will sit down with you and discuss details and relationships between
the Federal Reserve System and the Division of Contract Distribution.
In the meantime, I do hope that you can carry on just as you have been
carrying on.
Sincerely yours,
(Signed)
F. B. Odium
Floyd 3, Odium, Director,
Division of Contract Distribution.
143
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
asss
'
«
w
WASHINGTON
R-899
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
f
. October L, 194.1
Dear Sir:
The Federal Reserve Bank of Cleveland, advises, under date of October 1, 1941, that the address
of its Pittsburgh Branch should be* changed from Grant
Street and Ogle Way to 717 Grant Street. This address
supersedes that contained in the list of addresses of
the Federal Reserve Banks and branches forwarded to
you with our letter R-S89 dated September 23, 1941.
It will be appreciated if you will have the
change noted on your records.
Very truly yours,
-
"
f y
6 - , ' % ,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
144
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
R-900
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October J, 19^1
Dear Sir:
Referring to the Board 1 s letter R-7&5 of
January 11, I9I1I# the following change should be made
in the list of nonmember banks that have in force
agreements with the Board pursuant to the provisions
of Section 8^a) of the Securities Exchange Act of
19?L:
Deletion
New York
Kenmore
State Bank of Kenmore
(Admitted to Federal Reserve
membership on September 11, 19l• 1)
The last previous change in this list was
given in the Board1 s letter of September 5* 19W (R-877) •
Iv yours
L* P. Bethea,
Assistant Secretary
TO THE PRESIDENTS OF ALL FEDERAL R%E?RV3 EA^KS
145
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
li-901
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
October 11, 1941
Dear Sir:
The question has again been raised whether it is worth
while for the Board to continue compiling excerpts from the monthly
Bank Relations Reports and also whether it is worth while for the
Reserve Banks to continue their reports, as requested in the Board's
letter of August 25, 1936 (X-9630), — especially at a time like the
present when the Banks and the Board are busy with other duties imposed by a national emergency. The Board doubts whether the Banks'
reports and the Board's mimeographed excerpts are worth the expense
that their preparation and distribution entails: however, before
reaching a decision on the question, the Board would like to have
your views regarding their value to you and your Directors.
In the event that you favor discontinuing the Bank Relations Reports, the Board would also like to know whether you think
it worth while for the Banks to continue reporting the number of
visits made each month to member and nonraember banks and the number
of meetings attended by members of the Banks' staffs, and for the
Board to compile and circulate these reports in tabular form, together with a summary table showing the progress made in increasing
membership in the System.
In raising this question the Board implies no relaxation
of interest in the cultivation of good public relations, and, even
though it be decided that the regular reports now being submitted
should be discontinued, the Board would be glad to receive advice
from time to time regarding new activities or interesting developments in this field.
Very truly yours,
'
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
L. p. Bethea,
Assistant Secretary.
—
R-902
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
1 4 G
STATEMENT FOR THE PRESS
For release in morning newspapers
of Monday, October 13
October 11, 1941
About a year ago, the National Defense Advisory Commission
established a small business activities unit and requested the Board
of Governors to act as its operating agent in assisting the smaller
business enterprises in obtaining defense contracts. The Board of Governors, in accordance with this request, designated one of its members
to have charge of this work. Field offices of the unit were promptly
established at the Federal Reserve Banks and at their branches. Some
months later, the functions of this unit were transferred to the Defense Contract Service of the Office of Production Management. The
Defense Contract Service requested the Federal Reserve Banks to continue their cooperation in the field activities of this service. The
Federal Reserve regional plan of organization functioned in this way
until the President's Executive Order of September A, 1941 abolished
the Defense Contract Service and established in its place the Division
of Contract Distribution.
The Division of Contract Distribution has adopted a plan of
organization on a greatly expanded basis for the establishment of offices at new and additional locations in every State and the managers
of these offices are to report directly to Washington.
Therefore, the
offices maintained by the former Defense Contract Service at the Federal
-2-
K-902
147
Reserve Banks and their branches are to be discontinued as soon as the
new arrangements cf the Division of Contract Distribution can be put
into effect.
The Federal Reserve Banks will continue, through their own
officers who have been designated for this purpose at their head offices and branches, to furnish advice and assistance to small business
enterprises in obtaining necessary financing arrangements through their
local banks wherever possible, or when necessary, through other lending
agencies, including the Federal Reserve Banks and the Reconstruction
Finance Corporation.
The Federal Reserve officers will also advise with the field
officers of the Division of Contract Distribution and will continue to
cooperate with the procurement officers of the military services in regard to financial and credit information which they may desire.
148
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-903
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 11, 19Ul
Dear Sir:
There is enclosed for your information a copy of.a
letter written today to l."r. Floyd 3. Odium, Director of the
Division of Contract Distribution, in which the Board requests
him to make arrangements as promptly as practicable for the
payment by the Division of Contract Distribution of all
salaries and other expenses of the field offices now paid
by the Federal Reserve Banks and their branches on a reimbursable basis.
There is also enclosed a copy of a state-
ment which the Board will give to the Press on Monday,
October 13, 19Ul, with respect to this matter.
Very truly yours,
Ernest G, Draper
Enclosures 2
TO THE
PRESIDENTS OF ALL FEDERAL- RESERVE BANKS
COPY
R-9C3a
149
October 11, 19U1
Mr# Floyd B# Odium, Director,
Division of Contract Distribution,
Office of Production Management,
Social Security Building,
Washington, D. C.
Dear Mr# Odium:
During our discussions last Thursday afternoon of the program
of expansion of the Division of Contract Distribution, Chairman Eccles
reviewed the origin and development of the relationship of Federal Reserve Banks to the Defense Contract Service# As you were advised, the
arrangements which have been in effect grew out of the request that had
been made by the National Defense Advisory Commission on October 25,
19^0, and during the formative stage of the Defense Contract Service
the Federal Reserve Ban];-s, with their existing organizations at 12
head offices and 2 h branch cities, were in a position to perform, and
did perform valuable services for the Defense Contract Service in the
establishment arid maintenance of its field organizations•
In view of
the close association of the two organizations and the small amount of
funds which had been made available to the Defense Contract Service,
the Federal Reserve Banks relieved the Defense Contract Service of many
of the details connected with the setting up and operation of its field
offices#
They furnished or assisted in the selection of personnel;
they provided office space, where available; and they acted as paymasters for it; in addition the Board and the Federal Reserve Banks incurrod substantial expense in their liaison capacity as clearing houses
for information and advice to prospective contractors and to the procurement officers of the military services#
This situation has now undergone a very material change
because of the replacement of the Defense Contract Service by the
Division of Contract Distribution and the plans which you have outlined
for a greatly expanded and enlarged type of organization. You have
stated that the operating offices now in the Federal Reserve Bank buildings are to be moved as soon as practicable to other locations; that
there will be at least, one office, and probably several offices, in each
M r . Floyd B* Odium
150
- 2 —
State; that each office will be in charge of a Manager or Supervisor,
who will report directly to "Washington# and that while these offices
may be grouped roughly on a Federal Reserve District basis for administrative purposes, the supervision of this arrangement will be in the
hands of representatives of your office operating out of Washington.
It thus becomes clear that there is no occasion for the
Federal Reserve Banks to participate in matters of organization or
administration of the new set-up and consequently they should not
handle the payrolls or other expenses of the new organization#
In
other wordsj the relations of the Federal Reserve Banks to the new
organization should be on the same basis as in the case of any other
Governmental agency.
It was therefore understood from our discussion that all
arrangements for your new field organization will be made by your
office and that all expenses will be paid by your organization.
The Federal Reserve Banks# of course# will be glad to be
of every possible assistance in expediting the accomplishment of
your reorganization plans.
The Federal Roserve Banks will also continue to render every
service desired in the way of advice to your organization, to prospective contractors, and to the procurement officers of the military
services in regard to matters of financing and credit information
connected with the defense program. To this end there will continue
to be at each Federal Reserve Bank and Branch a designated officer with
whom contacts may be made for this purpose*
In this connection, it
was understood that you will keep the Board of Governors and the Federal Reserve Banks advised as to the development of your plans in so
far as they concern the Federal Reserve Banks and, particularly, as to
the locations of your new field offices and as to the names of the
officers in charge of them.
A copy of this letter is being sent to the President of
each Federal Reserve Bank for the guidance of his organization in its
future relations w i t h the Division of Contract Distribution.
Very truly yours,
(Signed)
E. G. Draper.
w
151
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
fi-904
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 14, 1941-
Dear Sir:
We expect to send to you by wire, for your
suggestions, a tentative draft of amendment No. 2 to
Regulation W.
The draft of amendment will provide for a
"Statement of Borrower", the form thereof to be prescribed by the Board, and several copies of a tentative draft of the statement are being sent to you
with this letter so that they will be in your hands
when the draft of the amendment is received.
Very truly yours,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
BOARD OF G O V E R N O R S
*******
152
OF THE
FEDERAL RESERVE SYSTEM
R-905
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 16, 194-1
Dear Sir:
There is enclosed for your information a copy of a letter addressed to Chairman Eccles by the Attorney General of the United States
under date of October 7, 1941, advising that the Council of State Governments and the Governors' Conference Committee has offered to assist
the Federal Government in securing State legislation or administrative
action which will be helpful to the national defense effort or in advising State officials concerning legislative or administrative proposals
which night be in conflict with the national defense program.
The Attorney General requests advice as to any measures in
connection with the defense activities of the Federal Reserve System
which we can foresee will require State action, with as detailed a description of such measures as is practicable at this time.
In order that a suitable and prompt reply may be made to the
Attorney General, it will be appreciated if you will advise the Board
at your early convenience of any problems arising in your district in
connection with the defense program which might be alleviated ty State
legislation or administrative action on the part of the State authorities.
In this connection, it might be helpful if you would request
your Counsel to review the laws of the States in your district regarding assignments of accounts receivable, trust receipts, and similar
subjects, with a view of ascertaining whether it is possible to suggest
any State legislation which would facilitate the financing of subcontractors having subcontracts arising out of the defense program.
Very truly yours,
Enclosure
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE. BANKS
R-905
Office of the Attorney General
Washington. D. C.
October 7, 1941
Honorable Marriner S. Eccles,
Chairman, Federal Reserve System,
Washington, D. C.
My dear Mr. Chairman:
An offer to assist the Federal Government in securing state
legislative or administrative action, which vri.ll be helpful to the
national defense effort, or in advising state officials concerning
legislative or administrative proposals which might be in conflict
with the national defense program, has been made by the Council of
State Governments and the Governors' Conference Committee. To be
able to assist in such matters, it will be necessary for these organizations, as soon as possible, to know the nature and extent of
the problems likely to arise and it has been suggested, with the
approval of the Office of Civilian Defense, that this Department
make a survey in this field at this time. After this survey has
been made, the Council of State Governments and the Governors' Conference Committee will work with the different Federal agencies
concerned with the proposals with such assistance as the Department
of Justice can furnish.
The Council of State Governments, as you know, embraces the
Governors' Conference, the State Legislators' Association arid the
National Association of Attorneys-General. This organization has
cooperated effectively with the Department of Justice and with other defense organizations and agencies during the past two years.
It has occurred to me that this service might be used to
advantage in such fields as defense housing, conditions surrounding
cantonments, the health and welfare of individuals in defense areas
and in other instances where support of, or caution against, state
action would aid the national defense program. Preparations made
at this time should be helpful in getting ready for the coming state
legislative sessions. It is my understanding that seven states will
hold regular sessions, and in all probability some six or seven other states will hold special sessions in 1942.
Hence, I shall appreciate it if you will advise re of any
measures in connection with the national defense activity of your
agency, which you can foresee will require state action with as detailed a description of such measures as is practicable at this time
-2-
R-905
My purpose in making this survey is to inform you of the existence of this offer of assistance and to facilitate your using it
if you desire to do so. Of course, I do not desire to interfere in
any of the activities of your agency or with any contacts you may
have in connection with state matters. Furthermore, you will understand, I am sure, that it will be impossible for me or for this Department to pass upon and approve or disapprove the various suggestions which nay be made by the different federal agencies. However,
1 will be glad to cooperate with you and to render you any assistance
I can. To assist me in this matter, I have asked Mr. Lawrence M. C.
Smith, Chief of the Special Defense Unit of this Department, to hold
himself available to help in this matter.
Sincerely yours,
(Signed) Francis Biddle
Attorney General
155
BOARD OF G O V E R N O R S
*******
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-906
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 17, 1941
Dear Sir:
There is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased lire System for the month
of September 1941•
Please credit the amount payable "by
your Bank to the Board, as shovm in the last
column of the statement, to the Federal Reserve
Bank of Richmond in your daily statement of
credits through the Interdistrict Settlement
Fund for the account of the Board of Governors
of the Federal Reserve System, and advise the
Federal Reserve Bank of Richmond by mail the
amount and purpose of the credit.
Very truly yours,
Fiscal Agent.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT RICHMOND
156
P——9.
REPORT OF EXPENSES OF MAIN LINES OF FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF SEPTEMBER 1961
Words Sent
by N. Y.
Chargeable
to Other
F.R. Banks
Total
Words
Chargeable
380
380
381
28,959 e
. 72,393
23,685
44,954
55,001
41,789
65,812
50,631
380
380
417
380
55,381
42,169
66,229
51,011
812.46
618.63
971.60
748.35
350.39
243.00
1,376.09
253.01
21,063
44,491
41,824
60,934
380
380
467
380
21,443
44,871
42,291
61,314
314.58
658.27
620.42
899.50
205.51
274.30
328.77
536.92
621,799
9,122.01
11,608.64
Federal
Reserve
Bank
Number
of Words
Sent
Boston
Mew York
Philadelphia
Cleveland
28,579
72,393
23,305
44,573
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Board of
Governors
Total
621,799
1,172,194
—
4,305
Pro Rata
Share of
Total Expenses (l)
Payable
to
Board
of Governors
Expenses
Paid
by Banks
and
Board (2)
302.73 $
424.84 S
1,062.03
1,179.97
253.84
347.47
346.48
659.49
1,176,499 $17,259.65 $17,259.65
122.11
117.94(a)
93.63
313.01
462.07
375.63
404.49(b)
495.34
109.07
383.97
291.65
362.58
—
$3,009.06
117.94(a)
404.49(b)
$2,436.63
(1) Based on cost per word ($.014670348) for business handled during the month.
(2) Payments by Banks are for personal services and supplies and payments by Board
are for personal services and supplies (Si,174-52) and wire rental (f10,820.41)
less amount ($386.29) representing reimbursement for the cost of sending messages between the Washington office of the Leased Wire System and the local
telegraph offices of the Treasury and Reconstruction Finance Corporation. Personal services include salaries of main line operators and of clerical help engaged in work on main line business, such as counting the number of words in
messages; also overtime and supper money and Retirement System contributions
at the current service rate.
(a) Credit—reimbursable to New York.
(b) Credit—reimbursable to Chicago.
R-907 1 5 7
BOARD OF GOVERNORS
' OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For release in morning papers,
Monday, October 20, 1941
The following summary of general
business and financial conditions
in the United States, based upon
statistics for September and the
first half of October, will appear
in the November issue of the Federal
Reserve Bulletin and in the monthly
reviews of the Federal Reserve Banks.
Industrial activity continued at a high rate in September and
the first half of October. Further advances in the output of defense
products were accompanied by curtailment in some lines of civilian goods,
particularly automobiles, rubber, and silk. Prices of industrial products increased further but agricultural prices declined after the middle
of September, and on October 16 dropped sharply in response to international development s.
Production
Industrial output increased by about the usual seasonal amount
in September and the Board's adjusted index remained at 160 per cent of
the 1935-1939 average, the same as in July and August. Continued increases in activity were reported in the machinery, aircraft, and shipbuilding industries. At steel mills activity in September and the first
half of October was maintained at about 97 per cent of capacity. Output
and deliveries of nonferrous metals likewise remained at about capacity
levels, while lumber production declined somewhat from the high August
158
-2-
R-907
rate. Automobile production increased less than seasonally in September,
following the changeover to new models, and, according to preliminary
estimates, output in September was considerably below the maximum quota
that had been authorised by the Government.
In the textile industry activity declined somewhat in September, reflecting mainly a further sharp reduction at silk mills. Activity
at wool mills rose to a new high level, while at cotton mills there was
little change from, a rate slightly below the peak reached last May.
Shoe production continued in large volume, and output of manufactured
food products was maintained near the peak August level.
Output of
chemicals likewise continued at earlier high rates, but at rubber
plants activity was considerably below the level of last summer owing
to curtailment programs ordered by the Government.
Coal production, which during the summer months had been
unusually large, increased less than seasonally in September, owing
in part to temporary work stoppages at some bituminous and anthracite
mines.
Crude petroleum production advanced to record levels in Septem-
ber and the first half of October, and output of metals and shipments
of iron ore down the Lakes continued at about capacity.
Value of construction contract awards declined in September,
according to figures of the F. W. Dodge Corporation, reflecting chiefly
decreases in awards for public projects which had been exceptionally
large in August. Awards for private residential building also declined,
while contracts for other private work increased somewhat further.
159
R-90?
-3-
Total awards in September, as in August, were 80 per cent larger than
in the corresponding period last year.
This higher level reflected
mainly a greater amount cf public construction, which was nearly three
times as large as a year ago, compared with an increase of about 10 per
cent for private construction.
On October 9, the Supply Priorities and Allocations Board
announced that, effective immediately, no public or private construction projects which use critical materials could be started during the
emergency unless these projects were either necessary for direct national defense or essential to the health and safety of the nation.
Distribution
Distribution of general merchandise showed less than the
customary seasonal rise in September, following an unusually large
volume of sales in August. During the past three months sale's have
been larger than in the corresponding period of any previous year.
In the first half of October sales at department stores declined
from, the peak reached in late September when there were considerable
consumer purchases, particularly of articles subject to higher taxes
on October 1.
Loadings of revenue freight in September increased less than
seasonally, particularly those of miscellaneous freight, which have
been high in recent months, and leadings of coal, which were curtailed
during part of the month by work stoppages at some mines.
Shipments
of forest products declined considerably from the high August level.
160
-U-
R-907
Commodity prices
Prices of industrial products continued to advance in September
and the first half of October and Federal price ceilings were announced
for additional commodities, including leading types of lumber, coke,
wastepaper, paperboard, acetic acid, alcohols, and carded cotton yarns.
In some cases these ceilings were below previously existing market quotations. Price advances were permitted, however, for some other commodities under Federal control. Prices of cotton and of foodstuffs increased
further in the first half of September, but subsequently declined, owing
partly to seasonal influences. On Thursday, October 16, prices of these
commodities dropped sharply.
Bank credit
Commercial loans at member banks continued to rise during
September and the first half of October,, reflecting in part defense
demands.
Increases were substantial, both in New York and in other
leading cities. Holdings of United States Government obligations
decreased, mainly at banks in leading cities outside of New York.
Excess reserves of member banks showed little change in this period.
United States Government security market
Following a slight decline in the first half of September,
prices of long-term Treasury partially tax-exempt bonds increased during the latter half of September and in the first part of October.
The yield on the 2-3/4 per cent bonds of I96O-65 reached a new record
low of 2.01 per cent in October. Prices of taxable bonds moved within
a relatively narrow range during the period with yields slightly above
previous low levels.
161
BOARD OF G O V E R N O R S
R-908
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 18, 191+1
Dear Sir:
There is enclosed for your information a
copy of a letter dated October l6 received from lUr.
Floyd B. Odium, Director, Division of Contract Distribution, Office of Production Kanagement, written in
reply to my letter of October 11, and a copy of my
letter of this date to L'r, Odium,
It is hoped that you will be able to assure
permanent employees of the Bank temporarily transferred
to the pay roll of the Division of Contract Distribution
that upon application they wi 11 be reemployed by the
Bank, without loss of seniority or other rights,-at any
time within six months after they are transferred to
the pay roll of the Division of Contract Distribution•
Very truly yours,
9,
Enclosures 2
TO TETC FRSSIDBBTS OF ALL FEDERAL RESERVE B A M S
COPY
OFFICE OF PRODUCTION EAMGE2.ENT
Social Security Building
Washington, D, C.
jL62
October l6, 19l{.l
Hon, Ernest G, Draper
Board of Governors
Federal Reserve System
Wa shington, D, C,
My dear Governor Draper;
I have your letter of
dent of each Federal Reserve
spirit expressed therein, I
pressure under which we have
October 11, a copy of which is going to the PresiBank, and I greatly appreciate the cooperative
am particularly grateful in view of the extreme
been reorganizing and expanding.
There are three specific points, however, which I should like to clarify.
First, it is my understanding that you will be agreeable to having our
offices remain in. Federal Reserve Banks, provided, of course, that after we receive our appropriation we will pay rent to you, and that the salaries of our
staffs are also paid directly by us, as well as other expenses,
I believe we
will find in a number of cases that it is desirable to remain in the present
locations.
Second, we cannot definitely advise you at this time just when our n e w
appropriation will become available although it should be certainly within the
next sixty days e You will appreciate, of course, that until this appropriation
is forthcoming we must depend upon you to continue disbursements on our behalf
as heretofore, your reimbursement here continuing from our old appropriation, I
understand that in some instances there is the impression that the present arrangements may not continue beyond November 1, 19ljl,
The third point I have in mind has particularly caused concern. As you
know, most of our clerical employees are "loaned" from the Reserve System. We
believe that many of them may hesitate to transfer under the new arrangement
directly to our payroll and thereby sever their connection with the System, for
employment in a temporary organization* It would be unfortunate indeed at this
particular time if any wholesale replacement of the personnel were necessary.
I would greatly appreciate it therefore if you could implement the
cooperation expressed in your letter of October 11 by a further communication
to the Presidents of your member banks suggesting that if possible any of their
former employees going directly on our payroll be assured the opportunity of
resuming their status with the bank at any time within six months after the
change is made, without loss of seniority or other rights,
Thanking you again for what you have done and are doing to further the
essential work of this division, I am
Sincerely yours,
CSigned)
F, B, Odium,
Floyd B, Odium, Director,
Division of Contract Distribution
163
C
0
*" Y
R-908b
BOARD OF GOVSFliCRS OF THE
FEDERAL RESERVE 8YSTEL
Washington
October 18, 19i».l
Mr, Floyd B. Odium, Director,
Division of Contract Distribution,
Office of Production Management,
Washington, D. C.
fty dear Mr. Odium:
This m i l acknowledge receipt of your letter of October 16
in reply to my letter of October 11 regarding services rendered your
Division by the Federal Reserve Banks.
I am sure that all the Federal Reserve Banks and Branches
that have space available will be glad to have you remain in your
present locations if you so desire, provided they are reimbursed for
space on the same basis as they are reimbursed for space by other
governmental agencies as soon as you receive your new appropriation,
which you state should become available certainly within the next 60
days.
In accordance with your request, the Federal Reserve Banks
m i l continue, as heretofore, to pay on a reimbursable basis the expenses incurred by the offices of the coordinators located in Federal
Reserve Bank and Branch buildings until December 1, 19lj 1, or such
earlier date as you are able to make the necessary arrangements to pay
such expenses direct. As stated in my letter of October 11, it is
understood that all arrangements for your n e w field offices, located
outside Federal Reserve Bank and Branch buildings, including payments
for salaries and other expenses incurred by them, wi 11 be taken care of
by your office direct and not by the Federal Reserve Banks.
I a m sending a copy of this letter to the President of each
Federal Reserve Bank with the request that he cooperate with your
office to the fullest extent practicable with respect to the third point
raised in your letter, i.e., that wherever possible he assure permanent
employees of the Bank transferred to your pay roll that upon application
they will be reemployed by the Bank, without loss of seniority or other
rights, at any time within six months after the change is made.
Very truly yours,
Ernest G. Draper.
164
BOARD OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
WASHINGTON
R-909
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
********
October 20, 19W-
Dear Sir:
Referring to the Board's letter of September
22, I9I4I, R-888, there is enclosed for your information
a summary of the September I9I4.I reports of the activities
of Federal Reserve Bank liaison officers in connection
with the Defense Savings Program.
In order that the monthly summary may be of
some current interest, it will be appreciated if arrangements are made so that statements of the activities of
the liaison officer will be received at the Board's
offices not later than the tenth of each month. If
necessary, any activities of the liaison officer on the
last few days of the month may be included in the report for the following month.
Very truly yours,
L. P. Bethea,
Assistant Secretary
Enclosure
TO THE PRESIDENTS OP ALL FEDERAL RESERVE BANKS
COPY TO LIAISON OFFICERS
165
R-909a
SUMMARY OF SEPTEMBER 194% REPORTS OF
ACTIVITIES OF FEDERAL RESERVE LIAISON OFFICERS IN CONNECTION
W I T H DEFENSE SAVINGS PROGRAM
Boston
A number of conferences have been held with employers desiring
information regarding pay roll deduction plans and the Reserve Bank has
been in close touch with several large companies now having such plans,
assisting them in getting organized to handle the work.
New York
Continued effort has been made toward a 100 per cent
tion of sales agents. In the Second Federal Reserve District,
now a 100 per cent qualification of New Jersey and Connecticut
banks and a like percentage of New York and New Jersey savings
qualificathere is
national
banks*
New York. Substantial progress has been made on work in connection with voluntary pay roll deductions. The plan being evolved is similar
to that of the Minneapolis Reserve Bank, except that it is put into effect
by the Committee rather than by the Bank, The Life Insurance Underwriters
group is providing m e n who will devote their entire time to this work,
assisting employers in setting up appropriate pay roll deduction records.
Other groups also are arranging to provide the Committee with m e n to
assist in this work. The State Bankers' Association is sending out salary
allotment plan data for the attention of banks, following this up with
suggestions to be passed on by the banks to their clients. W i t h the approval of the Governor, a representative of the State Department of
Education has become a member of the executive committee of the State
Committee and is working out a coordination of the schools of the State
with the Committee and cooperating with the Treasury Department in developing posters and written material adapted particularly to schools.
It is expected that a school official wi11 bo a member of all local
committees. The Reserve Bank continues to provide the State Chairman with
statistical and economic research material.
Connecticut. W i t h headquarters in Hartford, which is in the
Boston District, it is logical that those in charge should be more concerned with the State as a whole than working with the New York liaison
officer in any particular detail on Fairfield County, the only County in
the Second District. No further contact has developed, although the
liaison officer continues to work with the banks in Fairfield County.
166
• 2 —
R~909-a
Hew York (Cont'd)
Hew Jersey. It appears that the State Administrator is concentrating on the pay roll deduction plan and is pleased with the results so
far obtained.
Philadelphia
The liaison officer has directed his efforts toward establishing
closer relationship between companies which have pay roll deduction flans
and the Bank's Fiscal. Agency Department. Other activities included stimulating the interest of local newspapers in the Defense Savings Bond Program
and assisting in a general way in the campaign of the Retail Merchants'
Association* During the campaign, the liaison officer attended the organization meeting of the local Chamber of Commerce and outlined the results
of the sales of bonds in the Third District.
Five additional companies have installed pay roll allotment plans,
and the number of employees now participating has risen to approximately
30,000• The liaison officer has maintained close contact with all companies
having such plans in order that a standard form of remittance might be used
and has had company officials visit the Bank for the purpose of discussing
any problems that may have arisen and of seeing the operation of the Defense Savings Unit. In the case of one company which did not secure a
favorable response to its efforts to install a pay roll deduction plan,
a new approach was suggested which it is hoped will be conducive to better
results. At a meeting held in the Reserve Bank with officers of the
Metropolitan Edison Company of Reading, Pennsylvania, the ground-work was
laid for the presentation of the pay roll allotment plan described in the
"Field Organization News Letter" of September 27, 194l.
Several photographs have been taken by newspapers showing
officers of various fraternal organizations purchasing Defense Savings
Bon- s at the Reserve Bank* Arrangements have been made to furnish items
of local interest to the press, using due care that such information does
not in any way conflict with the publicity of the Defense Savings Staff,
The Secretaries of Banking of Pennsylvania, Now Jersey, and
Delaware have been very active in urging banks to qualify as issuing agents,
and the liaison officer is furnishing them with periodic lists of banks
that have qualified.
Cleveland
Ohio. Since the Administrator has opened an office in Cleveland
and a Deputy Administrator has been appointed, more frequent contacts have
been maintained. The liaison officer has accompanied the State Administrator to five group meetings of the Ohio Bankers' Association for the
purpose of discussing Defense Bond activities, and the same procedure will
167
- 3 —
R-909-a
Cleveland (Cont'd)
be followed in connection with four other group meetings to be held during
October. The Bankers' Association and the Superintendent of Banks have
been very active in obtaining banks to qualify as issuing agents. A
meeting of the Administrator, Deputy Administrator, a representative of
the Cleveland Life Underwriters Association, and the liaison officer was
arranged to discuss a plan to interest employers in a salary deduction
plan. The Underwriters' Association has appointed a committee of topranking members to do this, and it is planned to hold a luncheon mooting
of about 50 employers, at which time their cooperation will be solicited.
It is also planned to follow a similar procedure in other citics in Ohio.
The liaison officer received a request for assistance from a nonmember bank
in a manufacturing city of about 10,000 population, which indicated that
the community was not satisfied with the progress made in the sale of bonds.
One of the larger Cleveland banks has discussed a salary deduction plan
which it proposes to submit to employers who are customers of the bank.
The payments will be collected by the employer and recorded at the bank in
individual Defense Bond accounts for the employees, A bond will be purchased by the bank whenever an employee has accumulated the required
amount,
West Virginia. The liaison officer has continued to notify the
Commissioner of Banking as banks have qualified as issuing agents, and has
written to the banking representative on the State Committee offering to
be helpful in any way possible.
Kentucky. A State Chairman was recently appointed and the
liaison officer has written to him offering to be of assistance in any way
possible.
Staff.
Pennsylvania.
No appointments have been made by Defense Savings
Richmond
When the Deputy Administrator for Virginia was appointed, the
liaison officer called upon him and offered his cooperation and assistance
after explaining the Bank's position in the program. The Virginia organization is engaged in setting up an office in Richmond, and the liaison
officer has arranged to assist the organization when it begins to function.
No appointments for Maryland have c.s yet been made.
The liaison officer has kept in close touch with the Secretaries
of the several State Bankers' Associations and the State Banking Commissioners in the District, all of whom have been very active in their efforts
to have banks qualify &s issuing agents. In several instances they have
obtained applications and forwarded them to the Reserve Bank's liaison
officer.
168
-
h -
R-909-i
Richmond (Cont'd)
Copies of the weekly supplements to the list of qualified issuing
agents have been furnished to bankers' associations and others entitled to
receive them.
Several requests have been received for advertising material and
copies of speeches, and the liaison officer has assisted in supplying the
needs in each case.
Atlanta
Supplemental lists of qualified agents have been furnished to
Secretaries of the State Bankers' Associations and others. Supplies have
also been furnished to the Field Representatives of the Credit Union Section of the Farm Credit Administration.
The Bank has cooperated with the Georgia Administrator in arranging for Atlanta newspapers to make pictures in connection with the
sale of Defense Savings Bonds to a fraternal order. Correspondence has
also been had with other State Administrators on points concerning which
they feel that they may in the future desire assistance.
Telephone calls, personal visits and letters have been handled
from various business organisations requesting supplies, salary deduction
plans and other information pertaining to the Defense Program. Close
contact has been maintained with the State Chairman, Salary Allotment
Division, and copies of salary deduction plans have been furnished him.
The Managing Director of the Nashville Branch spoke at a
Rotary Club meeting in Columbia, Tennessee, on the subjtoet of Defense Savings Bonds. Arrangements have been made for speeches on Defense Savings
Bonds at the group meetings of the Georgia Bankers' Association being held
in October.
Chicago
Activities during September have been on an expanding scale and
the liaison officer has been in constant touch with the various State Administrators, particularly the one for Illinois*
The principal activity has been in connection with pay roll
allotment plans, and, as information has been received from or regarding
various corporations interested in instituting such a plan, it has been
promptly transmitted to the respective State Administrators. Likewise,
when applications for bonds have been received# a record of the concerns
submitting the applications for employees has been maintained and the
169
R-909-a
Chicago (Cont'd)
State Administrators informed of the name of the official handling the
transactions and such other information as has been received, The Reserve
Bank has been able to make a number of constructive suggestions based on
its experience with different types of plans#
Very appreciative letters have been received from the State Administrators , expressing their desire and willingness to cooperate in
every way possible, and a personal invitation has been extended to the
out-of-town Administrators to visit the Bank whenever they are in Chicago.
Assistance has been extended to the Illinois Administrator and
his staff in connection with publicity matters, furnishing blank bonds to
bo used in posing pictures with celebrities. When requested, the President
of the Reserve Bank hp.s been willing to appear in photographs in order to
bring the Bank into the picture and increase interest. The Illinois Administrator's office, which is in the Reserve Bank building, is not yet
equipped with a mailing department, and the facilities of the Bank have
been extended in forwarding posters, literature, ctc, to various parts of
the State,
During the A.B.A. Convention, Mr. B. M. Edwards, Assistant to the
Secretary, and Mr. R, W. Sparks, Associate Field Director of Defense Savings
Staff, were honor guests and spoke briefly at a luncheon given by President
Young to State Banking Commissioners and Supervisors who were attending the
Convention. Messrs. Johnston and Touchstone of Defense Savings Staff, who
are primarily interested in broadening the pay roll allotment plan, also
visited the Bank.
The general policy of the Reserve Bank is to supplement the work
of the State Administrators rather than to attempt to initiate sales promotional work. It is the Reserve Bank's view that leadership in sales promotional work must rest either with the State Administrators or the Reserve
Bank, as otherwise embarrassing and harmful conflicts might very easily
result. The relationship with the various State Administrators is very
harmonious, and it is believed that this type of cooperation will produce
the most beneficial results.
St. Louis
The liaison Officer called upon the Secretary of the St. Louis
Defense Savings Committee who appreciated the offer of assistance given.
The liaison officer also visited the office of the State Defense Savings
Staff in Jeferson City, Missouri.
On September 25, the liaison officer addressed a meeting of the
St. Louis Chapter of the Missouri Mutual Credit League on the subject of
—6—
R—909_,8-
St. Louis (Cont'd)
Defense Savings Bonds, and remarks were included relative to credit unions
qualifying as issuing agents.
An article was published in the September $0 issue of the Reserve Bank's Monthly Review of Conditions relative to Defense Savings
Bonds. The "Minute Man" illustration appeared on the cover. Edgar A.
Guest's poem, "Bonds for Defense", as well as numerous captions, "Buy
Defense Savings Bonds", were inserted in the employees' monthly publication, "Four-Four News".
Supplemental lists of bonks qualified as issuing agents have been
furnished to bankers' associations and others interested. Several of the
State bankers' associations and supervisors have taken an active part in
encouraging banks to qualify as issuing agents. Figures on sales of Defense Securities are given to the press weekly, and much helpful publicity
has been received.
. Minneapolis
During September, the Reserve Bank invited to luncheon-meetings
at the Bank the heads of approximately 125 Minneapolis firms employing approximately 60,000 people. These firms are in the process of installing a
pay roll deduction plan to enable their employees to conveniently purchase
Defense Savings Bonds. As of September 50, 66 of these firms having JO,796
employees report that 13,552 employees had signed pay roll deduction orders
aggregating $157,505 monthly (these figures are net final), which indicate
that 2+5 per cent of their employees arc already purchasing bonds under this
plan at an average of $10 a month for each employee. There are about 60
additional firms which are now in the process of installing this pay roll
deduction plan, but figures are not as yet available on their progress.
Kansas City
Contact has now been established and is beinr maintained with all
State Administrators in the District and supplies, information and monthly
reports of activity and progress are being furnished to them. Similar contacts are being maintained with the Secretaries of State bankers' associations and others in an effort to extend the number of qualified issuing
agents. A letter has been addressed to all banks that have qualified, but
have not yet ordered a stock of bonds, urging them to do so.
The Reserve Bank has cooperated with numerous firms and municipalities, assisting them in inaugurating pay roll deduction plans. A
representative of the Bank has led discussions with groups of various
organizations, the most recent being the Midwest District Meeting of the
171
- 7 -
R-909-a
Kansas City (Cont'd)
Credit Union National Association at Omaha, Nebraska, and the Corporate
Fiduciary Association at Kansas City, Missouri.
Dallas
(No report submitted.)
San Francisco
During September, the liaison officer kept in constant touch with
Defense Savings Bond organizations of the States comprising the District
and furnished them with material of interest, such as a Speakers Handbook
on United States Defense Savings Bonds and Stamps, prepared by the
California Bankers' Association, The handbook has been used by five hundred
competent bank speakers who have been appearing before hundreds of organizations throughout the State. In addition, State Administrators have been
kept informed of changes in the list of issuing agents.
There has also been brought to the attention of State Administrators, with the suggestion that it may be of interest to the Presidents
of State banking associations, the legend, "Support Your Government ... Buy
Defense Bonds, Stamps and Tax Notesi", which appears on the monthly statements of account rendered to customers of a bank in San Diego.
In the absence of the appointment of an Administrator for Northern
California, the Reserve Bank has aided some industrial organizations to
project their pay roll deduction plans. The Bank has also furnished material in connection with the establishment of a plan of pay roll deduction to
tho managing editor of the official publication representing the personnel
in the employ of the State of California.
While the services appear to be appreciated, it is felt that
there are limitations at this time as to how far liaison officers may go
in dealing with field forces without giving the appearance of assuming some
of the prerogatives of the Defense Savings Staff in Washington*
172
BOARD OF G O V E R N O R S
£-910
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 21, I9I1I
Dear Sir:
For your information, there is enclosed a
copy of a letter dated October 16, 19^1» from Kr.
Donald M. Nelson, Executive Director, Supply Priorities and Allocation Board, and of my reply thereto
dated October 21, I9I1I.
Very truly yours,
/
Enclosures 2
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BARKS
ICTORY
R-910%
iLLLI
173
SUPPLY PRIORITIES AND ALLOCATION BOARD
Social Security Building
Washington, D, C.
Office of
Donald K# Nelson
Executive Director
October 16, 19l;l
The Board of Governors of the Federal
Reserve System,
Federal Reserve Building
Yvashirgton, D. C.
Attention: Honorable Ernest G. Draper
Gentlemen:
At the request of the Yvar and Navy Departments the Federal Reserve
Banks and Branches have been making available to Inspectors of Naval Materiel, Supervisors of Shipbuilding, Commandants of Naval Districts, and
officials of the Navy Department in Washington confidential information
regarding industrial concerns which are being considered as potential contractors or who have made application for advance payments on contracts,
Similar information has bo en made available to officials of the
Under Secretary of War's Office and contracting officers of the Supply
Arms and Services of the War Department. Also, from time to time, the
Board of Governors has obtained confidential financial information through
the Federal Reserve Banks at the request of the Office of Production
Management.
In order that this work may continue as in the past without interruption, it is suggested that the Board of Governors request each
Federal Reserve Bank and Branch to notify the officers now serving as
Federal Reserve Defense Contract Officers that this office desires that
this valuable service continue to be made available to officers and
officials of the War and Navy Departments, the Office of Production
Management, and the Supply Priorities and Allocations Board, It is also
hoped that the Federal Reserve Defense Contract Officers will continue
as in the past to render all assistance to member banks, nonmenber banks,
and other financing institutions in assisting concerns engaged in defense
work to obtain whatever financial assistance is necessary in order to enable them to successfully finance the performance of the.i r contracts.
Your cooperation will be very much appreciated.
Very truly yours,
(Signed) D, IV. Nelson
Donald IV. Nelson
E
COXY
BOARD OF GOVERNORS OP THE FEDERAL RESERVE SYSTEM
mSINGTON, D. C,
October 21, 19lil
Mr• Donald L, Nelson, Executive Director,
Supply Priorities and Allocation Board,
Room 5603> Social Security Building,
Washington, D. C,
Dear Kr, Nelson;
Thank you for your courteous letter of October lb
which has just been received. We note your suggestion that
the Board of Governors rotify its various Defense Contract
Officers that they continue to render ir. the future to the
War and Navy Departments, the Office of Production Management
and the Supply Priorities and Allocation Board the same service relating to financial information, etc., that has been
in effect for some time in the past. We are also requesting
these Federal Reserve Defense Contract officers to continue
as in the past to render all assistance to member banks, nonmember banks and other financing institutions in aiding concerns engaged in defense work to obtain whatever financial asaistance is necessary in order to enable them to successfully
finance the performance of their contracts.
You may be sure that the Board of Governors desires
to be of every possible help in these fields and it is today
forwarding a copy of your letter to the President of each Federal Reserve Bank requesting him to have his Federal Reserve
Defense Contract officer continue to render the services you
desire,
With best wishes to you, believe me
Yours sincerely,
(Signed) Ernest G. Draper,
"91°b
174
175
BOARD OF GOVERNORS
OF THE
******
FEDERAL RESERVE SYSTEM
R-911
WASHINGTON
%+mwf*
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
xsFSf.-'
October 24, 1941
>*
Dear Sir:
On Tuesday, November 11, Armistice Day, the offices of the Board
of Governors of the Federal Reserve System and all Federal Reserve Banks
and branches will be closed.
The Board is advised that the following holidays also will be
observed by Federal Reserve Banks and branches during November:
November 1
(Saturday)
New Orleans
November 4
(Tuesday)
New York
Buffalo
All Saints' Day
Philadelphia
Pittsburgh
Richmond
Election Day
On November 1 and 4> the offices affected will not participate
in either the transit or the Federal Reserve note clearing through the Interdistrict Settlement Fund. Please include transit clearing credits for
such offices with your credits for the following business days. No debits
covering shipments of Federal Reserve notes for account of the head offices
mentioned should be included in your settlement of November 4»
The Federal Reserve Bank of Cleveland and its Cincinnati Branch
will be open until 1:00 P.M. on November 4- Debits covering note shipments
for account of the head office and transit clearing credits for both offices should be included in your settlements for that day.
Advice with respect to Thanksgiving Day is held in abeyance awaiting the President's proclamation and action by the authorities of the respective States.
Please notify branches.
Very truly yours,
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
A. Nelson,
s
Assistant Secretary
R 912
~
176
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Statement for the Press
For release in morning newspapers of
Monday, October 27, 19Ul»
October 25, 19Ul
The Board of Governors of the Federal Reserve System has adopted,
effective December 1, 19Ul* several amendments to Regulation W, dealing
with instalment credit.
The amendments are mainly of an administrative and
technical nature*
The amendments include adoption of the so-called "purpose test",
requiring a borrower on an instalment loan, after January 1, 19li2, to sign
a statement as to the purpose of the loan; exempting business instalment
loans from the Regulation, as well as loans to purchase or construct an entire building, and making the 18-month maximum maturity apply to all install
ment loans of $1,500 or less, instead of $1,000 or less, as previously provided.
In addition, more liberal provisions have been adopted to facilitate
repayment of instalment loans by farmers in accordance with the seasonal
nature of their income*
Also, in the case of so-called "add-ons", options
are provided —- either the additional credit may be treated separately, or
the combined credit may be paid in 15 months, the monthly payments to be not
less than they would have been without the add-on.
As amended, the Regulation closes the loophole whereby, although
dealers in listed articles were required to obtain down payments, cash lenders
were free to lend the full price unless the article was given as security
R-912
-
2
177
-
for the loan.
Other provisions are as follows:
All instalment loans of $1,500 or less which are not for the
purpose of purchasing a listed article are made subject to the 18-month
maturity limit (except modernization loans, where the figure remains $1,000)•
Down payments of $2 or less will no longer be required; and the
$5 minimum on monthly instalments (which was to become effective January 1,
19^2) is eliminated#
The extension of an instalment loan which is for the purpose of
making a down payment on a listed article is prohibited.
All business loans are exempted from the Regulation unless they
are for the purpose of purchasing listed articles.
The provision covering instalment credit for farmers permits any
schedule of payments, if the down payment and maturity requirements of the
Regulation are complied with, and if one-half of the balance is paid within
the first half of the maximum maturity.
These amendments are effective December 1, 19Ul, and the pro**
visions of the Regulation which were to have become effective on November
1 are postponed to December 1.
Distribution of copies of the amendments will be made by Federal
Reserve Banks and branches#
178
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-913
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 25, 194-1
Dear Sir:
You will recall that the Board's letter of September 5, 194-1
(5-879) forwarded to you copies of forms and memorandum of procedure
for use in connection with designations of defense housing to be made
try the Defense Housing Coordinator under section 6(e)(2) of Regulation
W.
These forms and the memorandum of procedure have been somewhat altered, and revised copies are being forwarded under separate
cover directly to your head office and your branches (if any) ty the
Division of Defense Housing Coordination. Your head office will receive 150 copies and each branch will receive 25 copies.
You will note that an important change in procedure is that
the applications are to be submitted to the local representatives of
the Division of Defense Housing Coordination rather than dircctly to
Washington.
A list of the local representatives of the Division of Defense Housing Coordination will be included in the material forwarded
to you, and these local representatives will have additional copies of
the forms and memorandum of procedure. It is suggested that contact
be maintained with such representatives in your district with a view
to facilitating public information with respect to these matters as
indicated in the Board's letter of September 5*
Very/truly you$s.
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
179
B O A R D OF G O V E R N O R S
*******
OF THE
FEDERAL RESERVE SYSTEM
R-9U
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*********
October 30, 1941
Dear Sir;
•
Under separate cover we are sending you two copies of the
new edition of the Federal Reserve Chart Book containing charts on
Bank Credit, Money Rates, and Business. Copies have also been sent
to your Research Department. Additional copics for the use of the
Bank's staff may be procured upon request without charge.
Several of the charts have been substantially revised and
all of then have been brought up to date with the latest figures
available as of September 3, 194-1- Space has been left blank with
lightly printed grids for plotting data through 1942.
»
In accordance with our policy, copies are furnished free
upon request to Government departments, State banking departments,
and to the economics departments of colleges and universities. To
others we shall continue to charge 50 cents for single copies and
4-5 cents per copy in quantities of ten or more for classroom or
other use.
Our practice is to make a charge to member banks for copies ordered by them, but, as stated in Mr. Morrill's letter of March
17 on this same subject, should you desire to distribute copies to
some of your member banks at your own expense, it is not felt that
this would be in conflict with the Board's policy.
Very truly yours,
Bray/Hammond, Chief,
Correspondence and Publications Section.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
«
180
BOARD OF G O V E R N O R S
******
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-915
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 31, 1941
Dear Sir:
A form of registration statement for purposes of Regulation W (Form F.R. 563) has been approved by the Board, and several
mimeographed copies are enclosed herewith, The form is now being
printed here on single sheets, 8-1/2fcy11 inches, with the instructions on the reverse side. Please notify the Board as to the
number of printed copies that you will require.
The distribution of these forms will be, in general, in
the hands of the Federal Reserve Banks and will be effected try such
means as they may determine. It is assumed that ordinarily two copies of Form F.R. 5&3 will be needed by each prospective Registrant,
one to be returned to the Reserve Bank of the district in which his
head office is located and the other to be retained by him. The
facilities of trade associations, chambers of commerce, and local
banks may be used in distributing these forms to whatever extent
you consider desirable. The Board has agreed, however, to supply
forms to the Federal Home Loan Bank Board for distribution to all
building and loan associations, to the Farm Credit Administration
for distribution to all Federal credit unions, and to the Credit
Union National Association for distribution to all State-chartered
credit unions. Building and loan associations and credit unions,
therefore, will not as a rule have to obtain their forms or notices
from the Reserve Banks.
There are enclosed a suggested form of notice to accompany
the forms distributed ty the Federal Reserve Banks, and a form of
"Registration Certificate" to be used by the Reserve Banks in acknowledging the completed statements received. It is requested that
each Reserve Bank determine for itself whether to use the suggested
form of notice, either as it stands or with modifications, but that
all Reserve Banks use a "Registration Certificate" in the form enclosed. Each Reserve Bank will in any ovent arrange for its own
printing.
R-915
—2—
Your attention is invited to the fact that Form F.R. 563
includes a note suggesting that Registrants with questions or difficulties should direct their problems to the Reserve Banks. In
order to assure a uniform treatment of these problems and in order
to deal with many minor points that were suggested at the time the
first draft of the registration statement was circulated, some additional notes for the use of the Reserve Banks (but not for distribution to the Registrants) have been prepared, and several copie
are enclosed herewith.
The Board's staff is working on plans for the tabulation
of the information that will be brought in on these registration
statements, and there will be further communications in due course
on this subject.
Very truly yours,
L. P. Bethea,
Assistant Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-915-a
For* F.R. 563
, This statement la to be filed with the Federal deserve lank of the district in
Please leave
which the maim office of the Registrant is located, and should be sent to reach the
Federal Reserve Bank on or before December 31, I94t, Before answering the questions.
,
please read the instructions on the back of this form. If you have any question about
this form which i* not covered by the Instructions on the beck, please communicate
jrlth the Reserve Bank*
this space blank
REGISTRATION STATEMENT
Date
1941
This statement is filed in accordance with the provisions of Regulation 1 issued by the Board of Governors
of the Federal Reserve System pursuant to Executive Order No# 8843 issued by the President of the United States
relating to consumer credit.
Name of Registrant (print or type); state also trade name If different from legal na
Street Address
City
County
State
le Indicate by check mark whether Registrant is in business as an individual^
corporation
. or other form (specify)
" • 6*ner«t nature of business
1,1
* Credit outstanding and sales
(Check the principal business of Registrant)
J&* Financial business
I* Sales finance company
2* Commercial bank or trust company
(Whether or not subject to
1941
I* Retail Instaiment paper purchased,
2* Retail Instalment credit/ixlenwd
6* Other financial business (specify)
d i rect I y a#*.*####*###### #.»**#
3* Personal instalment cash loans.....#
8#
Registrants In classes 7 to 16 please report the
7. Department or goners) store
following data:
8* Automobile dealer
9* Furniture or house furntsMngs store „
40 e Household appliance or radio store
H * Electric or gas utility company
j-j
omittedf where amount
paper held at elose of business September 3 0 ,
5 * Credit union
A
a
(in even dot lira, cents
Regulation W)
is none, write *nene%)
A* Registrants in classes I to 6 please report the
unpaid balance of retail and personsI instalment
3* Industrial loan company or bank
H, State**licensed small loan company
* Dealer, contractor, or other business
partnership^
12
1
Retail sales.
months ending September
Total net sa es * * * * * * ^ *
4
30. 194Is
j
5* The sales reported in item 4 were approximately*
12* Hardware or automotive eooessory store
(a) instalment sales (inet*
13* Dealer or contractor in heating, plumbing or air-conditioning equipment
down-pay men t s) .. . • • •**_ -- jG,
(b) other credit sales.,*.*
tc) cash sales.**.*..
14** Dealer or contractor in other cons true*
tion or repair materials
15* Manufacturer (specify type of product)
Retail receivables, unpaid balance it close of
business September 30, I94ls
1 6 * Other (specify).
6* Instalment receivables.
%
7* Other reoe i veb I es*# * * . *.#**#***.* *
TV* Did Registrant have any branches on September 30, 194l?w
If so, how manytw
(Please attach a list of brenohe^ and their addresses, unless the Registrant is a bank insured by F*t>fl*C*)
V# Is 50$ or more of Registrants voting stock owned «r controlled directly or Indirectly by any othwr
company?
If so, please fill ins
Name of controlling company
City
State
Street Address
nature of business of control Iing company
VI* Exp 1 ana ties*, if sny, irfi tcb Re glsrtrsnt may wi sh to addie
This h to certify that to the best of my kno*i##&^ and belief the foregoing statement is correct (except as
to any H:#meiseHe#d ?sst^ which are estimated in good faith)*
Plesse print or type here the name and official title
of the person whose signature appears at the right
Authorized Signaturo
(Numbered to correspond with questions on Registration Statement)
183
EEBiUSSMSXiSl*
JMM*~~ Instalment credit should iwluds credit for which the agreed repayment is In two or more parts*
Instalment sales should Include sales made on Instalment credit*
In case the records of the Registrant are kept on such a baa Is that receivables he Id on September
30, 1941, and sales fer the 12 months snding on that date art not readily available, the Registrant may In*
stead report the amount of receivables held on a m y pther ds$e withM IS dave before or after September 30,
and sales for the year ending on such other date
in which case the date used should be stated. Businesses
which were not in operation on September 30, 1941, pleass answer question III for such later date as IS convenient, clearly indicating the date used*
A business concern organised to succeed another concern doing
similar business should report for the concern succeeded, If possible*
jj/*~-#rsnchee should include storss or offices at which the Registrant is engsged in making instalment » sales or otherwime extending instalment credit, or purchasing or discounting or making loans on Instalment
obligations,
Vl^l—This statement may be signed by any official ordinarily authorized to sign statements for the
Registrant,
SPECIAL INSTRUCTIONS FOR FINANCIAL BUSINESSES; (Sales finance company, bank, lean company, credit union, or
other financial business)*
HJ*A*~~Any hypothecated payments or deposits which are for the purpose of retiring loans should be deducted before reporting the unpaid balances of such loans*
In case a Registrant cannot readily secure an exact
division of Its outstandings between items 11 l*A~l, 2 and 3, the division may be estimated*
III.A.I and a.Wmclude the unpaid balances of all frrimffiyt credits ^rlsin^ from the retail eale of and
secured by art I c lee, whether or not listed iq fogul*t|on ;|U #uch as automobiles, trucks, household appliances,
furniture, clothing, jewelry, etc,, including else loans fgr building repair or ^modernization (whether or not
insured under FHA Title I and whether or net secured)* Any retail instilment paper purchased from or rsdiscoated far dealers or other? should be reported in item Ul*A-l snd loans made directly to eojimmsfo for the
purchase of snd secured by such articles should be reported in 11 l - M * fto ftot Include loana mads to dealers
and finance companies on their own promiesory notes, even if secured by the pledge of instalment paper*
IIl*A-3.—Report the unpaid balances of all secured and unsecured instalment loans which were msde to in*
dividuaIs, including those used for such purposes as consolidation #f debts, medical attention, general personal
expend! twos, etc* (but do not Include any loans reported in Item 11 UA-2, nor loans to business concerns for
business purposes, nor loans secured by mortgages or oiher Hens on real estate, nor agricultural loans)*
SPECIAL INSfRUCTIONS FOR DEALERS« 00*T*AmR&. AND OTHERS,
11l*B*4.^Give net retail sales figurs (gross sales isss returns and discounts), but do not deduct trade*
ins, A store thou Id include sales of leased depsrtsmmta for whieh It arranges and ho I da retail credit*
A
Registrant which is engaged in manufacturing or ether,busineas should report only the sales which It makes
at retail*
A Registrant who is a contractor should include receipts from repair work and the like. There
shotltd be excluded from item I h o w e v e r , sales of clsotffcitv or gas by s Registrant who is s utility
company and sales of real Qfftatp (and receivables arising from such sales should also be excluded from
Items I ll#8#6 and 7),
A concern
ich was In businesa on September 30 but was not in operation throughout the 12 montha
ending on that date, should report sales for only that part of the period for which it operated, indicating
clearly thm length of such period*
I I I I n s t s l m e m t sales* should include all saiss on instalment credit, regardless of whether the
piper is sold or discounted or held by the Registrant, and should Include the down psyment (whether eesh or
trade-in) as we 11 as the amount deferred*
"Other credit sale,;* should include those on open credit, charge
account, or similar basis*
11l-B-6 and %.**RetaiI receivables should represent the unpaid balances of all receivables, whether re*
presented by notes, book accounts, or otherwise, arising from fo^il salfs fry foe Registrant* including ssles
of automobiles, trucks, household appI lances, furniture, clothing, jewelry, building repair and modernization
(whether or not insured under FHA Title l), etc. Retail receivables should include such credits even If
pledaed as security foe loans to the Registrant, but shoul| not Include credits sold to (or discounted with)
a bank or finance or other company with or without recourse*
In case s Registrant, In sddltlon to holding receivables arising out of its own retail safes
(reportable against items 1I t-B-6 and 7), also hold# receivables yHch were purchase^ or which arose from
Iepdinpfc>vthm Rcfistrant. the receivables of the latter ty|es should be reported against ths appropriate
items in group 111-A, (Some Registrants <*- such as some manufacturers or public uti W t y companies — may
have no retail sales or retail credit to report under group |M-B but should report their purchased paper
or looms under group 111-A*)
"
In case ths Registrant is unable to determine exactly, without undue inconvenience or expense* the
division of its receivables between instalment and other credit, this division may be estimated*
H ! § t -^Section 3(d) of Regu I at I en 1 provides in part as followst
"The license of any Registrant may, after reasonable notice and opportunity for hearing, be
suspended by the Board, either in its entirety or as to particular activities or particular offices
or for specified periods, on any of the following grounds*
(1) Any material misstatement or omission willfully or negligently made in the
registration statement;
(2) Any willful or negligent failure to comply with any proviaion of this regulation
or any requirement of the Board pursuant thereto*"
R-915-b
y
•
Federal Reserve Bank of
NOTICE REGARDING REGISTRATION IN CONNECTION WITH REGULATION W ON
CONSUMER CREDIT
Under authority of Executive Order No. 8843 issued by
the President of the United States, dated August 9, 1941, the
Board of Governors of the Federal Reserve System on August 21
issued Regulation W dealing with Consumer Credit. Section 3 of
this regulation provides that all those who are subject to the
regulation are required to be licensed; all such persons and
organizations are automatically given a license which continues
until December 31; 1941> but in order to have a license after
December 31, 1941, it is necessary, on or before that date, to
file a registration statement on the required form. This notice
is to describe who must register and how registration is to be
accomplished. Two copies of £he required form are attached to
this notice.
Who Must Register
A Registration Statement should be filed by any person or organization which is:
(1) engaged in the business of making instalment
sales of any of the articles listed in the
Supplement to Regulation W (which list is
printed on the back of this notice), or
(2) engaged in the business of making instalment
loans in amounts of $1,500 or less, or instalment loans in any amount secured by articles
listed in the Supplement, or
(3) engaged ip the business of discounting or
purchasing (or lending on the security of)
instalment obligations arising from transactions described in (1) or (2).
How to Register
Registration is accomplished by filling out Form F.R. 563
and filing it with the Federal Reserve Bank (main office or branch)
of the district in which the Registrant's main office is located.
A map of the United States, showing the locations of the Federal
184
-2-
R-915-b
Reserve Banks and branches, is printed on the reverse side of this
notice. Only one copy of the Registration Statement need be filed
the second copy is provided for the files of the Registrant. Addi
tional copies of Form F.R. 563 may be secured from any Federal Reserve Bank or branch.
Only one Registration Statement is required for any one
person or corporation, which will cover the main office and all
branches, but each subsidiary, if it is a separate corporate entity and is engaged in the business outlined above, is required
to file a separate Registration Statement.
Instructions for filling in Form F.R. 563 are given on
the back of the form, and these are intended to enable the Registrant to fill in the form quite readily. If in completing the
statement, however, any Registrant has questions which are not
answered by these instructions, or finds that following the
instructions exactly would cause undue expense or inconvenience,
the Registrant should take up such questions v.dth the Federal
Reserve Bank.
The foregoing notice applies only to persons who are in
business and are required to register on or before December 31,
1941. For persons who begin business after that date and who will
be required to register, an appropriate form and instructions will
be obtainable from the Federal Reserve Bank at that time.
R-915-c
REGISTRATION CERTIFICATE
.
This is to certify that
(Name)
of
1
1
(Place)
has filed a registration statement pursuant to Regulation W relating to
consumer credit, issued by the Board of Governors of the Federal Reserve
System pursuant to Executive Order No. 3843 of August 9, 1941, and is
licensed under said regulation.*
FEDERAL RESERVE BANK! OF
By
Authorized Signature
* Under section 3(d) of Regulation W, any license may, after reasonable notice and opportunity for hearing, be suspended by the Board
of Governors of the Federal Reserve System for:
(1) Any material misstatement or omission willfully or
negligently made in the registration statement; or
(2) Any willful or negligent failure to comply with any
provision of Regulation W or any requirement of the Board
pursuant thereto.
ADDITIONAL NOTES REGARDING THE FILLING OUT OF
FORM F.R. 563, REGISTRATION STATEMENT UNDER REGULATION W.
•
e
R-915-d
187
In addition to the instractions which are printed on the back of
Foim F.R. 563, the registration statement prescribed under Regulation W,
a number of questions have arisen which may be brought up by Registrants
but which are not deemed to be of such general application as to call
for answers in the instructions. The following notes are intended to
assist the Reserve Banks in answering such questions when they are brought
up, and to increase the uniformity of reporting by the Registrants in
different districts.
Determining the general nature of Registrant's business. -
„
In answering question II it is intended that the Registrant should
check (or write in against items 6 or 16) the usual designation by which
the establishment is known to the trade or public. Where there is doubt
on this point and the Reserve Bank is asked to assist the Registrant in
deciding, it may be desirable for the Reserve Bank to consult the designations used in the Census of Business for 1939, which are available
in several publications that are likely to be in the library of each
Reserve Bank. Where a Registrant's business consists of several parts
which would fall into several classifications, the general rule in
determining the answer is that the Registrant should check (or write in)
the designation applying to that part of the business which produced the
largest amount of sales or gross revenue.
*
Industrial banks, even though insured by the Federal Deposit Insurance Corporation (including those that are State members or have
national bank charters), should check item II-A-3 rather than II-A-2.
.
Reporting of approximate or inexact figures.-
*
.
•
While it is desired that the answer to question III be sufficiently
accurate to provide useful statistical data on total instalment outstandings and credit sales, and that each registration statement provide a
reasonably accurate indication of the amount of the Registrant's instalment business, it is not desired that any Registrant should be put to
any undue inconvenience or expense in order to provide exact figures
on this form. As indicated in the instructions which are printed on
the back of Form F.R. 563, a Registrant who finds it inconvenient to
report as of September 30 will be permitted to report as of some nearby
date; a Registrant who is unable to secure readily an exact division
between items III-A-1, 2 and 3 will be permitted to estimate this division; Registrants may give approximate figures against item III-B-5;
and the division between outstanding instalment receivables (item III-B-6)
and other receivables (item III-B-7) may be estimated. In addition, however, there are some other points on which it appears that exact reporting would unduly inconvenience a few Registrants and on which estimated
figures will be acceptable; points which have come to the attention of
the Board's staff include;
-
2
-
R-915-d
Items III-A-2 and III-A-3. - According to the strict wording
of the questions these items call only for retail and personal
instalment paper, and exclude loans not payable in instalments
and loans for business or agricultural purposes. Mortgage
loans, other than loans for repair or modernization purposes,
are also to be excluded. In the case, however, of an institution
that holds some non-instalment loans or business loans or agricultural loans or mortgage loans and would find it excessively
burdensome to make an exact separation of such loans from its
personal and retail instalment paper, the Registrant may estimate
the amount of such loans to be excluded, or where the amount is
very small the Registrant may ignore them.
Item III-B-4. - There will be seme small Registrants for whom
the compiling of their sales for a 12-month period ending on or
about September 30 would be inconvenient; such Registrants may
estimate their sales for this 12-month period. There will also
be some Registrants who compile their sales figures on the basis
of net sales after the deduction of trade-ins and cannot conveniently determine the amount of such trade-in allowances; such
Registrants should be asked to estimate the value of goods
accepted in trade and to include this figure in their total
sales.
Treatment of instalment paper pledged, discounted, or sold. The general principle to be followed with respect to instalment paper
that is pledged as security for a loan is that such paper should be reported as held b£ the borrower or pledgor, and should not be reported by
the lender or pledgee. The general principle with respect to instalment
(or other) paper that has been sold or discounted (with or without recourse) is that such paper should be reported b% the purchaser, and
should not be reported by the seller.
Credits charged off. A Registrant, in reporting the amount of credit outstanding against
question III-A or under items 6 and 7 of question III-B, may either exclude
or include credits which have been charged off the Registrant's books —
whichever procedure is in accord with the customary practice of the
Registrant.
Sales and credits to include those relating to unlisted as well as listed
articles. The figures on sales to be reported against item III-B-4 and III-B-5
should include all retail sales of the Registrant (except sales of electricity or gas by a public utility and sales of real estate) — and should
- 3 -
R-915-d
189
not be confined to sales of articles of the types listed in the Supplement
to Regulation W. Likewise the figures on credit outstanding to be reported against items III-A-1, III-A-2, III-B-6, and III-B-7 should not
be confined to credit connected with articles of the types listed in the
Supplement to Regulation W.
Treatment of down-payments on instalment sales. In answering question III-B-5, which calls for the approximate percentage of instalment sales, other credit sales and cash sales, the
Registrant should include the down-payments received on instalment sales
in making his estimate of instalment sales notwithstanding the fact that
his custom may bo to count such amounts as cash sales.
C.O.D. sales not instalment credit. The fact that a C.O.D. sale may be payable in two parts, a deposit
at the time of purchase and the balance payable on delivery, does not make
it an instalment sale for purposes of question III-B, as no instalment
credit is involved; all such C.O.D. sales should be considered as cash
sales.
Question regarding control of Registrant. Question V, regarding control of Registrant's stock, is asked for the
purpose of obtaining information that will assist in combining the figures
reported by related companies and in classifying the Registrants. Therefore,
in complex cases involving difficult questions of legal ownership or control
of stock, a Registrant should be permitted to attach to its registration
statement a brief summary of the relevant facts regarding ownership or control
of its stock, and need not be required to give a definite "yes or no" answer
to the first part of question V in every case.
Registrant controlled by several other companies. In the event that 50 per cent or more of the voting stock of a Registrant is owned by a second company and 50 per cent or more of the voting
stock of the second company is owned or controlled by a third company,
the Registrant is controlled "directly or indirectly" by both the second
and the third companies, and should list both or such companies in answer
to question V. This will, of course, require in a few cases the attaching
of an extra sheet to give the names of such controlling companies.
Registrants beginning business on or after January 1, 1942. Form F. R. 563 is designed for the registration of persons who were
engaged in the instalment credit business on or before December 31, 1941.
It is intended that a slightly different foim, appropriate for persons
beginning business after December 31, 1941, will be made available before
that date.
- 4 -
R-915-d
Persons extending instalment credit of types exempted from Regulation W
by section 6.The requirements of Regulation VJ regarding registration apply to all
persons who are engaged in the business of selling listed articles for
payment in instalments, or making instalment loans of less than $1,500,
or making instalment loans of any amount which are secured by listed
articles, or purchasing or discounting or lending on such instalment obligations, notwithstanding the fact that all of the credit extended by
such a person may be credit of the types exempted by section 6 of the
regulation.
Registrant-s having subsidiaries which extend instalment credit.Since each corporation which extends instalment credit of the specified types is required to register, the report of a corporation or other
business concern having subsidiaries which also are required to register
should include only its own figures and not those of its subsidiaries.
If the reporting of separate figures should be unreasonably difficult,
the division of the credit outstanding and sales (question III) between
the parent company and its subsidiaries and among the subsidiaries may
be estimated.
Credit unions and building and loan associations.In connection with the distribution of" foims to credit unions by the
Farm Credit Administration and the Credit Union National Association and
to building and loan associations by the Federal Home Loan Bank Board, it
is contemplated that some additional instructions will be sent out in order
to assist those classes of Registrants in filling out their registration
statements correctly. Copies of these instructions, which will be cleared
in advance with the Board, will be sent to all Federal Reserve Banks for
their information.
Issuance of "Registration Certificates" to Registrant with several offices.In case a Registrant having several offices requests the issuance of one
or more duplicate "Registration Certificates", in order to be able to supply
a copy to each of its branches, the Reserve Bank may comply with the request.
Additional questions.As to questions which are not covered, either by the instructions accompanying the form or by the foregoing not- s, the Reserve Bank will use
its o-m judgment as to whether to answer or to forward the question to the
Board.
October-30, 1941•
191
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
8-916
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
November 18, 194-1
Dear Sir:
There is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased Wire System for the month
of October 1941.
Please credit the amount payable by
your Bank to the Board, as shown in the last
column of the statement, to the Federal Reserve
Bank of Richmond in your daily statement of
credits through the Interdistrict Settlement
Fund for the account of the Board of Governors
of the Federal Reserve System, and advise the
Federal Reserve Bank of Richmond ty mail the
amount and purpose of the credit.
Very truly yours,
0. E. Foulk,
Fiscal Agent.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT RICHMOND
REPORT OF EXPENSES Of MAIN LINES OF FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF OCTOBER 1941
Words Sent
b/ M. I.
Chargeable
to Other
F.R. Banks
Total
Words
Chargeable
Pro Rata
Share of
Total Expenses (l)
Expenses
Paid
Banks
and
Board (2}
R-9i6-a
Payable
to
Board
of Governors
Federal
Reserve
Bank
Number
of Words
Sent
Boston
New York
Philadelphia
Cleveland
40,361
95,982
26,971
51,173
380
381
40,742 1
373-32 | 148.70
522.52 $
1,230.97
1,040.92
190.05
95,982
27,351
350.78
265.45
85.33
661.18
322.96
338.22
51,554
Richmond
Atlanta
Chicago
St. Louis
64,322
54,834
79,360
56,770 .
379
379
428
378
6Z.,701
55,213
79,788
57,148
Minneapolis
Kansas City
Dallas
San Francisco
23,932
53,056
45,330
75,049
379
379
442
381
24,311
53,435
45,822
75,430 '
Board of
Governors
Total
713,673
1,380,863
381
-
—
4,287
713,673
829.79
708.11
1,023.28
732.92
374.82
261.44
1,330.27
277.17
311.79
685.30
587.67
967.39
183.85
203.91
327.60
460.73
9,152.87
12,341.63
454.97
446.67
306.99(a)
455.75
127.94
481.39
260.07
506.66
1,385,150 $17,764-57 $17,764-57 $3,495-75
306.99(a)
$3,138.76
(1) Based on cost per word ($.012825015) for business handled during the month.
(2) Payments by Banks are for personal services and supplies and payments by Board
are for personal services and supplies ($1,166.28) and wire rental (#11,578.89)
less amount ($403.54) representing reimbursement for the cost of sending messages between the Washington office,of the Leased Wire System and the local
telegraph offices of the Treasury and Reconstruction Finance Corporation. Personal services include salaries of main line operators and of clerical help engaged in work on main line business, such as counting the number of words in
messagesj also overtime and supper money and Retirement System contributions
at the current service rate.
(a) Credit—reimbursable to Chicago.
R-917
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For release in morning papers,
Friday, November 21, 194-1.
The following summary of general business and financial conditions in the
United States, based upon statistics
for October and the first half of November, will appear in the December
issue of the Federal Reserve Bulletin
and in the monthly reviews of the Federal Reserve Banks.
Industrial activity continued to increase in October and the
first half of November and there was some further advance in prices of industrial materials and finished products. Distribution of commodities to
consumers declined in this period following an unusually large volume of
trade in the preceding three months.
Production
Volume of industrial production increased further in October and
the Board's seasonally adjusted index advanced from 1.6l to 164 per cent of
the 1935-39 average. Increases in activity occurred mainly in industries
producing machinery, armament, and other durable manufactures required under the defense program. In the meatpacking industry activity also advanced considerably and output of other manufactured food products, which
has been unusually large in recent months, declined less than seasonally.
Automobile production increased during October and in the first
half of November was sustained at about the' rate reached at the beginning
of the month. Production in October approximated the quota permitted for
the month, whereas in August and September output, had been considerably
below the quotas set, owing in part to delays incident to the changeover
to new model production and to difficulties in obtaining certain materials.
Since the beginning of the model year production has been substantially in
excess of retail sales and dealers' stocks have risen sharply. Output of
cars and trucks in October was about one-fourth smaller than in October last
year; in the industry as a whole, however, activity, as measured by manhours worked, was about the same as a year ago, apparently reflecting a shift
to armament production.
In most other- manufacturing industries output in October was maintained at or near the rates prevailing in other recent months. At cotton
mills activity increased, following some reduction in the previous month,
-2-
R.-917
194
while at wool mills there was a slight decline from the peak reached in
September. Steel production rose to an average rate of about 99 per cent
sf capacity during October but declined slightly in the first half of November,
Coal production declined somewhat in October and early November,
while output of crude petroleum increased further to new record levels.
Iron ore shipments down the Lakes were maintained at a high rate and through
the end of October amounted to 71,600,000 gross tons, a larger volume than
had previously been transported in arqr complete shipping season.
Value of construction contract awards decreased slightly in October, according to figures of the F. W. Dodge Corporation. Declines in awards
for publicly-financed work were partly offset in the total by an increase in
privately-financed projects. Awards for residential building showed little
change, although an increase is customary in this month. Contract awards in
October continued in larger volume than a year ago. Total awards were 60
per cent larger, reflecting increases of 13 per cent in private construction
and of 112 per cent in public work.
Distribution
Distribution of commodities to consumers declined, in October following an unusually large volume of trade in the preceding three months.
During the third quarter sales had been stimulated considerably by several
factors, notably apprehension that there might be shortages and higher prices
of many consumers' goods later on, as well as desire to avoid stricter instalment credit terms, effective September 1, and higher taxes on many products
effective October 1.
Railroad freight-car loadings declined somewhat from September to
October, owing principally to decreased shipments of grain products and coal.
Shipments of livestock increased and ore loadings showed less than the usual
seasonal decline.
Commodity prices
Prices of agricultural commodities, which ha.d declined from the
early part of September to the middle of October, have advanced somewhat
since that time and prices of industrial commodities have increased further.
Recent advances for industrial raw materials and finished products have been
more restricted than in earlier periods, reflecting partly an extension of
Federal maximum price action particularly to petroleum products and to selected metal, chemical, and textile products.
Prices in retail markets have continued to advance sharply. In
September the cost of living, as measured by the Bureau of Labor Statistics'
-3—
R-917
index, increased 2 points to 108 per cent of the 1935-39 average and was 7
per cent above the level of last March. Since September retail food prices,
which usually decline at this season, have increased further and preliminary
data indicate that retail prices of other commodities have continued to rise.
Bank credit
Total loans and investments at reporting member banks rose further
during October and the first two weeks in November. Holdings of United
States Government securities increased and commercial loans continued to advance.
Excess reserves of member banks declined from 4.7 billion dollars
to 3*5 billion on November 1, reflecting the increase in reserve requirements
previously announced by the Board to be effective on that date.
United States Government security market
Long-term Treasury bonds declined slightly in price during the
early part of November, following a relatively sharp increase after the middle of September to a record high level around November 1. Yields on shortterm issues have firmed since early in September, the yield on Treasury notes
of December 194.5 advancing from 0.62 per cent on September 15 to 0.83 on
November 15, and the bill rate rising to 0.253 per cent.
196
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-918
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
'•isSSf/
November 19, 194-1
Dear Sir:
Reference is made to the Board's telegram of October
9, 1941 relating to the new Federal tax on the transportation
of persons. The Bureau of Internal Revenue has approved a form
of tax exemption certificate for use ly officers and employees
of Federal Reserve Banks when traveling on official business.
A supply of this form (Form F.R. 158 - Revised November, 194-1)
is being sent you today under separate cover. ™To will be glad
to furnish your Bank with additional forms from ii;ne to time
when needed.
These forms, when properly filled out, will entitle
the holder to exemption from the tax on transportation of persons and on seats, berths, or staterooms in connection therewith. Care must be taken, however, that the forms are used
only when the facts are as certified to in the certificate.
For example, if your Bank is to be reimbursed for the transportation try anyone not entitled to an exemption from the tax,
the form should not be used.
Very truly yours,
L. P. Bethea,
Assistant Secretary.
BOARD OF GOVERNORS
197
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-919
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
4
November 24, 19-41
Dear Sir:
From the Board's point of view, the recent three-day System
conference on Regulation W served a very useful purpose. In particular,
the Board wishes to express its appreciation of the opportunity afforded
for members of the Board and its staff to become better acquainted with
the men in attendance from the Reserve Banks and to obtain the views of
the Reserve Banks on the various matters discussed. The cooperation of
the Federal Reserve Bank representatives facilitated the discussion of
a long program of topics and resulted in giving the Board and its staff
much valuable information and counsel.
'
As to some of these matters, such as the Statement of Borrower
and the Statement of Necessity, you will have already received by tele—
graph, or will soon receive, requests for further comment.
A letter is
now in preparation concerning data to be tabulated by the Reserve Banks
from the registration statements. It is intended that System committees
shall soon be appointed on the following: enforcement} relations with
national trade associations; participation of branches; and the collection and organization of facts and figures. Y o u will also be receiving
shortly for comment studied suggestions, developed in the light of the
conference discussion, for Amendment N o . 3 — o n which action before the
end of December is contemplated.
Among the suggestions made at the conference, there were several relating to the possibility- of reconsideration of the Board's interpretations of Regulation W in the light of the experience and views of
the Reserve Banks. Since the discussion on this point may have left a
confusing impression, the Board wishes to state that it will continue its
present practice, consulting beforehand with one or more Reserve Banks
when deemed necessary or appropriate, but that after any interpretation
has been issued the Board will amplify or modify the interpretation whenever good reason for doing so may appeal-. Consequently, criticisms and
suggestions from the Reserve Banks will be in order at any time, either
198
s
R-919
shortly after an interpretation has been issued or at any later time.
They are in fact desired, and in case any given interpretation should
turn out to "be wrong in any important particular the Board will not
hesitate to correct it by issuing a subsequent interpretation.
It is contemplated that other System conferences on Regulation W will be held from time to time, of which it is hoped that the
next will be within sixty days or ninety days.
Very truly yours,
Chester Morrill
Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
199
B O A R D OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-920
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
November 25, 1941
Dear Sir:
On Thursday, December 25, the
offices of the Board of Governors of the
Federal Reserve System and all Federal
Reserve Banks and branches will be closed.
Very truly yours,
v
F. A. Nelson,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
200
B O A R D OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-921
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
November 27, 1941
Dear Sir:
In addition to communications from the Federal Reserve
Banks specifically requesting rulings, interpretations, or other
action with respect to Regulation W, the Board also receives letters from the Reserve Banks enclosing communications received fay
them and presumably transmitted to the Board for its information
and not for action.
Some of the Federal Reserve Banks forward with such letters copies of their own replies and these replies make it apparent
that the original letters have been courteously and satisfactorily
answered and require no further action by the Board. We, of course,
are glad to have such information and particularly to know how the
Federal Reserve Banks are handling the questions raised. In some
cases, however, we are uncertain whether the Reserve Bank has r e plied to the inquiries and whether or not it is expected that we
take some action with respect to them. It will assist the Board
in handling such correspondence if the Reserve Banks will indicate
plainly whether they have replied and whether the correspondence
is transmitted simply for our information or for some other particular purpose.
At the same time, it appears best, in line with the policy of decentralization, that as many communications as possible
be given such answer by the Reserve Banks as makes no further correspondence by the Board necessary.
Very truly yours,
Chester Morrill,
Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
201
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-922
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
De c om.be r 2, 191 \ 1
Dear Sir:
There have been forwarded to you today under separate
cover
copies of form F, R. 107b to be used by State bank
members in submitting their reports of earnings and dividends
for the six and twelve months ending December 31, 19^1.
The form is unchanged, so far a s the items therein
are concerned, from the form used in submitting, reports for the
six morths ended June 30, 19'• 1 • However, the n e w form has an
additional column in sections 1 and 2 for figures covering the
full year ending December 31, 1 9 W ,
The figures in this column
will represent the total of the figures in the first column of
the current report plus those shown in the report of earnings
and dividends for the six months ended June 30, 19hlf
If the
latter report was corrected after it was submitted to your bank,
the corrections should, of course, be taken into account in compiling the full-year figures for the current report.
It is suggested that appropriate instructions be given
to the banks at the time the forms are sent to them. It is also
suggested that, in the examination of the reports submitted by
the member banks before transmittal to the Board, particular
attention be given to the annual figures in the second column of
section 2, to verify that they reconcile section 3 of the current
report with section 3 of the report submitted at the end of I9I4.O #
Assistant Secretary.
http://fraser.stlouisfed.org/ TO THE PRESIDENTS OF A L L FEDERAL RESERVE BARKS
Federal Reserve Bank of St. Louis
308
B O A R D OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
WASHINGTON
R-923
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 3, 1941
Dear Sir:
It is becoming increasingly difficult to obtain
supplies of paper of all kinds, and vie should like to have
a survey made of your requirements for extra copies of the
Board's publications and mimeographed material now being
sent to your Bank, with a view to reducing the number of
copies to a minimum.
There is attached a list of the number of copies
of mimeographed letters and speeches currently sent to your
Bank. Of course this is not a comprehensive list of all
publications and mimeographed material which you receive
from the Board, but represents only a few items in which
reductions might be effected. In arriving at the number
of copies needed for your regular requirements it might be
well to keep in mind that additional copies can always be
obtained upon request.
Y/e shall appreciate advice of any changes that
may be effected in your requirements for such supplies.
Very truly yours
F. A. Nelson
Assistant Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Enclosure with addressed copies only)
203
BOARD OF G O V E R N O R S
OF THE
1
tSjj&fc ,hS
FEDERAL RESERVE SYSTEM
R-92l»
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
"4SS&
*********
December 5> 19W-
Dear Sir:
Referring to the Board's letter R-7&5 of January 11, I9L4.I, the following changes should be made in the
list of nonmanber banks that have in force agreements
with the Board pursuant to the provisions of Section 8(a)
of the Securities Exchange Act of 193^4-$
Addition
Virginia
Charlottesville
Citizens Bank and Trust Company
Deletion
Hew York
Troy
The Troy Trust Company
(absorbed by The Manufacturers
National Bank of Troy 11-3-Ul)
The last previous change in this list was given
in the Board's letter of Octob?r J, I9I+I (R-900).
Verjf truly yours,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
304
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-925
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 5> 194-1
Dear Sir:
There are enclosed a copy of the Board's
letter of November 10 to the Administrator of the
Farm Security Administration, and a copy of the reply of the Acting Administrator dated November 28,
1941, relating to section 6(k) of Regulation W.
The phrase "member banks" in the lest
paragraph of the letter of November 28 apparently
refers to the Federal Reserve Banks, and therefore,
although your Bank is of course free to advise any
interested person as to the contents of these enclosures, there would seem to be no need for circularizing all the member banks in your District
unless you feel that it is desirable to do so.
Very truly yours,
Chester Morrill,
Secretary.
Enclosures 2
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
205
4
R-925-a
November 10, 1941
Mr. C. B. Baldwin, Administrator,
Farm Security Administration,
Department of Agriculture,
14th and Independence Avenue, S.W.,
Washington, D. G.
Attention: Mr. Payson Irwin
Dear Mr. Baldwin:
This will confirm, on behalf of this Board, the discussion regarding section 6(k) of Regulation W between members of the staffs of this Board
and your Administration. A copy of Regulation vi is attached for your convenience .
Section 6(k) exempts two different kinds of agricultural loans.
The firut, covered iy subdivision (1), is agricultural credit which is "approved by the Farm Security Administrator, or his authorized agent, as being
necessary for the rehabilitation of a needy fart; family." The second,, covered try subdivision (2), is agricultural credit which is "for general agricultural purposes and is not for the purpose of purchasing any listed article
and not secured ty any listed article purchased within 45 days before the
extension of credit."
An important difference between these two types of credit is that
the first may involve listed articles (that is, articles listed in the Supplement to the regulation), while the second may not.
Subdivision (1) exempts the loans made fcy the Farm Security Administration for the rehabilitation of needy farm families, since the vary act
of making the loan constitutes the specified approval. There might be some
question as to whether this provision also authorizes the Farm Security
Administration to approve—and in this manner to exempt—loans made ty other
lenders for the rehabilitation of needy .farm families. In view of the credit risks involved in such loans it seems unlikely that many other lenders
would use such an exemption even if it were available. Furthermore, it is
understood that the Solicitor of the-Department of Agriculture has rendered
an opinion that the Farm Security Administration is not authorized to approve such loans when made ty other lenders. Subdivision (1) of section 6(k)
will consequently be limited in its application to loans actually made ty
the Farm Security Administration.
It will be appreciated if you will confirm our understanding that
these views are in accord with those of your Administration.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
206
R-925-b
UNITED STATES DEPARTMENT OF AGRICULTURE
Farm Security Administration
Washington
November 23, 1941
Board of Governors
Federal Reserve System
Washington, D. G.
Attention;
fill'. Chester Morrill, Secretary
Gentlemen:
This will acknowledge receipt of your letter
of November 10, giving your understanding of section
6(k) of Regulation W issued by you. We confirm the understanding that subdivision (l) of section 6(k) gives
all. loans made by the Farm Security Administration exemption from the restrictions on instalment credit and
that it does not imply that the Farm Security Administration is to give approval to agricultural loans made
by other lenders.
To clear up this matter in the field we understand that you will send this information to your member banks and that we shall send it to our regional
offices.
Sincerely yours,
(Signed) George. S. Mitchell
Acting Administrator
BOARD OF G O V E R N O R S
FEDERAL RESERVE SYSTEM
%
1•
»
^
20*7
WASHINGTON
R-926
^
ft
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 8, 194-1
Dear Sir:
On pages 116-12? of the February 191; 1 Federal Reserve
Bulletin, the name, official title and principal business affiliation of each director of the Federal Reserve Banks and Branches
was shown. This list was prepared from the directors' biographical sketches on file with the Board. Subsequent to the publication of this list, the Board's attention was called to the
fact that a number of the official titles of the directors were
incorrect, which apparently was the result of several of the
directors' official titles having been changed without the Board
having been notified thereof, as requested in its letter
(X-9i'70) of January 29, 19^6,
In order to avoid any errors in the list to be published in the February 19L.2 Federal Reserve Bulletin, it m i l be
appreciated if you will review the titles and principal business
affiliations of the directors of your Bank and branches, if any,
and notify the Board not lat°r than January 20, 19!'2 of any
changes that should be made therein.
Very truly yoi-rs,
L. P . Bethea,
Assistant Secretary,
TO THE PRESIDENTS OF ALL FEDERAL RESERVE B A M S
308
R-927
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Statement for the Press
For immediate release
December 8, 19Ul
The Board of Governors of the Federal Reserve System issued the
following statement today:
The financial and banking mechanism of the country is today in
a stronger position to meet any emergency than ever before.
The existing supply of funds and of bank reserves is fully adequate to meet all present and prospective needs of the Government and of
private activity*
The Federal Reserve System has powers to add to these
resources to whatever extent may be required in the future*
The System is prepared to use its powers to assure that an ample
supply of funds is available at all times for financing the war effort and
to exert its influence toward maintaining conditions in the United States
Government security market that are satisfactory from the standpoint of
the Government's requirements.
Continuing the policy which was announced following the outbreak
of war in Europe, Federal Reserve Banks stand ready to advance funds on
United States Government securities at par t& all banks.
209
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-928
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*»*=
December 9, 1941
Dear Sir:
Enclosed are three copies of a memorandum dealing
with the tabulation of the data which will be received in
the Registration Statements under Regulation W (Form F. R.
563). Since the memorandum supplements a committee report
that was presented to the conference on Regulation W held
in Washington on November 17-19, three copies of this committee report are also enclosed.
The plan of tabulation described in the memorandum
allows each Reserve Bank latitude in adapting it to the personnel and equipment that are available. Any Reserve Bank
having difficulty in following the plan or wishing more specific advice on particular points should feel free to present its problems to the Board's staff. In case any Reserve
Bank should find that it can submit final tabulations ty
February 15, 1942 only with great inconvenience, it should
feel free to ask for an extension of the deadline.
Specimen copies of the table forms, to be used in
making up tabulations to be sent to the Board, are herein
transmitted. A supply will be dispatched as soon as possible .
Very truly yours,
Chester Morrill,
Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Enclosures sent with addressed copies only)
210
BOARD OF G O V E R N O R S
OF THE
j-, *fr •& rV
FEDERAL RESERVE SYSTEM
B-929
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 11, 19Ul
Dear Sir:
There is enclosed for ycur information a
copy of a lotter from Mr, Claude C, Conn, Director
of Personnel, Office of Production Management, to
the President of one of the Federal Reserve Banks
regarding the transfer from Federal Reserve pay roll
to the Office of Production Management pay roll of
employees of the Federal Reserve Banks. The procedure
outlined by Mr. Conn is agreeable to the Board,
Very truly yours,
L, P. Bethea,
Assistant Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERhL RESERVE BAFKS
211
COPY
R-929%
December 5> 19k 1
Mr.
,
Federal Reserve Bank of
Dear Mr,
;
Your letters of November 17, 19^1 > to Messrs,
and
concerning the employment of Miss
~
by the Defense Contract Distribution Office in
,
have been referred to the Personnel Branch of the Office of Production Management, since this office is handling the personnel
actions in connection with the transfer from Federal Reserve payroll to the Office of Production Management payroll f
The problem involved in the case of Miss ____________ has
been raised in many instances in various offices all over the
country. Although it is the policy to place all personnel on the
payroll of the Office of Production Management who decide to accept
an offer to stay with the Defense Contract Distribution Office, we
appreciate that strict adherence, to this policy will often work
a serious hardship on both the employees concerned and on the
Division* A person with considerable equity in the Federal Reserve
retirement system is not going to wish to lose these rights without
some other very special consideration. However, if such an employee
does not stay with the Defense Contract Distribution Division, the
Division may be seriously handicapped by the loss of an employee
who may be very difficult to replace.
In order to meet this situation and still be as fair to
both the individual concerned and the division, it has been
decided that in those cases in which the employe is unwilling to
give up his interest in the Federal Reserve retirement system, but
whose services are urgently needed by the Division, at least until
suitable replacement can be appointed and trained, the Office of
Production Management will carry these persons on reimbursable
basis for a maximum of 6 months. Within 6 months, suitable replacements must be obtained, and no extensions will be granted to such
reimbursable arrangement.
212
As fkr as the Office of Production Management is concerned,
each employee of the Federal Reserve system has the privilege of
deciding whether or not to accept any offer of employment with the
Defense Contracts Distribution Division, It is necessary under the
policy outlined above for each person to definitely decide whether
or not to accept.
In the case of Miss
, it is recommended that if
Messrs#
and
wish to retain her services until
someone else can be found to take her place, and if you are willing
to 4ntor into such an agreement, an arrangement can be made for
y
1.3.ss
s services on a reimbursable basis for a period rot
to exceed 6 months# Approval for such action will be given by the
Office of Production Management# Such a request should be accompanied
by a statement outlining the justification for such an arrangement
because of the retirement problem involved.
This office greatly appreciates the interest of Kiss
as well as irany oth^r employees of the Federal Reserve system, in the
program of tha Defense Contract Distribution Division, and hopes that
any hardships which may be incurred by individual employees due to
this transfer will be reduced to a minimum.
Very truly yours,
Claude C. Conn
Director of Personnel
4
213
BOARD OF G O V E R N O R S
*******
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-930
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 11, 1941
Dear Sir:
It is desired that the regular annual reports of holding
company affiliates on Form F.R.. 437 be obtained for the year ending
December 31, 1941, or for the holding company affiliate's latest
fiscal year if it differs from the calendar year. Accordingly,
please deliver to each holding company affiliate which has its principal executive office in your district, and which holds a general
voting permit, three copies of Form F.R. 437, with the request that
the annual report be filed in duplicate with your bank not later
than February 2, 1942.
Form F.R. 437 has not been revised, and since an extra
supply of the form was sent to each Federal Reserve Bank a year ago,
your bank presumably has a sufficient stock of the form on hand to
deliver the necessary copies to the holding company affiliates in
your district. However, if such is not the case, please inform us
immediately as to the number of additional copies of Form F.R. 437
needed by your bank, and these will be furnished promptly from' our
stock.
For information as to the procedure to be followed in obtaining the reports, please refer to the Board's letter of December
23, 1938 (R-368) and the memorandum enclosed therewith (R-368-a).
The instructions contained in such letter and memorandum are still
applicable to the handling of the reports, except certain dates mentioned in the instructions.
Very truly yours,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
214
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
.1-931
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 13, 1941
Dear Sir:
Enclosed are 25 copies of a specimen form of the STATEMENT
OF NECESSITY TO PREVENT UNDUE HARDSHIP which the Board has prescribed
for use pursuant to the provisions of section 3(d) of Regulation W.
This specimen form has been designated as Form F.11. $6$.
The forms for actual use ty Registrants will not be printed
by the Board or by the Reserve Banks, but specimen forms are to be
distributed ty the Federal Reserve Banks to the instalment selling
and lending trade so that Registrants may secure a supply either ty
printing or otherwise reproducing them or ty obtaining them from stationery or supply houses. The notice at the top of the form indicates the restrictions on reproduction.
It is suggested, that your Bank print a supply of the specimen form in such number as will permit a distribution of one copy to
each Registrant in your District. Such additional specimen copies as
you deem necessary may be distributed to Registrants and others for
sample purposes. The Board requests that the Reserve Banks, in preparing sample copies, adhere strictly to the size of the sheet and
the. style of type used for the specimen copy.
Section 8(d) of Regulation W reads in part as follows:
"Until the Board has prescribed the form and content
of the Statement of Necessity the Registrant may in good
faith accept a written statement in any form, provided
such statement otherwise conforms to the requirements of
this section."
The Board has set January 15, 194-2 as the date on and after which the
use of a form in accordance with Form F.R. 565 will be required, Until
that date, a Registrant may accept a statement in any form meeting the
other requirements of section 8(d).
215
-2-
"
R-931
The enclosed form of notice to Registrants to accompany
the specimen forms is designed to serve only as a suggestion to Reserve Banks and, of course, you are at liberty to coir.nose your own
appropriate form of notice or to modify or alter the suggested form
in any particular.
Use by Registrants of this form of Statement of Necessity
will demonstrate whether the form accomplishes its obvious objective.
The Reserve Banks are invited to comment from time to time on reactions from the trade and the public.
The Board and its staff gratefully acknowledge the helpful
suggestions of the Reserve Banks. .
Very truly yours,
%-ke-j tu, hi
Chester Morrill,
Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
216
P.—93-i—a
FEDERAL RESERVE BANK OF
NOTICE REGARDING USE OF
"STATEMENT OF NECESSITY TO PREVENT UNDUE HARDSHIP"
IN CONNECTION WITH REGULATION W
Regulation W, relating to consumer credit, which was issued
by the Board of Governors of the Federal Reserve System pursuant to
Executive Order No. 8843 issued by the President of the United States,
limits... the terms of payment of certain instalment credits.
It would tend to defeat the purposes of the Order if, after
an instalment credit subject to Regulation ¥ had been granted, the terms
could ordinarily be changed at e. later time or the credit refinanced to
provide a rate of payment not regularly permitted by trie regulation.
However, in order to prevent undue hardship, provision has been made
for flexibility in exceptional circumstances.
The regulation provides that in such circumstances a creditor
may, within certain limits, renew, revise, consolidate, or refinance an
instalment credit already outstanding so as to provide a rate of payment
below that regularly permitted by the regulation. Section 3(d) of the
regulation provides that a creditor may take such action upon acceptance
in good faith of a "Statement of Necessity to Prevent Undue Hardship"
signed by the obligor, Until January 15, 1942, such a statement may be
in any form which meets the requirements set forth in section 8(d) of
the regulation, but a statement received on or after January 15, in order
to be acceptable under the regulation, must follow the form, prescribed by
the Board of Governors of the Federal Reserve System.
A specimen copy of the form which the Board has prescribed for
use in this connection is enclosed. The forms will not be supplied by
the Board or by this Bank but should be printed or otherwise reproduced
by the Registrant or obtained by him from stationery or supply houses.
Please note that the form should bo reproduced only in accordance with
the instructions at the top of the specimen form. Your attention is also
called to the fact that Registrants are instructed to keep all statements
on file.
Any inquiry relating to this form should be addressed to the
Federal Reserve Bank of
or to its
Branch(es).
217
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
islBlii
WASHINGTON
R-932
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 13, 1941
Dear Sir:
Enclosed are 25 copies of a specimen
OF BORROWER which the Board has prescribed for
1, 194-2, pursuant to the provisions of section
This specimen form has been designated as Form
form of the STATEMENT
use on and after January
5(d) of Regulation W.
F.R. 5'oL.
The forms for actual use by Registrants will not be printed
try the Board or try the Reserve Banks, but specimen forms are to be distributed try the Federal Reserve Banks to the lending trade so that
Registrants may secure a supply either by printing or otherwise reproducing them or by obtaining them from stationery or supply houses. The
notice at the top of the form indicates the restrictions, on reproduction .
It is suggested that your Bank should .print a supply of the
specimen form in such number as will permit a distribution of one copy
to each Registrant in your District who appears to be engaged to any
extent in the business of extending instalment loan credit. Such additional specimen copies as you deem necessary may be distributed to
Registrants and others for sample purposes. The Board requests that
the Reserve Banks, in preparing sample copies, adhere strictly to the
size of the sheet and the style of type used for the specimen copy.
You will also find herewith a suggested form of "Notice Regarding Use of Statement of Borrower in Connection with Regulation W".
This form is designed to serve only as a suggestion to the Reserve
Banks and, of course, you are at liberty to compose your own appropriate form of notice or to modify or alter the suggested form in any
particular.
Use by Registrants of this form of Statement of Borrower
will demonstrate whether the form accomplishes its obvious objective.
The Reserve Banks are invited to comment from time to time on reactions
from the trade and the public.
—2—
H-932
The Board and its staff gratefully acknowledge the helpful
suggestions of the Reserve Banks.
Very truly yours,
Chester Morrill,
Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
FEDERAL RESERVE BANK OF
—
219
NOTICE REGARDING THE "STATEMENT OF BORROWER"
PRESCRIBED FOR USE IN CONNECTION V.ITH REGULATION W
Regulation W, relating to consumer credit, which was issued by
the Board of Governors of the Federal Reserve System pursuant to Executive Order No. 8843 of the President of the United. States, provides that,
on and after January 1, 1942, no Registrant shall make any extension of
instalment loan credit (with certain exceptions) unless, at or before
the execution of the loan contract, he obtains and accepts in good faith
a signed Statement of the Borrower as to the purposes of the loan in form
prescribed by the Board.
A specimen copy of the form which the Board has prescribed for
use in this connection is enclosed.
The forms will not be supplied by
the Board or by this Bank but should be printed or otherwise reproduced
by the Registrant or obtained by him from stationery or supply houses.
Your attention is called to the fact that the form should be reproduced
only in accordance with the instructions at the top of the specimen form.
Your attention is also called to the fact that Registrants are instructed
to keep all such statements on file.
Any inquiry relating to this form should be addressed to the
Federal Reserve Bank of
or to its
Branches(es).
220
S P E C I M E N
FORM
Form F. R. 564.
F O R I N F O R M A T I O N O F R E G I S T R A N T OR P R I N T E R O N L Y — N O T TO B E P R I N T E D AS P A R T O F F O R M : In reproducing this form,
the Registrant or printer shall follow exactly the wording and arrangement of the front and back of the form, but may vary the spacing as desired.
Additions to the form, such as an acknowledgment by the borrower that he has received a copy, are permitted provided they do not call for the obtaining
of any additional information from the borrower.
Since the form may be changed from time to time, it is suggested that Registrants do not stock large supplies of the form.
STATEMENT OF BORROWER
Prescribed by the Board of Governors of the Federal Reserve System under its Regulation W , issued pursuant
to Executive Order No. 8843 of the President of the United States.
T O B E F I L L E D I N BY R E G I S T R A N T
(Name of Registrant)
$-
(Date of Loan)
(Amount of Loan)
(Answer
1. Is any of the money from this loan to be used to buy a Listed Article?
(See statement on back of this sheet)
"Yes" or "No")
(Answer)
2. Is any part of this loan to be secured by any Listed Article which you have
bought within the last 45 days or which you intend to buy ?
(Answer)
3. Is any of the money from this loan to be used to pay all or part of any
instalment debt?
(Answer)
4. Is any of the money from this loan to be used as a down payment on the
purchase of a Listed Article?
(Answer)
In determining whether any article involved in this loan is a Listed Article, I have been guided by information
furnished by the lender. I certify that, to the best of my knowledge, the information given by me on this sheet
is true and complete.
{Date)
(Borrower's
Signature)
5. IF EITHER QUESTION 1 OR 2 HAS BEEN ANSWERED "YES", the following information must be
obtained from borrower:
Listed Article Bought or To Be Bought
Purchase
Date Purchased
Trade-in
Amount
or Used as Security
Price
{If before loan)
Allowance
To Be Borrowed
Have you borrowed any money elsewhere, or do you intend to borrow any, to be used in buying any of the
Listed Articles specified above?
If "Yes", how much? $
{Answer "Yes" or "No")
6. IF QUESTION 3 HAS BEEN ANSWERED "YES", the following information must be obtained f r o m
borrower:
Total
Amount
Name of Person Holding Debt
Unpaid Balance
Instalment Terms
To Be Paid Off
•
$
$
$
*
NOTICE TO LENDER.—The lender, acting in good faith, may rely upon the above statements of the borrower.
However, this form does not provide all of the information that it may be necessary for the lender to have if
he intends to avail himself of certain provisions of Regulation W . In any case as to which the lender must
obtain additional information in order to be protected in making the particular loan under consideration, the
facts themselves will govern. This, however, does not affect the right of the lender to rely upon statements of
fact obtained from the borrower pursuant to applicable provisions of the Regulation.
THE REGISTRANT RECEIVING THIS STATEMENT MUST KEEP IT ON FILE
*
LISTED ARTICLES
The instalment purchase of classes of consumers' durable goods using materials, labor, and equipment needed
for national defense is regulated under the President's Executive Order No. 8843, Regulation W covers the
extension of credit to buy these articles, whether bought directly on instalment payments or with money borrowed
on an instalment basis. The following are the classes of "Listed Articles" based upon the Supplement of
Regulation W in effect December i, 194-1, but articles may be added to or taken from the list at any time. IN
D E T E R M I N I N G W H E T H E R A N A R T I C L E I N V O L V E D I N A L O A N IS A " L I S T E D A R T I C L E "
A B O R R O W E R MAY BE G U I D E D BY I N F O R M A T I O N F U R N I S H E D BY T H E L E N D E R , A N D
R E G I S T R A N T S M U S T K E E P T H E M S E L V E S I N F O R M E D A S T O C H A N G E S IN T H E S E
"LISTED ARTICLES".
PASSENGER AUTOMOBILES
AIRCRAFT
MOTOR BOATS A N D BOAT MOTORS
MOTORCYCLES A N D MOTOR BICYCLES
REFRIGERATORS A N D ICEBOXES
WASHING OR IRONING MACHINES
VACUUM CLEANERS
COOKING STOVES
HEATING STOVES A N D HEATERS
ELECTRIC DISHWASHERS
AIR CONDITIONING EQUIPMENT
SEWING MACHINES
RADIOS AND PHONOGRAPHS
METAL MUSICAL INSTRUMENTS
FURNACES, OIL OR GAS BURNERS, A N D STOKERS
WATER HEATERS A N D PUMPS
PLUMBING AND SANITARY FIXTURES
ATTIC VENTILATING FANS
NEW HOUSEHOLD FURNITURE, BED SPRINGS AND
MATTRESSES
PIANOS AND ELECTRIC ORGANS
MATERIALS AND SERVICES USED IN CONNECTION
WITH REPAIRS, ALTERATIONS, OR IMPROVEMENTS OF BUILDINGS
WARNING
Regulation W provides that no borrower shall willfully make any material misstatement or omission
in his Statement. The law under which the President's Executive Order was issued reads in part: "Whoever willfully violates any of the provisions of this subdivision or of any license, order, rule or regulation
issued thereunder, shall, upon conviction, be fined not more than $10,000, or, if a natural person, may be
imprisoned for not more than ten years, or both; and any officer, director, or agent of any corporation who
knowingly participates in such violation may be punished by a like fine, imprisonment, or both."
231
BOARD OF G O V E R N O R S
/i§|,
R-933
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
December 1R, 19hl
Dear Sir:
Referring to my letter of October 18, 1%.!,
R-908b, the Contract Distribution Division of the Office
of Production Management has called to my attention the
fact that vouchers for certain expenditures authorized
prior to December 1 necessarily till not be presented
for payment until some time after that date and have
asked that the Federal Reserve Banks pay such vouchers
when submitted, with the understanding that they will be
reimbursed ir the usual way for such expenditures*
There is enclosed for your information, a copy
of a letter written by the Field Management Section of
the Contract Distribution Division to the field offices
with respect to this matter# You will note from the
letter that each field office will submit to your office
a list of obligations incurred prior to December 1, to be
paid by your Bank, and arrange to have all such bills
submitted to the Bank for payment prior to January 1, 191*2•
It will be appreciated if you will cooperate
with the Contract Distribution Division in this respect.
Very truly y^urs,
frkLtf q. fl/xtfdiJi
E. G, Draper
Enclosure
TO THE I RESIDENTS OF ALL FEDERAL- RESERVE BALKS
(ERCLOSTTRE WITH ADDRESSED COPIES ONLY)
332
B O A R D OF G O V E R N O R S
OF THE
*****
FEDERAL RESERVE SYSTEM
R-934
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
December 17, 1941
Dear Sir:
On New Year" s Day the offices of the Board of Governors of the
Federal Reserve System and all Federal Reserve Banks and branches will
be closed.
The Board is advised that the following holidays also will be
observed by Federal Reserve Banks and branches during January 1942:
January 8
(Thursday)
New Orleans
Januaiy 19
(Monday)
Richmond
Charlotte
Atlanta
Birmingham
J acksonville
Nashville
New Orleans
Anniversary of
the Battle of
New Orleans
Little Rock
Louisville
Memphis
Dallas
El Paso
Houston
San Antonio
Anniversary of
the Birthday
of General
Robert S. Lee
On the dates given the offices mentioned will not participate
in either the transit or the Federal Reserve note clearing through the
Interdistrict Settlement Fund. Please include transit clearing credits
for the offices concerned on each of the holidays with your credits for
the following business day. No debits covering shipments of Federal
Reserve notes for account of the head offices mentioned should be included in your note clearing of January 19.
Please notify branches.
Very truly yours,
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
F. A. Nelson,
Assistant Secretary.
R-935
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For immediate release
December 17> 1941
DEPARTMENT STORE INVENTORIES
Stocks of goods held by department stores throughout the
country increased by 35 per cent in value in the year ending October
31, according to information compiled by the Federal Reserve System.
Outstanding orders by department stores were also considerably larger than a year earlier, while sales by these stores showed a smaller
increase, which for the three months September through November
amounted to 15 per cent over the corresponding period of last year.
Most of the increase in stocks occurred after the middle of this
year; prior to that time department store stocks were exceptionally
small in relation to one volume of sales. Outstanding orders also
increased considerably during the summer but later declined somewhat. To a varying degree the increases in sales, stocks, and outstanding orders reflect price increases. On the average these have
•amounted to perhaps 15 per cent over the past year, although changes
have differed considerably among different classes of products. Fur
niture prices, for example, have advanced by 25 per cent, and men's
apparel prices by 10 per cent.
According to a special survey made by the Board, of Governors and the Federal Reserve Banks, substantial increases in stocks
have occurred in all departments of the stores during the past year.
The largest percentage increases were reported in stocks of household appliances and of some types of women's apparel and accessories
Women's coats, suits, dresses, and shoes, however, showed the smallest increases, probably owing to the importance of style changes in
these lines. Department stores also held at the end of October a
relatively large amount of goods in the "small wares" and"miscellaneous" groups of departments, which include many items, such as toys
luggage, jewelry, and the like, that are important in the Christmas
trade.
For the country as a whole department store stocks at the
end of October amounted to about 3-1/2 months' supply at the rate of
October sales—while a year earlier stocks represented about 2-3/4
months' supply. It should be noted, however, that the October comparison is not altogether representative of the change over the year
234
-2-
R-935
because October sales showed a smaller increase from the previous
year than sales in other recent months. In departments where sales
in October were not greatly different from those in previous months,
the ratios of stocks to sales were generally about one-sixth larger
than a year ago. Apparently both this year and last the relation
of stocks to sales was fairly uniform in different regions of the
country, although stocks in some of the Eastern sections were somewhat below the average and those in some of the Western districts
somewhat above the average.
The attached table shows for the principal departments of
stores reporting in this special survey percentage changes in stocks
and sales in October this year over the same month last year and also
ratios of stocks to sales. Reports from 340 stores are included in
the total, compared with a sample of from 240 to 250 stores that report departmental sales figures monthly. For purposes of comparison
figures on sales by 244 stores in the period January-September 1941
are also shown. Although based on a different sample, these figures
are roughly comparable with the others in the table; in October the
two different samples showed closely similar results.
R-935
3 *"
DEPARTMENT STORE STOCKS AND SALES* BY MAJOR DEPARTMENTS
225
Jan.-Sept.
Ratio of
% change
stocks to
in sales
sales
1940-1941
(month's supply)
21+4 stores
1940
1941
+17
2.7
3.4
October
Number
of
stores
% change
I940-I9I+I
Stocks
GRAND TOTAL—entire store
34o
+35
Sales
+10
MA.IN STORE—total l/
340
+31+
+10
2.9
3.5
+18
*
+32
+5
2.3
2.9
+16
314
316
300
+20
+15
+33
+27
+1+7
.+51
+1+1
+15
+17
-5
+6
+20
+11
+12
+17
+19
+11
-59
14+
1.2
1.9
1.9
2.0
3.8
2.6
4.2
2.8
1.7
1.3
2.1
2.2
2.7
4.8
3.0
4.4
7.9
+27
+11
+19
+19
+14
+15
+16
+12
+45
+29
+17
4.2
4.7
+i4
+19
+38
+30
+21+
+16
+18
+15
+15
3.9
4.6
3.6
6.1
4.1
5.3
4.1
6,6
+16
+11
+14
+36
+18
3.3
3.8
+24
+34
+28
+27
+85
+36
+21
+19
+11+
+3
+22
3.0
3.3
3.0
2.1
3.8
3.3
3.6
3.4
3.8
4.2
+25
+26
+15
+4o
+24
+15
+22
3.6
4.0
3,8
4.3
+7
125
+23
+32
*
+1+5
+13
2.0
2.6
+14
+52
+1+5
+48
+32
+27
+10
+ll+
+23
+21
+10
1.5
2,7
2.2
2.8
3.1
2.1
3.4
2.7
3.1
3.6
+14
+10
+20
+9
+8
Women*s apparel and accessories
Coats & suits
Dresses
Blouses,skirts,sportswear,etc *
Juniors! and girls1 wear
Aprons,housedresses,uniforms
Underwear,slips,negligees
Infants' wear
Women's and children's shoes
Furs
Menf s and boys * wear
Men's
Men's
Boys'
Men's
clothing
furnishings,hats,caps
clothing & furnishings
& boys' shoes & slippers
Housefurnishings
Furn.,beds,mattresses,springs
Domestic floor coverings
Draperies,curtains,upholstery
Major household appliances
Domestics,blankets,linens,etc.
Piece goods
Cotton wash goods
BASEMENT STORE—total 2/
*
261+
*
281+
230
21+1
*
219
289
264
ll+l
*
225
21+7
281
200
*
*
*
Women's apparel & accessories
Men's & boys' clothing & furnishings 160
*
Ho us efurnishings
Piece goods
69
Shoes
111+
*
*
•Not available. Number of stores included in each group total is somewhat greater
than the largest number shown for any subgroup,
l/Group totals for main store include sales in departments not shown separately.
2/Group totals for basement are not strictly comparable with those shown for main
~~' store owing chiefly to inclusion in basement of fewer departments and somewhat
types of merchandise.
different
226
BOARD OF G O V E R N O R S
******
OF THE
FEDERAL RESERVE SYSTEM
R-936
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 18, 194-1
Dear Sir:
There is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased Wire System for the month
of November 1941.
Please credit the amount payable by
your Bank to the Board, as shovm in the last
column of the statement, to the Federal Reserve
Bank of Richmond in your daily statement, of
credits through the Interdistrict Settlement
Fund for the account of the Board of Governors
of the Federal Reserve System, and advise the
Federal Reserve Bank of Richmond try mail the
amount and purpose of the credit.
Very truly yours,
0. E. Foulk,
Fiscal Agent.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT RICHMOND
227
• R-936-a
REPORT OF EXPENSES OF MAIN LINES OF FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF NOVEMBER 1941
Words Sent
by N. Y.
Chargeable
to Other
F.R. Banks
Total
Words
Chargeable
Number
of Words
Sent
Boston
New York
Philadelphia
Cleveland
30,052
75,135
19,220
39,459
410
410
30,451 $
535.35 #
1,322.16
75,135
19,630
345.43
701.58
39,869
Richmond
Atlanta
Chicago
St. Louis
42,639
38,815
63,019
44,368
408
408
447
408
43,047
39,223
63 5 466
44,776
757.50
690.21
.1,1.16.82
787.93
386 .90
257 .49
1,321 .01
304 .85
Minneapolis
Kansas City
Dallas
San Francisco
19,474
41,649
35,986
56,645
408
408
437
410
19,882
42,057
36,423
57,055
349.86
740.0S
640.94
1,004.00
204 .98
202 .39
323 .65
560 .79
394,004
6,933.32
10,629 .40
905,018 §15,925.63
015,925.68
Board of
Governors
Total
' 394,004
900,465
399
-
-
4,553
Payable
to
Board
of Governors
Expenses
Paid
by Banks
and
Board (2)
Pro Rata
Share of
Total Expenses (1)
Federal
Reserve
Bank
281.48 |
879 .24
258 .65
314 .85
254 .37
442 .92
86 .78
386 .73
370 .60
432 .72
204 • 19(a)
483 .08
144 .88
537 .69
317 .29
443 .21
—
03,900.27
204.19(a)
$3,696.08
(1) Based on cost per word ($.017597086) for business handled during the month.
(2) Payments tjy Banks are for personal services and supplies and payments by Board
are for personal services and supplies (#1,176.27) and wire rental ($9,845*11)
less amount ($391.98) representing reimbursement for the cost of sending messages between the Washington office of the Leased Yiire System and the local
telegraph offices of the Treasury and Reconstruction Finance Corporation. Personal services include salaries of main line operators and. of clerical help
engaged in work on uain line business, such as counting the number of words in
messagesj also overtime and supper money and Retirement System contributions
at the current service rate.
(a) Credit—reimbursable to Chicago.
f
228
B O A R D OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
rSi
WASHINGTON
R-937
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 18, 194-1
Dear Sir:
There is attached a copy of a resolution
adopted ty the Board of Governors of the Federal
Reserve System levying an assessment upon the various Federal Reserve Banks in an amount equal to
two hundred and eighty-eight thousandths of one per
cent (.00288) of the total paid-in capital stock and
surplus (Section 7 and Section 13b) of the Federal
Reserve Banks as of the close of business December
31, 1941, to defray the estimated expenses and salaries of the members and employees of the Board
from January 1 to June 30, 1942.
The resolution also contains instructions
with regard to the manner in which the payments on
the assessment shall be deposited with the Federal
Reserve Bank of Richmond.
Very truly yours,
0. E. Foulk,
Fiscal Agent.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
229
E-937-a
RESOLUTION LEVYING ASSESSMENT
WHEREAS, Section 10 of the Federal Reserve Act, as amended,
provides, among other things, that the Board of Governors of the Federal Reserve System shall have power to levy semiannually upon the
Federal Reserve Banks, in proportion to their capital stock and surplus, an assessment sufficient to pay its estimated expenses and the
salaries of its members and employees for the half year succeeding
the levying of such assessment, together with any deficit carried
forward from the preceding half year, and
WHEREAS, it appears from a consideration of the estimated
expenses of the Board of Governors of the Federal Reserve System that
for the six months1 period beginning January 1, 194-2, it is necessary
that a fund equal to two hundred and eighty-eight thousandths of one
per cent (.00238) of the total paid-in capital stock and surplus (Section 7 and Section 13b) of the Federal Reserve Banks be created for
such purposes, exclusive of the cost of printing, issuing and redeeming Federal Reserve notes,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM, THAT:
(1) There is hereby levied upon the several Federal Reserve Banks an assessment in an amount equal to two hundred and
eighty-eight thousandths of one per cent (.00288) of the total paidin capital and surplus (Section 7 and Section 13b) of each such Bank
at the close of business December 31; 194-1.
(2) Such assessment shall be paid by each Federal Reserve
Bank in two equal instalments on January 2, 194-2, and March 2, 1942,
respectively.
(3) Every Federal Reserve Bank except the Federal Reserve
Bank of Richmond shall pay such assessment by transferring the amount
thereof on the dates as above provided through the Interdistrict Settlement Fund to the Federal Reserve Bank of Richmond for credit to
the account of the Board of Governors of the Federal Reserve System
on the books of that Bank, with telegraphic advice to Richmond of the
purpose and amount of the credit, and the Federal Reserve Bank of
Richmond shall pay its assessment ty crediting the amount thereof on
its books to the Board of Governors of the Federal Reserve System on
the dates as above provided.
230
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
R-938
STATEMENT FOR THE PRESS
For release in morning papers,
Saturday, December 20, 1941•
The following summary of general
business and financial conditions
in the United States, based upon
statistics for November and the
first half of December, will appear in the January issue of the
Federal Reserve Bulletin and in
the monthly reviews of the Federal Reserve Banks.
Industrial activity was maintained at a high rate in November
and the first half of December and distribution of commodities continued in large volume. Our entry into the war was reflected in a sharp
advance in the prices of some commodities, some decline in security
prices, and further curtailment of nonmilitary production.
Production
Volume of industrial output was sustained in November at the
high rate of the previous two months, although a decline is usual at
this season. The Board's adjusted index advanced from 163 to 167 per
cent of the 1935-39 average. In industries engaged in production of
armament and munitions activity continued to increase and in most other
lines volume of output was maintained or declined less than seasonally.
Output of materials, such as steel and nonferrous metals, was
maintained at about capacity. In the automobile industry activity increased, reflecting larger output of both military and civilian products,
and at lumber mills and furniture factories activity declined less than
seasonally. At cotton and rayon textile mills activity rose to new record levels, and at woolen mills the high production rate of other recent
months was maintained. Less than seasonal declines in output were indicated for shoes and manufactured food products.
Crude petroleum production increased further in November.
Bituminous coal production declined somewhat owing to temporary shutdowns at some mines during November, and anthracite production was
curtailed as a result of unusually warm weather in some areas and the
existence of considerable stocks of coal accumulated in earlier months.
R-933
Iron ore shipments continued in large volume until the shipping season closed early in December; during 1941 about 80 million tons of
ore were brought down the Lakes as compared with the previous record
of 65 million tons in 1929. Stocks- of ore at lower Lake ports on
November 30 amounted to about a seven months' supply at the current
consumption rate of around 6.5 million tons a month.
Following a declaration of war by this country in early
December further steps were taken to curtail output of nondefense
goods using critical materials. Output quotas for passenger cars
and household appliances were greatly reduced and cessation of output of some other products was ordered as of the end of January.
Also, the production and sale of new automobile tires and tubes for
civilian use were halted temporarily, pending establishment of a
system for controlling their distribution.
Value of construction contracts awarded in November declined sharply from the high level of other recent months, according to figures of the F, W, Dodge Corporation. Awards for privatelyfinanced construction decreased more than seasonally and contracts
for publicly-financed projects also declined following a continued
large volume of awards since last spring. Total awards in November
were about a fifth larger than a year ago, while for the first ten
months of the year they were three-fifths larger.
Distribution
Volume of retail trade increased in November following
some decline in the previous month. Department store sales, as
measured by the Board's seasonally adjusted index, advanced to 115
per cent of the 1923-25 average as compared with 105 in October and
116 in September. Larger sales in November were also reported by
variety stores. Sales of automobiles increased somewhat, according
to trade reports, but, as in other recent months, now car sales
were smaller than output and dealers' stocks rose further.
In the second week of December sales at department stores
rose less than seasonally, particularly in the coastal regions.
Freight traffic on the railroads continued in large volume
in November and the first half of December * Grain shipments increased considerably and loadings of miscellaneous merchandise, which
includes most manufactured products, were maintained at the high
level reached several months earlier. Coal loadings declined somewhat , owing in part to temporary shutdowns at some mines. Shipments
of most other classes of freight decreased less than is usual at
this season.
231
332
-3-
R-'»S
Commodity prices
Following the entry of the United .States into the war,
prices of grains, livestock, and foods rose sharply. Prices of most
industrial materials traded in the organized markets, being limited
by Federal regulation, showed little change. Additional measures to
prevent advances in wholesale prices were soon announced for wool
and shellac and for such imported foods as cocoa, coffee, pepper,
and fats and oils.
Retail food prices, as measured by the Bureau of Labor
Statistics' index, increased 1-1/2 per cent further from the middle
of October to the middle of November to a level 18 per cent above a
year ago. Indications are that retail prices of both foods and
other commodities continued to rise in December.
Bank credit
Total loans and investments at banks in leading cities
continued to advance during November and the first two weeks of
December, owing mostly to increased holdings of Government securities at banks outside New York City. Commercial loans, after showing little net change in Novemberagain increased sharply in the
first two weeks of December.
Excess reserves increased through most of the period as
a result of Treasury expenditures from Reserve Bank balances, but
declined sharply on December 15 when these balances were replenished in connection with the issue of 1.6 billion dollars of new
Government securities. Money in circulation lias continued to show
a marked increase.
Yields on United States Government securities
The yield on 2-1/2 per cent United States Government bonds
of 1967-72, which reached a record low level of 2.32 per cent on
November 5, advanced somewhat in November and, after the entry of
the United States into the war, rose to 2.50 per cent. Yields on
short,-term Government securities increased further. The yield on
Treasury notes of December 3945 advanced to 0.93 per cent on December 17, compared with 0.62 per cent on September 15, and the rate
on three-month tills rose to ,295 per cent.
333
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
R-939
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 22, 1941
Dear Sir:
For your information you will find attached a copy of a letter fro.u Honorable Harold
L. Ieke3, Secretary of the Interior, dated December 10, relating to a survey of solid fuels used
by- the United States Government, and a copy of
the Board's reply of December 20.
Very truly yours,
Chester Morrill,
Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
234
R-939-a
THE SECRETARY OF THE INTERIOR
Washington
December 10, 1941
Hon. Marriner S. Eccles, Chairman,
Board of Governors of the Federal Reserve System.
My dear Mr. Eccles:
This is to request information on the use of solid fuels
within your Agency.
The President, in asking me to act as solid fuels coordinator for national defense, specified certain duties, among which
is the one to obtain current data on fuel needs. In this regard,
it is essential that I have information on fuel requirements of the
United States Government which is a large user of coal in particular. A similar request is being sent to the other Federal Agencies.
The information reported will be tabulated to show the fuel
consumption of the Government by regions during the present calendar
year, stocks on hand at the end of the year, and the estimated requirements for 1942. Enclosed are forms upon which the data may be
listed. It is urged that the information be submitted as promptly
as possible.
It may happen that the information to be listed in the
above forms is not available in your central office and its assemblage will necessitate a canvass of field offices or local installations. For purposes of such a canvass, a specie! form, S.F.C. No.
4, has been prepared, copies of which will be furnished to your
office upon request.
I earnestly recommend that all Agencies of the United
States Government plan their fuel purchases to provide a comparatively large supply for storage purposes. Government activities
must be protected from interruptions due to temporary fuel shortages caused by disturbances in mining and distribution.
Sincerely yours,
(Signed) Harold L. Iekes
Secretary of the Interior.
R-939-b
December 20, 194-1
The Honorable
The Secretary of the Interior.
Sir:
Chairman Eccles has asked me to reply to your letter of
December 10 requesting information on the use of solid fuels. It
is noted that the information which you desire relates to fuel requirements of the United States Government and that the information
reported will be tabulated to show the fuel consumption of the
Government ty regions.
In view of these statements in your letter as to the purpose of the inquiry, we feel that you should be advised that the
requirements of the building occupied by the Board of Governors at
20th and Constitution Avenue in this city for purposes for which
solid fuels would be required are met through steam furnished by
the Central Heating Plant, electricity furnished by the Potomac
Electric Power Company, and gas furnished by the Washington Gas
Light Company, so that the Board of Governors does not purchase
or carry any stocks of solid fuels.
The Board of Governors, under the provisions of the Federal Reserve Act, has general supervision over the operations of
the Federal Reserve Banks, each of which and its branches, if any,
are located in one of the twelve Federal Reserve districts of the
United States. While these Banks are incorporated under the Federal Reserve Act, the fuel requirements for their buildings are
not supplied by the Government and the properties which they
occupy are not Government properties.
In the circumstances, it is assumed that it would not
serve your purpose to fill out the forms referred to in your letter so far as the Federal Reserve System is concerned.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
E-9l;0
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
336
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 22+, I9I1-I
Dear Sir:
In accordance with the usual practice, please furnish the Board with a summary statement shewing the number and
salaries of officers and employees of your Bank (including
Branches, if any) as of December 31, 19^1, made out in accordance with the attached form. The figures, which should not
include any changes in either the number or salaries of officers and employees that become effective on January 1, 19^2,
will be published in the Board1 s 19I1I annual report. In compiling this statement please include supplemental compensation,
if any, in effect or paid December 31, 19i'l> adjusted to an
annual basis.
The summary statement of employees by salary groups,
submitted in accordance with the Board 1 s letter of November 23,
1936, X-97l;6, should also include supplemental compensation, if
any, at the rate in effect January 1, 19i'2, or if no such rate has
been established at the rate, if any, in effect on December 31,
19l.il. The salaries shown in the list of employees on January 1,
19lt2, also furnished in accordance with the above-mentioned letter,
should be exclusive of supplemental compensation, however, A
statement as o f January 1, 19l'2, outlining the plan under which
any supplemental compensation is being paid will be appreciated.
Very truly yours,
E . L. Smoad, Chief,
Division of Bank Operations.
Enclosure
http://fraser.stlouisfed.org/
TO THE PRESIDENTS OF A L L FEDERAL RESERVE B A H S
Federal Reserve Bank of St. Louis
337
R-9l<0a
NUMBER JiND SALARIES OF OFFICERS AI:D EMPLOYEES OK TIE
FEDERAL RESERVE BANK OF
_•
(INCLUDING BRdJvCHSS)
December ^1, 19Ul
Total officers
and employees
including those
whose salaries
are reimbursed
to the bank in
whole or in part
Officers and employee s (included
in column l) whose
salaries are reimbursed to the bank
in whole or in
partf a)
Annual salary of President
Other officers:
Number
Annual salaries fb)
Employees, both permanent and
temporary:
Number fc)
Annual salaries (b)
(a) Should represent aggregate of fractional amounts ir the case of employees
whose salaries are only partly reimbursed to the bark. For example, if
25 per cent of tie salary of an employee receiving $1,200 a year is reimbursed to the bank, .2F- should be included in the computation of the
"number'* of employees, and the amount of salary reimbursed, $300, should
be included in the computation of the annual salaries,
(b) Including supplemental compensation, if any, adjusted to an annual basis,
paid as of December %1, 19lil.
(c) In the case of part-time employees, i.e., employees who are regularly engaged
for less than a full day, the "number" reported should represent the portion
of the full day,worked. For example, if any employee is regularly engaged
for one-half of the usual working day, .50 should be included in the computation of the "number" of employees*
238
R-941
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For release in morning newspapers
of Friday, January 2, 1942
December 31, 1941
The Board of Governors of the Federal Reserve System, today announced the following designations and appointments at the Federal Reserve
Banks and Branches shorn below:
CHAIRMEN A^D FEDERAL RESERVE AGENTS FOR YEAR 19L2
Federal Reserve
Bank
Napepf Appointee
New York
Mr. Beardsley Euml of New York, New York
Philadelphia
Mr. Thomas B. McCabe of Swarfchmore, Pennsylvania
Cleveland
Mr. George C. Brainard of Youngstown, Ohio
Richmond
Mr. Robert Lassiter of Charlotte, North Carolina
Mr. Frank H. Neely of Atlanta, Georgia
Atlanta
Chicago
Mr. Frank J. Lewis of Chicago, Illinois
St. Louis
Mr, Wu. T. Hardin of St. Louis, Missouri
Minneapolis
Mr. W. C. Coffey of St. Paul, Minnesota
Kansas City
Mr. R. B. Caldwell of Kansas City, Missouri
San Francisco -"Mr. Henry F. Grady of San Francisco, California
DEPUTY CHAIRMEN FOR YEAR 1 % 2
Boston
New York
Mr. Henry S. Dennis on of Frandn gharri Centre, Massachusetts
Mr. Edmund E. Day of Ithaca, New York
Philadelphia
Cleveland
Mr.
Mr,
Mr.
Mr.
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Warren F. Whittier of uouglassville, Pennsylvania
R. E. Klagos of Columbus, Ohio
W. G. Wysor of Richmond, Virginia
J. F. Porter of Willi ainsport, Tennessee
-"Mr. Simeon E. Leland of Chicago, Illinois
Mr. Oscar Johnston of Scott, Mississippi
Mr. Roger B. Shepard of Newport, Minnesota
*Mr. Robert L. Mehornay of Kansas City, Missouri
Mr, Jay Taylor of Amarillo, Texas
Mr. St. George Holden of San Francisco, California
-2-
Federal Reserve
Bank
R-941
239
Name of Appointee
CLASS C DIRECTORS
(Appointed, for three-year terms beginning January 1, 1942, unless otherwise
stated)
Mr. Beardsley Ruail of New York, New York
Mr. Winfield W. Riefler of Princeton, New Jersey
Mr. Walter K. Lloyd of Cleveland, Ohio
Mr. Charles P. McCormick of Baltimore, Maryland
Mr. Frank H. Neely of Atlanta, Georgia
Mr. Simeon E. Leland of Chicago, Illinois
-:;-Mr. W. W. Waymack of Des Moines, Iowa, for unexpired portion of three-year term ending December 31, 1942
St. Louis
Mr. Douglas W. Brooks of Memphis, Tennessee
Minneapolis
Mr. Roger B. Shepard of Newport, Minnesota
Kansas City
"-Mr. Robert L. Mehomay of Kansas City, Missouri
San Francisco *Mr. Henry F. Grady of San Francisco, California
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
Chicago
BRANCH DIRECTORS
(Appointed for three-year terms; except at the Branches of the Federal Reserve Banks of Cleveland, Minneapolis and San Francisco where the appointments are for two-year termsj beginning January 1, 1942, unless otherwise
stated)
Federal Reserve
Bank and Branch
New York
Buffalo
Cleveland
Cincinnati
Pittsburgh
Richmond
Baltimore
Charlotte
Atlanta
Bi rmingham
Jacksonville
Nashville
New Orleans
Chicago
Detroit
St. Louis
Little Rock
Louisville
Memphis
Name of Appointee
Mr. M. B. Folsom of Rochester, New York
*Mr. Francis H. Bird of Cincinnati, Ohio
"'"Mr. Robert E. Doherty of Pittsburgh, Pennsylvania
Mr. W. Frank Thomas of Westminster, Maryland
Mr. Chas. L. Creech, Sr., of v'i'inston-Salem, North Carolina
Mr.
*Mr.
Mr.
Mr.
Donald Comer of Birmingham, Alabama
Walter J. Matherly of Gainesville, Florida
Clyde B. Austin of Grecneville, Tennessee
Alexander Fitz-Hugh of Vicksburg, Mississippi
Mr. L. Whitney Watkins of Manchester, Michigan
*Mr. S. M. Brooks of Little Rock, Arkansas
"-Mr. E. J. O'Brien, Jr., of Louisville, Kentucky
Mr. J. Holmes Sherard of Sherard, Mississippi
-3Federal Reserve
Bank and Branch
Minneapolis
Helena
Kansas City
Denver
Denver
Oklahoma City
Omaha
Dallas
El Paso
Houston
San Antonio
San Francisco
Los Angeles
Portland
Salt Lake City
Seattle
R-94-1
Name of Appointee
Mr. H. D. Myrick of Square Butte, Montana
Mr. J. B. Grant of Denver, Colorado
-""Mr. M. E. Noon en of Kremmling, Colorado, for unexpired
portion of three-year term ending December 31, 1943
Mr. Neil R. Johnson of Noman, Oklahoma
L. E.tiurtzof Om,
ana,
Mr. F. M. Hayner of Las Cruces, New Mexico
Mr. H. Renfert of Galveston, Texas
Mr. J. M. Odom of Austin, Texas
Mr.
Mr.
Mr.
Mr.
C. V. Newman of Los
George T. Gerlinger
Herbert S. Auerbach
Charles F. Larrabee
Angeles, California
of Portland, Oregon
of Salt Lake City, Utah
of Bcllingham, Washington
"-All positions not preceded by an asterisk were filled by reappointment o
the present incumbents.
241
B O A R D OF G O V E R N O R S
OF THE
ijT <s, #
FEDERAL RESERVE SYSTEM
sSHiiHI!
R-9^2
WASHINGTON
i S f * '
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
December $1, 19Ul
Dear Sirj
There are being forwarded to you today, under
separate cover,
copies of pages 21, h£>, and i|6-a
(and revised pages of Table of Contents) of the "Manual
of Instructions Governing the Preparation of Functional
Expense Reports (Form E)% These pages have been revised in order to provide for a new unit, "Machine
Tabulating", in the General Service function. An
additional copy of each of these pages is enclosed for
your information# Pages 121fg and 121-h, covering the
"National Defense--District Coordinator" and "National
Defense—Priorities Division" units, should be eliminated
from the Manual.
Revised pages of Form E will be forwarded to
you as soon as they are received from the printer.
Very truly yours,
Et L. Smead, Chief,
Division of Bank Operations.
Enclosures.
TO THE PRESIDENTS OF ALL* FEDERAL RESERVE BANKS
242
B O A R D OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
8-274
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
July 2, 1941
Dear Sir:
Enclosed herewith for your information is a copy of
the Board's letter of July 2, 1941, to the Secretary of the
Retirement System of the Federal Reserve Banks approving the
resolution relative to the Retirement System status of employees who leave the service of an employing Bank to render special service to a Government department or agency, which was
adopted ty the Board of Trustees of the Retirement System at
its annual meeting on May 6, 1941. Under the Board's approval,
payment by the Federal Reserve Banks is authorized of the additional cost, if any, of allowing service credit for previous
service as provided for in the last paragraph of the abovementioned resolution.
Very truly your
Chester Morrill,
Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
To Mr. W. S. McL&rin, Jr., Chairman, Board of Trustees
To Mr. L. R. Rounds, Chairman, Retirement Committee
S-274—a
July 2, 1941
f4rs. Valerie R. Frank, Secretary,
Retirement System of the
Federal Reserve Banks,
33 Liberty Street,
New York, New York.
Dear Mrs. Frank:
This is to advise you that the Board of Governors
of the Federal Reserve System approves the resolution relative to the Retirement System status of employees who leave
the service of an employing Bank to render special service
to a Government department or agency, which was adopted ty
the Board of Trustees of the Retirement %stem on May 6,
1941, as reported in your letter of June 25, 194-1.
It is understood that under the above-mentioned
resolution a special additional benefit will be granted only
in the case of an employee who has discontinued service for
an employing Bank for a period in excess of two years, and
who otherwise would receive no service credit for service
rendered prior to his employment by the Government department or agency in question.
Copies of this letter are being sent to Mr. W. S.
McLarin, Jr., Chairman of the Board of Trustees, to Mr.
L. R. Rounds, Chairman of the Retirement Committee, and to
each Federal Reserve Bank.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
244
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
-275
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
July 17, 1941
Dear Sir:
For your information there is enclosed
a copy of a letter written to a Federal Reserve
Bank with respect to the reemployment of persons
retired after reaching age 65. The Board assumes that the Federal Reserve Banks will not
reemploy employees who have been retired after
reaching age 65 except during periods of emergency and then only for short periods.
Very truly yours,
Chester Morrill,
Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
I
245
S-275-a
July 17, 1941
Mr.
,
First Vice President,
Federal Reserve Bank of
Dear Mr.
:
This will acknowledge receipt of your letter of
July 9 in which you advise the Board that you have reemployed three former employees of your Bank who were retired
after reaching age 65, and ask the Board's approval of the
payment 01 salary to the men reemployed.
It is noted that Mr.
has been retained
as a temporary substitute engineer during the period of
vacations instead of hiring an engineer who would not be
familiar with your equipment avid requirements, a.id it is
assumed that Mr,
and Mr.
have been employed
on a temporary basis and that their services will be dispensed with when the special conditions necessitating
their reemployment no longer exist.
In those circumstances the Board will interpose
no objection to the payment of salaries to the above named
men at the rates stated in the enclosures to your letter
of July 9.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
246
BOARD OF G O V E R N O R S
• F THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-276
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
July 22, 1941
Dear Sir:
Enclosed you will find a copy of a letter, dated July
18, addressed to the Board of Governors ty the Honorable James
V. Forrestal, Acting Secretary of the Navy, and a copy of the
Board's reply thereto, requesting the Federal Reserve Banks and
branches to make available to Naval officials confidential information in connection with the financial condition and reputation of the management of ship repair and ship building yards.
In all probability you will be visited by Inspector
of Naval Material, Supervisors of Shipbuilding, and Commandants
of Naval Districts, requesting this information.
Your cooperation will be much appreciated.
Very truly yours,
Chester Morrill
Secretary.
Enclosures 2
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
8-276DEPARTMENT OF THE NAVf
Office of the Under Secretary
Washington
July 18, 1941
Gentlemen:
It becomes frequently necessary for the Navy
Department to obtain confidential information in connection with the financial ability and reputation of
the management of certain ship repair and shipbuilding
yards throughout the continental limits of the United
States. This information is used in determining whether or not the Department is justified in awarding contracts to such yards for the construction or repair of
Naval vessels.
The Department would appreciate the Board of
Governors making available to Inspectors of Naval Material, Supervisors of Shipbuilding and Commandants of
Naval Districts the services of the Federal Reserve
Banks and branches in obtaining this confidential information upon application of these local representatives.
Very truly yours,
(Signed) Forrestal
Acting Secretary of the Navy
Board of Governors,
Federal Reserve System,
Washington, D. C.
S-276-b
July 22, 1941
Honorable James V, Fprrestal,
Acting Secretary of the Navy,
Washington, D. C.
Dear Mr. Forrestal;
This refers to your letter of July IB in which you request the Board of Governors to make available to Inspectors of
Naval Material, Supervisors of Shipbuilding, and Commandants of
Naval Districts the services of the Federal Reserve Banks and
branches in obtaining confidential information respecting the
financial•ability and reputation of the management of certain
ship repair and ship building yards throughout the continental
United States.
It is the desire of the Board of Governors to be of
every possible assistance to the Navy Department in the National
Defense Program and it is today asking the Federal Reserve Banks
to furnish the confidential information upon request of the
above representatives of the Navy Department.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
249
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-277
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
August 6, 19hX
Dear Sir;
Referring to the minutes of the Conference of Presidents
held in Washington, D. C. on June 11, 1941, the Board of Governors
approves the following action taken by the Presidents:
VOTED thab it shall be the policy of the Federal Reserve
Banks not to furnish credit information concerning individuals, partnerships, associations, and corporations
(other than banks), except as follows:
1. Where the furnishing of such information is
expressly authorized ty Act of Congress; or
2. Where authorized to furnish such information
by the source from which the information was
obtained; or
3.
To the Board of Governors of the Federal Reserve System; or
4.
To other Federal Reserve Banks; or
5. To the appropriate officers or agents of the
War Department and the Navy Department; or
6. To other departments, agencies, or instrumentalities of the United States Government, but
only when the information requested is to be
used in connection with the letting or proposed letting of Government contracts.
It is assumed that the Federal Reserve Banks will continue
to furnish credit information to the Federal Housing Administration,
250
-2-
-277
when requested, as authorized by the Board of Governors (Loose-Leaf
Service #3333).
Very truly yours,
^ ' 7
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
251
S-278
Reg. T-95
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 1, 19-41
Mr.
, Vice President,
Federal Reserve Bank of
,
Dear Mr.
:
Reference is made to your letter of June 19, 1941 regarding a question raised ty The
National Bank of
under
section 8(a) of the Securities Exchange Act of 1934, which reads in
part as follows:
"SEC. 8. It shall be unlawful for any member of a
national securities exchange, or any broker or dealer who
transacts a business in securities through the medium of
any such member, directly or indirectly —
"(a) To borrow in the ordinary course of business
as a broker or dealer on any security (other than an exempted security) registered on a national securities exchange except (1) from or through a member bank of the
Federal Reserve System, (2) from any nonmember bank which
shall have filed with the Federal Reserve Board an agreement, which is still in force and which is in the form
prescribed by the Board, undertaking to comply with all
provisions of this Act, the Federal Reserve Act, as
amended, and the Banking Act of 1933, which are applicable to member banks and. which relate to the use of credit to finance transactions in securities, and with such
rules and regulations as may be prescribed pursuant to
such provisions of law or for the purpose of preventing
evasions thereof, or (3) in accordance with such rules
and regulations as the Federal Reserve Board may prescribe to permit loans between such members and/or brokers and/or dealers, or to permit loans to meet emergency
needs. ..."
The question is, in effect, whether a
provision may borrow from a nonmember bank that
specified agreement if the loan is not obtained
member bank but is made by a member bank acting
member bank.
broker subject to the
has not signed the
directly from the nonas agent for the non-
-2-
S-278
Reg. T-95
As you indicate in your letter, the Board has previously
considered the question and in a letter dated December 4> 1934> to
Mr.
, Federal Reserve Agent at
, the Board has expressed the opinion that such borrowing was not authorized under
section 8(a). You have indicated, however, that you are inclined
to agree with the contrary view which is urged by The
National
Bank. The question has accordingly been carefully reconsidered in
the light of your letter and the views of the Board on the matter
are indicated in some detail below.
It is the view of the Board that section 8(a)(2) states
the general rule for borrowings, of the specified type, from nonmember banks. It is true that under clause (3) the Board is authorized "to permit loans to meet emergency needs", and that under
this authority the Board might conceivably authorize such emergency
loans even ty nonmember banks that have not filed the specified
agreement. Such emergency authorization, however, would not alter
the fact that ordinary dey-to-day borrowings from nonmember banks
are covered by clause (2).
Similarly, the Board feels that the provision in clause
(1) for borrowings "from or through a member bank of the Federal
Reserve System" should not be construed to authorize a broker to
do indirectly what the law clearly forbids him to do directly.
Such a construction of the provision would, in the opinion of the
Board, extend the meaning of the word "through" considerably beyond
that which it might reasonably be expected to have in the context.
It is perhaps not entirely clear why the word "through"
was included in clause (1), or why it was omitted in clause (2).
However, it may have been included to authorize, or to clarify,
borrowings by a broker from a member bank when the member bank is
acting as agent for another member bank cr for a nonmember bank
that has signed the agreement. Such a construction would seem to
be more in conformity with the general purpose and tenor oi the
section than would the suggested extension of the term.
The Committee reports on the legislation and the drafts
of the provision in the bills that preceded the final statute have
been carefully examined for any light they might throw on the question, and the Board is unable to see how these conflict with the
views expressed above. In fact, they seem to reinforce the conclusion.
As originally introduced ty Senator Fletcher on February
9, 1934 (S. 2693) and Congressman Rayburn on February 10, 1934
-3-
S-278
Reg. T-95
(H.R. 7852) the provision on the point in both bills entirely excluded borrowings from nonmernber banks and did it in a form somewhat
different from that of later drafts. The identical provision in
both these bills provided that it would be unlawful for the specified persons:
"(a) To borrow on any security registered on a national securities exchange from any person other than a
momber bank of the Federal Reserve System;"
The word "through" first appeared in H.R. 8720, introduced
by Congressman Rayburn on March 19, 193-4. . Section 7(a) of that bill
prohibited the specified borrowing:
".... except (1) from or through a member bank of
the Federal Reserve ^7stern, or (2) in accordance with
such rules and regulations as the Federal Reserve Board
may prescribe to permit limited loans between members
and/or brokers or dealers who transact a business in securities through the medium of a member, or to permit
loans from or through others than member banks in localities where there are no member banks, or to meet emergency needs."
Section 8(a) of S. 3420, introduced ty Senator Fletcher
on April 20, 1934 and reported out by the Senate Banking and Currency
Committee on the same day, contained substantially the same provision
The Committee report on the bill strongly negatives any thought that
the word "through" was intended to have the meaning suggested by The
National Bank. Instead, it rather indicates that the word
was used more or less as a synonym for "from" and was intended to
add very little to that term. The report at page 7 says that the
provision:
".... prohibits brokers and dealers from borrowing
except through a member bank of the Federal Reserve System or in accordance with regulations of the Commission".
•And on page 16 the report states that the provision confines the spec
ified borrowings to;
".... loans from member banks of the Federal Reserve
System and loans from other sources made in accordance with
such rules -as the Commission may prescribe, either in general or under particular conditions."
It seems clear that the terms "from" and "through" were considered to
be more or less synonymous and interchangeable.
-4-
S-278
Reg. T-95
Section 7(a) of H.R. 9323, introduced by Congressman
Rayburn on April 25, 1934 and reported out on April 27, 1934
the
House Committee on Interstate and Foreign Commerce, contained a provision identical with section 8(a) of the final Act. The Committee
report on this bill, like that on the Senate bill, gives every indication that "from or through" was intended to refer only to the
usual direct banking relations, and that the word "through" was not
intended to have the extended meaning now suggested by The
National Bank. On page 7 the report states that:
"Borrowings by brokers to finance their customers
are confined to borrowings from or through member banks
of the Federal Reserve System or those nonmeraber banks
which apply for a license from the Board."
Far from giving the suggested broad meaning to the word
"through", the Committee did not even draw any distinction between
clause (1), where the word "through" is used in authorizing borrowings from member banks, and clause (2), where the word, is entirely
omitted in authorizing borrowings from nonaember banks. The same is
true when the provision is described in more detail on pages 19-20,
as follows:
"By subsection (a), borrowing on registered securities (other than exempted securities) ly members, brokers,
and dealers who do a business through members is confined
to loans from member banks of the Federal Reserve System
or from nonmember banks which agree to comply with the
provisions of this act, the Federal Reserve Act, and the
Banking Act of 1933, insofar as they relate to the use of
credit to finance transactions in •securities. This, however, is subject to certain exceptions in case of transactions between members, brokers, and dealers and in
emergency cases." (Underscoring added)
In view of these considerations, which have been set forth
at some length because of the novelty of the question and the Board's
reexamination of the matter, the Board believes that section 8(a)
does not authorize ordinary borrowings from a noniaeiaber bank which
has not filed the specified agreement and that this is not altered try
the fact that the loan is made by a member bank acting as agent for
the nonmember bank.
Very truly yours,
(Signed) L. P. Bethea
L. P..Bethea,
Assistant Secretary.
355
BOARD OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
S-279
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
August 13, 194-1
Dear Sir:
For your consideration there is attached
a copy of a letter dated August 6, 194-1, from the
Adjutant General's Office of the War Department in
regard to identification of representatives of Government agencies who call upon officials of public
utilities and other companies for information. We
have acknowledged receipt of this communication and
have advised the War Department that it is being
brought to the attention of the Federal Reserve
Banks.
Very truly yours,
Chester Morrill,
Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
256
S-279-a
WAR DEPARTMENT
The Adjutant General1s Office
'Washington
August 6, 194-1
Chairman, Board of Governors,
Federal Reserve System,
Washington, D. C.
Dear Mr. Chairman:
Reports have been received by the War Department that individuals representing Government agencies
have called upon officials of public utilities and other
companies for information concerning their plants, and
have failed to offer satisfactory authorization for their
inquiry or, in some cases, have failed properly to identify themselves.
With a view to the maintenance of cordial relations with such companies, and to the saving of time
effected by elimination of demand for credentials from
persons who have occasion to seek information which
plant managements may consider confidential, it is requested that instruction bo issued to your subordinates
that they preface requests for such information with
complete personal identification and with evidence of
the authorisation of the project for which the information is desired.
Very truly yours,
(Signed) E. S. Adams
Major General,
The Adjutant General.
R E S T R I C T S D
257
S-280
Reg. W-l
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
"
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
1
•*
August 27, 1941
Young - Chicago
Davis - St. Louis
Peyton— Minneapolis
Leedy - Kansas City
• Gilbert - Dallas
Day - San Francisco
An inquiry which may be stated as follows has been received under Regulation W:
"Work is in progress on a home modernization job
which cannot be completed by August 31. Prior to the
issuance of Regulation W or tne signing of Executive
Order 83A3 under which Regulation W was issued, a lender made a written commitment to finance the modernization upon its completion. When the work is completed
in due course after September 1, may it be financed
pursuant to the pre-September commitment, or must the
financing comply with the 18-months limitation stated
in the Supplement to the regulation? Would it make
any difference whether the credit was instalment sale
credit instead of instalment loan credit?"
It is the opinion of the Board that in such a case of a
bona fide written pre-September commitment, which is in effect a
contract to make a contract and which involves no effort to evade
the regulation, section 9(d) permits the modernization to be financed pursuant to such commitment even though the loan is not made
until after September 1. The same result would follow in such a
case whether the credit was instalment sale credit or instalment
loan credit.
(Signed) Chester Morrill
Morrill
S-231
Reg. W-2
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
August 27, 1941
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy r Kansas City
Gilbert - Dallas
Day - San Francisco
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
An inquiry which may be stated as follows has been received under Regulation W:
"In connection with a contract for the modernization
of a building, a written commitmtnt is made on September
2, 1941 for a loan which will be subject tc Regulation W
and is to be made when the work is completed. The construction and installations involved in the modernization
are expedited as much as circumstances will permit, and
are completed on October 10, when the loan is made on the
certificate of completion. In calculating the 18-monLhs
maximum maturity permitted for the credit, should September 2 or October 10 be taken as the base? Would it make
any difference if the credit was instalment sale credit
instead of instalment loan credit?"
The Board is of the opinion that in the specified case
the date to be used as the base for calculating the 18-months maximum maturity is October 10. This would hold true whether the credit is instalment sale credit or instalment loan credit.
(Signed) Chester Morrill
MORRILL
258
S-282
Reg. W-3
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 27, 1941
TSIEORAa
Federal Reserve Bank, of
Boston
New York
Philadelphia
Cleveland
Minneapolis
Kansas City
Dallas
San Francisco
Richmond
Atlanta
Chicago
St. Louie
Re Regulation W inquiry on furniture, if furniture is of the
type used in households it is subject to the regulation and it
does not matter that the particular piece may be sold for use
in an office, hospital, store, or other commercial building.
(Signed) Chester Morrill
Morrill
259
•S-283
2(>0
Reg. W-4
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 27, 194-1
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Minneapolis
Kansas City
Dallas
San Francisco
Richmond
Atlanta
Chicago
St. Louis
Re Regulation W inquiry on cooking stoves and ranges, an oven
or a broiler is considered a heating surface if it has a separate source of heat, as, for example, a separate burner or
electric element, but if oven and broiler have a separate
source of heat in common it is considered that there is but
one heating surface. Neither is considered a heating surface
if its source of heat is a central firebox.
(Signed) Chester Morrill
•iorrill
261
S-284
Reg. W-5
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 28, 194-1
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
An inquiry which may be stated as follows has been received
under Regulation W:
"Pursuant to an established bona fide business practice a finance company issues and sells notes which are
secured by instalment sales obligations trusteed under a
collateral trust agreement. It is not feasible for a purchaser of the collateral trust notes to examine the underlying obligations held by the trustee. Suppose one of the
underlying instalment obligations failed to comply with
the requirements of Regulation W and such noncompliance,
although unknown to the purchaser of the collateral trust
notes, showed on the face of the underlying instalment
obligation. Would the purchase of the collateral trust
note in such, a case, or the receipt of payments on the
note, constitute a violation of Regulation W?"
The regulation does not apply to the purchaser unless he is
a person required ty section 3(a)(1) to be licensed. If he is such
a person, the payments received, according to the question as stated,
arise out of the collateral trust note rather than the underlying obligation and under section 9(e) the regulation does not apply to such
payments.
Even if the transaction were such that the payments arose
out of the underlying obligation rather than the collateral trust
note the receipt of payments by the registrant purchasing the note
secured by such underlying obligation would not be contrary to the
regulation if when he made the purchase the underlying obligation
5-284
Reg. W-5
-2-
did not on its face show some noncompliance or if he did not at that
time know some fact by reason of which the extension of credit on
which the underlying obligation was based failed to comply with the
regulation. In this connection it will be noted that while 4(f) requires that extension of instalment sale credit be evidenced in the
prescribed manner, this dees not require that the obligation or claim
referred to in section 3(a)(2)(B) shall contain all the prescribed
information, since under section 4(f) the evidence of the underlying
transaction which must contain the necessary information, or have
such information attached, may be a separate instrument or record
and need not be the same as the obligation or claim referred to in
section 3(a)(2)(B).
(Signed) Chester Morrill
Morrill
263
S-285
Reg. 1-6
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 28, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas CityDallas
San Francisco
The classification mechanical refrigerators includes
frozen food cabinets of the specified capacity but does not
include milk coolers, assuming that they are not designed for
household use.
(Signed) Chester Morrill
Morrill
264
S-286
Reg. W-7
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 28, 1941
TELEGRAM
Federal Reserve Bank of
Boston
. New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Tumbler clothes driers are not included in any of
the classifications of listed articles.
(Signed)
Chester Morrill
Morrill
S-287
Reg. W-8
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 28, 194-1
FELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
In connection with section 9(d) of Regulation W exempting contracts made before September 1, questions have been
received as to whether orders received through the mail by a
mail order company come within the exemption if the orders are
postmarked prior to September 1 but in the usual course of business are not filled until after that date. The standing practice of the company has been to fill all such mail orders
according to the terms of the catalog, subject only to the
right of the company to refuse to fill the order for certain
specified reasons such as unsatisfactory credit standing of
the customer. If such orders are received in good faith pursuant to an outstanding catalog and without personal solicitation, it is the view of the Board that those postmarked before
September 1 may be deemed to be exempted under section 9(d)
even though in the usual course of business they are not
filled until after that date.
(Signed) Chester Morrill
Morrill
S-288
Reg. W-9
INTERPRETATION OF LAW OR REQ'uLAIIQN
(Copies to be sent' to all Federal Reserve Banks)
August 29, 1941
TELEGRAM
Fedsral Reserve Bank of
Boston
Richmond.
New York
Atlanta
Philadelphia
Chicago
Cleveland
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
The classification household furniture includes
lamps designed for household use.
(Signed) Chester Morrill
Morrill
S-289
Reg. ff-10
INTERPRETATION OF LAW OR REGULATION
(Copies to be aent to all Federal Reserve Banks
August 29, 1941
TELEGRAM.
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
•
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
An inquiry which may be stated as follows has been
received under Regulation W:
"Coupons serve as money within a department
store and are sold by store on instalment basis
with maturity shorter than prescribed in Regulation but down payments are smaller than required
by Regulation. Msy coupons purchased for 10 per
cent down and 8 months to pay be used for purchase
of vacuum cleaner requiring 20 per cent down p a y ment."
Board is of opinion that for purposes of applying
Regulation W face value of coupon is not material but that
consideration should be given only to amount of money actually paid try purchaser.
Accordingly sale of vacuum cleaner would not comply
with Regulation if sufficient money to constitute required
down payment had not been paid before sale, whether money was
paid for coupons or otherwise.
(Signed)
Chester Morrill
Morrill
S-290
Reg. WINTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 29, 194-1
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Question has been raised as to effect of September
1 holiday upon the effective date of Regulation W.
Fact that
this is holiday does not alter effective date of regulation,
which becomes effective at beginning of business on September
1.
(Signed) Chester Morrill
Morrill
269
S-291
Reg. W—12
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 30, 1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert — Dallas
Day - San Francisco
Certain questions have been received regarding the status
under Regulation W of commitments made prior to September 1 to extend
credit after September 1. Section 9(d) of the regulation exempts
"any valid contract made prior" to September 1. An earlier ruling
of the Board has indicated that this exemption applies to a written
commitment made prior to September 1 with respect to a modernization
job that is in process on August 31. In order to clarify further
the application of this provision to outstanding commitments, certain general principles applicable to such commitments are set out
below.
1. The underlying principle is that the exemption in section 9(d) for "any valid contract" made before September 1 applies
not only to an extension of credit actually nado before that date,
but also to a valid contract to make a contract. The exemption,
therefore, includes a valid commitment made in good faith before
September 1 to extend credit after September 1, and includes also
the credit extended pursuant to such a commitment.
2. In order for the exemption to apply there must have
been a valid contract. The general test is that the borrower should,
in the absence of the regulation, have been able to maintain a suit
for damages if the credit had not been granted pursuant to the contract. Some of the requirements for such a contract may be briefly
summarized:
(a) Even an exact agreement on the sale of a particular
article is not necessarily an agreement to extend credit therefor.
There must have been a valid contract relating to the credit. Where
there is ambiguity as to whether the contract included credit arrangements, relatively little proof would be. needed in the case of
a contract for a unique or "custom built" item, as for example a
home modernization job, to snow that the contract did include credit
arrangements; but in the case of a standard article the presumption
S-291
Reg. W-12
-2-
would be strongly the other way. (b) There must in any case be considerably more than general negotiations or indefinite "understandings" that the credit would be extended. There must have been an
agreement to extend the credit and a reasonably exact agreement as
to terms and amount, (c) While not always essential, the case is
much clearer if there is written evidence of the commitment. The
time as of which the extension of credit is itself dated is not important, the significant date being that of the prior commitment.
3. Substance and good faith rather than technicalities
and formalities control in determining whether there is a valid preSeptember contract. The most elaborate written documents do not
constitute such a contract unless they represent a bona fide commitment made as a part of a regular business transaction and not as a
means of evading the regulation.
(Signed) Chester Morrill
Morrill
270
S-292
Reg. WINTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 30, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas CityDallas
San Francisco
The classification household furniture includes
mirrors, unpainted furniture, stools, kitchen or breakfast
room sets, porch tables, chairs, and swings, and kitchen
cabinets but does not include pictures or clothes hampers.
(Signed) Chester Morrill
Morrill
S-293
Reg. W-1A
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 30, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Minneapolis
Kansas CityDallas
San Francisco
Richmond
Atlanta
Chicago
St. Louis
The following articles are not included in any of
the classifications of listed articles:
toasters, food mix-
ers, roasters, air circulating or ventilating fans other than
attic fans or air conditioners, waffle irons, clocks, carpet
sweepers not electrically operated.
(Signed)
Chester Morrill
Morrill
S-294
Reg. WINTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 30 j 194-1
TELEGRAM
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leed.y - Kansas City
Gilbert - Dallas
Day - San Francisco
Young
Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond.
McLarin - Atlanta
Section 4(d) of Regulation W does not permit sale
of listed article for payment in five equal instalments
spaced at three month intervals.
(Signed) Chester Morrill
Morrill
274
S-295
Reg. W-16
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
August 30, 194-1
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - S t . Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
A case has been presented to the Board in which a dealer
selling a listed article in Group D does not take a note from the
purchaser payable to the dealer, but instead, according to arrangements with a bank, takes from the purchaser a note payable to the
bank. Since the note is not secured ty the listed article, the
question has been presented whether the transaction is an extension
of instalment sale credit subject to section 4, in which case a
aovm payment would be required, or whether the transaction is an
extension of unsecured instalment loan credit subject to section
5(b), in which case the down payment would not be required.
The question is covered by section 2(d) of the regulation.
That section defines an "extension of instalment sale credit" as an
extension of instalment credit which is made "by any seller" and
"arises cut of the sale of such listed article", and it specifically
states that the definition applies whether the seller is acting "as
principal, agent or broker".
It is accordingly clear that the extension of credit here
in question is an extension of instalment sale credit, and as such
is subject to the down payment requirement.
(Signed) Chester Morrill
Morrill
375
B O A R D OF G O V E R N O R S
OF THE
Xr Vy
FEDERAL RESERVE SYSTEM
WASHINGTON
s-296
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
September 2, 1941
Dear Sir:
Mr. Allan Sproul, Chairman, Presidents' Conference Committee
on Defense Savings Securities, has furnished the Board with copies of
his correspondence with you with respect to the Defense Savings Bond
Program.
It is noted that all Federal Reserve Banks have now assigned
officers to establish and maintain contact with the Defense Savings
Bond organizations in the States of their Districts. It is also noted
that Mr. Sproul has advised you of the names of the members of the
staff of the Board of Governors who, under the general direction of
Governor McKee, will maintain contact with the Defense Savings Bond
organization at Washington and between that organization and the Federal Reserve Banks.
Mr. Sproul indicates in one of his letters that,if the experience in the Second District is at all typical, he thinks it will be
found that the State organizations willingly accept the cooperation of
the Reserve Banks and that they should be able to help the State committees in organizing their work and, where the work is already organized, in furthering their sales program.
In order that the Board may be kept currently informed as
to the part the Federal Reserve Banks are taking in connection with
the Defense Savings Bond Program, it will be appreciated if you will
advise the Board what steps have been taken to establish and maintain
contact with the Defense Savings Bond organizations in the States of
your District and furnish it, not later than the tenth of each month,
with a brief statement of the activities of the liaison officer at
your Bank in connection with the Program.
Very truly yours,
^IbficAXiA;
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
Chester Morrill,
Secretary.
276
S-297
Reg. W-17
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 2, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
The classification "household furniture" does not
Include china dinner sets, stainless steel cooking utensil
sets, or silver-plated flatware.
(Signed) Chester Morrill
Morrill
277
S-298
Reg. W-13
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 2, 194-1
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
The classification "household electric organs" includes electronic instruments and electric action instruments
designed for use in homes. It does not include ecclesiastical
models the cases of which are specially designed for use in
churches or for similar use.
(Signed) Chester Morrill
Morrill
278
S-299
Reg. W-19
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 2, 194-1
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
In order to clarify the status of renewals, revisions and
consolidations (or "add-ons") under Regulation W during the period
until November 1, when sections 8(a) and 8(b) on these subjects become effective, certain general principles applicable to such transactions during this period until November 1 are set out below:
1. Any instalment credit which was originally extended
before September 1 may be renewed or revised once on or after September 1 on any terms which the Registrant would have granted in good
faith in the absence of the regulation. In the case of the renewal
or revision of a credit which was originally extended on or after
September 1, or the renewal or revision of a credit which was originally extended before September 1 but has already been renewed or
revised (or consolidated with a new credit) on or after September 1,
the credit as renewed or revised may not have a maturity beyond 18
months from the date of the renewal or revision. This 18-months limitation, however, does not apply to a renewal or revision which relates to an obligation of a member of the armed forces of the United
States incurred prior to his induction into the service, or which is
necessary for the Registrant's protection in connection with an obligation which is in default and is the subject of bona fide collection
effort by the Registrant.
2. The mere act of consolidating two separate obligations,
or of "adding-on" one obligation to another, can confer no greater
privileges than would apply if the obligations were treated separately. Accordingly, any new extension of credit which would be subject
to a down payment requirement if made alone, is subject to the same
requirement if consolidated with, or "added-on" to, an outstanding
obligation.
279
S-299
Reg. W-19
-2-
3. Similarly, in determining the terms of repayment permissible when an extension of credit is consolidated with, or "added-on"
to, an outstanding obligation of the same obligor, it is necessary to
consider (a) the terms on which the outstanding obligation could be renewed or revised (for that is what its consolidation may in effect accomplish), and (b) the terms required for the additional extension of
credit if it stood alone. The consolidated obligation may not provide
for repayment at a slower rate than would have been permissible if the
outstanding obligation were revised as permitted by the regulation and
the new credit were extended in accordance with the regulation but the
two credits v/ere not consolidated.
4.. While sections 8(a) and 8(b) which require a statement
of necessity in certain cases do not become effective until November
1, section 8(g) of the regulation, which is in full effect beginning
September 1, prohibits any extension of instalment credit in connection with which there is any evasive side-agreement for the subsequent
renewing or revising of the credit. Therefore, any extension of instalment sale credit or instalment loan credit made on or after September 1 cannot} be the subject of any contemporaneous agreement,
arrangement or understanding by which renewals or revisions are to be
used as a means of evading the requirements of the regulation. Any
renewal or revision must be the bona fide result of developments coming after the making of the original extension of credit. Unless it
is such a bona fide result of a subsequent development, it is prohibited ty section 8(g).
(Signed) Chester Morrill
Morrill
280
S-300
Reg. W-20
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 3, 1941
TELEGRAM
i'oung - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
IvlcLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert -- Dallas
Day - San Francisco
The classification "mechanical refrigerators" does
not include coin operated machines for dispensing beverages
or coolers designed for the purpose of holding bottled beverages offered for sale even though they arc of less than twelve
cubic feet rated capacity.
(Signed) Chester Morrill
Morrill
281
S-301
Reg. W-21
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 3, 1941
TSLEGRM
loung ~ Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach — Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leecty- — Kansas City
Gilbert - Dallas
Day - San Francisco
The classification "water pumps designed for house»
hold, use" includes water system pumps which are either shallowwell or reciprocating deep-well pumps having a rated capacity
of 300 gallons per hour or less, or deep-well jet type or centrifugal pumps operated by motors having a rating of 1/3 horsepower or less. The actual use to which the pumps are put does
not affect the classification.
(Signed) Chester Morrill
#
Morrill
t
S-302
Reg. WINTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 3, 1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
Re ruling number six the classification "mechanical
refrigerators" does not include frozen food cabinets designed
for the display of frozen foods offered for sale but does include frozen food cabinets designed for the home freezing of
foods or for the home storage of frozen foods.
(Signed) Chester Morrill
Morrill
S-303
Reg. WINTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September U> 1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The following articles are not included in any of
the classifications of listed articles: Automobile trailers
whether designed for use as living quarters or otherwise, or
motor veniclcs designed for use as ambulances or hearses.
(Signed) Chester Morrill
Morrill
S-304
Reg. WINTERPRETATIQN OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 4» 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Inquiries have been received as to whether Regulation
W limits the amount of an instalment loan (as distinguished from
the maturity of the loan) when the Registrant knows the loan is
for the purpose of purchasing a listed article but the listed
article is not pledged as collateral for the loan. The answer
is that unless an extension of instalment credit is made by the
seller of the listed article (whether as principal, agent or
broker) as described in section 2(d), or unless tne extension
of instalment credit is secured, or to become secured, by a recently purchased listed article as described in section 5(a),
the present regulation does not limit the amount of the credit
(as distinguished from its maturity) regardless of the lender's
knowledge that it is to be used to purchase a listed article.
(Signed) Chester Morrill
Morrill
S-30S
Reg. W-25
INT7EPRETA1ION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September U, 1941
TELEGRAM
Federal Reserve Bank of
Boston
iiew York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas CityDallas
San Francisco
An inquiry which may be stated as follows has been received. under Regulation W:
"May first mortgage under section 6(a) be considered
1
first lien' even though a prior lien for current
taxes not due and payable exists under State law?"
The Board is of the opinion that in such a case the
first mortgage is a "first lien" under section 6(a).
(Signed) Chester Morrill
Morrill
286
S-306
Reg. W-26
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 5> 194-1
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Minneapolis
Kansas City
Dallas
San Francisco
Richmond
Atlanta
Chicago
St. Louis
"First lien" referred to in section 6(a) of Regulation
W means any first lien created by agreement of the parties at the
time of or as an incident to the extension of credit, including
first mortgages, first deeds of trust, and the like.
It does
not, however, include a lien arising try operation of law, independently of such an agreement, under statutes such as those designed to protect furnishers of labor or material. A lien of
the kind existing in some jurisdictions which is sometimes referred to as a mechanic's lien but which is a first lien created
by agreement of the parties, and not by operation of law under a
statute, is a "first lien" under section 6(a).
(Signed) Chester Morrill
Morrill
3-307
Sec. A, FRA-3
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 4, 1941
(Telegram addressed to the President
of a Federal Reserve Bank)
Referring your telephone inquiry Board is of the
opinion that Federal Reserve Act is not to be construed as
preventing a Class C director of a Federal Reserve Bank from
serving as a director of the Central Bank for Cooperatives.
(Signed) Chester Morrill
Morrill
288
S. 308
Reg. W-27
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 5, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Extension of credit "securedfcgra bona fide first lien
on improved real estate duly recorded" is exempted iy section 6(a)
of Regulation W even though the purpose of the credit is to purchase a listed article. For example, if the credit is secured by
such a first lien it is exempt even though part of the credit is
for the purpose of purchasing a furnace to be installed in the
mortgaged property and even though the lien does not extend to
the furnace.
Conversely, if a portion of the credit involved in
the transaction is not secured ty the lien, the exemption does
not apply to that portion of the credit.
$
(Signed) Chester Morrill
Morrill
S-309
Reg. W-28
INTERPRETATION OF LAW OR REGULATION
(Copies to be
sent to all Federal Reserve Banks)
September 5, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Franicisco
Although W-19 dealt generally with renewals and revisions made during September and October, questions have been received regard m g renewals or revisions made on or after November
1, of credits which were originally extended before September 1.
The controlling principle in such cases is that credit
originally extended, before September 1 may be renewed or revised
once at any time on or after September 1 without the statement
of necessity referred to in section 8(a) and on any terms which
the Registrant would have granted in good faith in the absence
of the regulation. This is the case whether such first renewal
or revision of a pre-6'spteiaber credit occurs before November 1
(as discussed in W-19) or after November 1. Inon a pre-5aptember
credit has been once renewed or revised on or after September 1,
whether such renewal or revision occurs before or after November
1, any subsequent renewal or revision is subject to the same requirements which would apply if the credit being renewed or revised had originally been extended on or after September 1. As
indicated in W-19, the consolidation of a pre-September credit
with a new credit has the same effect, for the purposes of this
question, as a renewal or revision of the pre-Septernber credit.
(Signed) Chester Morrill
Morrill
290
S-310
Reg. W-29
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 5, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Mianeapolis
Kansas City
Dallas
San Francisco
The question has been asked whether, in view of W-5,
Registrant who is purchaser or pledgee of obligation or claim subject to Regulation is required by section 3(a)(2)(B) to receive a
copy of the statement of the transaction required try section 4(f) •
Answer is that purchaser or pledgee is not required to receive
this statement. Section 4(f) provides that there shall be a written instrument or record of the transaction which shall contain
certain information and of which a copy shall be given to the obligor, but this instrument or record is not necessarily the same
document as the "obligation or claim" which is discounted or accepted ty the Registrant under section 3(a)(2)(B).
(Signed) Chester Morrill
Morrill
S. 311
Reg. W-30
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 5, 1941
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas CityDallas
San Francisco
An inquiry which may be stated as follows has been received under Regulation W:
"A mortgagee, who has made a loan of $2,000 secured by a first mortgage, advances $4.00 more to the
same borrower but instead of combining the two transactions into one debt secured ty one mortgage, the
lender takes another note and a second mortgage. Can
the latter mortgage be regarded as a 'first lien' within the meaning of section 6(a)?"
The Board is of the opinion that the second mortgage
securing the additional loan of $4-00 may not be regarded as a
"first lien" within the meaning of section 6(a).
(Signed) Chester Morrill
Morrill
293
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-312
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
********
September 6, 1941
Dear Sir:
During the latter part of 1938 and early part of 1939 the
Board gave considerable thought to the difficulties experienced in
passing upon changes in officers' salaries at all Federal Reserve
Banks and Branches within a comparatively short period at the beginning of the year, and in 1939 advised the Federal Reserve Banks that
it had decided to review the salaries of officers in the months of
March, April, and May of each year, such salaries to become effective
on the first of the following month.
It is believed that the revised procedure has been mutually
advantageous to the Reserve Banks and tho Board of Governors, particularly in relieving some of the pressure around the end of each year.
There appears to be some uncertainty on the part of the Reserve Banks,
however, as to just what information is desired ty the Board in connection with officers' salaries under the revised procedure and when
it should be submitted. Accordingly, it is requested that the following data be furnished the Board as early as practicable in March,
April, or May of each year:
1. A list of all officers as of March 1, April 1, or
May 1 (depending on whether their salaries are reviewed ty
the Board in March, April, or May) showing in the case of
each officer (a) name; (b) title; (c) principal departments
supervised (Form A classification); (d) present annual salary; and (e) annual salary for the year beginning on the
first of the following month as fixed by your board of directors subject to the approval of the Board of Governors.
If the Bank's counsel is not an officer of the Bank, his
annual retainer fee should be shown separately.
2. In the case of each officer for whom an increase
in salary is recommended a statement of changes in his duties and responsibilities since his last increase in salary
and of any other factors that have a material bearing on
the proposed increase.
393
—2—
S-312
3. A copy of the current organization chart of the
Reserve Bank including Branches, if any.
From time to time the Reserve Banks have found it desirable,
because of resignations or otherwise, to make certain changes in positions of officers during the year. Since the Board's approval of
salary for a given officer is contingent upon his occupying a specific position, it is requested that whenever an officer is assigned to
another position (change in title) his salary be fixed by the board
of directors for the new position subject to the approval of the
Board of Governors. The Board would also appreciate receiving current
advice of any major changes in the duties of an officer which do not
involve a change in either title or salary.
You may wish to review the provisions of the ty-laws of the
Bank that relate to the election or appointment of officers and the
fixing of their salaries and consider whether any changes appear necessary or desirable as a result of the changed procedure.
This letter supplements the Board's letter of June 16, 1939 >
and supersedes and cancels all previous letters, instructions, etc.
relating to the submission of officers' salaries to the Board, except
that it should not be construed to change in any way the present practice of taking up informally in advance with the appropriate member
of the Board any important adjustments contemplated in official salaries.
Very truly yours,
Chester Morrill,
Secretary.
TO THE CHAIRMEN OF ALL FEDERAL RESERVE BANKS
t
S-313
Reg. W-31
through
Reg. W-39
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 6, 194-1
TELEGRAM
Federal Reserve Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas CityDallas
San Francisco
The following are inquiries received under Regulation W, and
Board's answers thereto;
W-31• Question: Is consumer who knowingly violates or induces violation of regulation subject to criminal penalties? Answer:
Knowing participation in violation may subject offender to criminal
penalties.
W-32. Questions Section 8(f) line 6, do words "any other
extension of credit" mean any other extension of instalment credit?
Answer: Words quoted include but are not confined to other extensions of instalment credit.
W-33- Question: May a new furnace be purchased without
clown payment in emergency situations? Answer: Exceptions to down
payment requirements are those stated in section 6, none of which extend to the situation described, and the exception inherent in section
5(b).
W-34-. Question: Suppose bank loans on instalment basis or
otherwise to a finance company secured by instalment contracts onlisted articles. Must bank look to regularity of security? If bank
is not required to examine each item of collateral, what is purpose
of section 3(a)(2)(B)? Answer: So long as bank's payments arise only
out of the loan as distinguished from the underlying obligation, it
need not investigate underlying collateral. This is so that lender
who takes such collateral will not be in worse position than one who
lent unsecured. However, if and when lender attempts to obtain payments which arise out of the underlying obligation, i.e., to enforce
the underlying obligation as distinguished from the loan, the lender
is forbidden to receive the payments unless requirements of section
$
394
8-313. Reg. W-31
through Reg. W-39
-2-
3(a)(2)(B) were met. This is so that registrant who loans upon instalment obligations will not be in more favorable position than one who
discounts or purchases the obligation. To extent that registrant is
willing to assume the business risk, he may lend on instalment obligation without inspection, realizing the disabilities which may appearlater if it should become necessary to disregard loan and rely upon
underlying instalment obligations. See W-5.
W—35- Question: If bank makes instalment loan under $1,000,
either secured ty listed article or not secured at all, must bank take
statement as to proposed use of proceeds of loan? Answer: Registrant
is not required to take statement as to proposed use of proceeds in
such cases irrespective of whether loan is secured by listed article.
However, statement accepted in good faith by registrant will protect
registrant as mentioned in 8(c) and in similar provisions.
W-36. Question: May bank make loan secured by listed article owned more than 45 days in order to make down payment on new listed
article? Answer: Section 8(f) does not prohibit making a loan which
will serve as down payment. It merely applies to registrant who is required to obtain the down payment (or required to limit loan to maximum
credit value) and prohibits him from making the extension of credit if
he knows or has reason to know of side loan for making the down payment.
W-37. Question: Mey bank make loan secured by listed article
owned more than IS days in order to pay in full the cash purchase price
of a new listed article? Answer: Yes.
W-38. Question: Customer purchases from same seller listed
articles on several different days. All purchases are put. on open
charge account without down payments with the understanding that when
last article is purchased a definite contract will be made. If all
purchases go into a single contract must the entire contract be dated
back to the date of purchase of first article and must the 18 months
run from that earliest date? Answer: If intention is for instalment
payments, down payments should be obtained at times of different purchases. Similarly, 18 month maximum maturities would date from different purchases and need not go back to purchase of first article.
W-39. Question: When borrower makes bank loan on straight
note for six months not payable in instalments is there anything in
regulation to prohibit an agreement at the time of making the loan to
renew the loan at the end of six-months period or at subsequent due
dates? Answer: Question is not entirely clear and answer would depend
on all relevant circumstances. There is nothing to prohibit agreement
for renewal if renewal is to be made without reduction. However, if
agreement is that renewal is to involve a reduction, loan would seem to
be instalment crcd.it and subject to requirements of the regulation.
(Signed) Chester Morrill
Morrill
S-3H
W-
Re g.
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 8, 1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas CityGilbert - Dallas
Day - San Francisco
The Board has been asked to distinguish between
"Heating stoves and space heaters designed for household use"
and "Household furnaces". For purposes of Regulation W, the
heat generating unit is a heating stove or space heater whan
it is designed to heat directly the space in which it is located 5 the heat generating unit is a furnace when it is designed for the transmission of heat by means of piping or
ducts to the space which is to be heated.
If a unit is de-
signed to heat directly the room in which it is located and
other rooms ty piping it is to be classified as a furnace.
(Signed) Chester Morrill
Morrill
S-315
Reg. W-4-1
INTERPRETATION OF LAW OR REGULATION
(Copies to "be sent to all Federal Reserve Banks)
September 3, 1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The classification "Heating stoves and space
heaters designed for household use" includes gas-fired floor
furnaces even though they are permanently built into the
floor. This classification also includes small portable
electric heaters.
(Signed) Chester Morrill
Morrill
S-316
Reg. W-42
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 8, .1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The classification "mechanical refrigerators" does
not include mechanically refrigerated cabinets specifically
designed for the storage of ice cream or other food products
offered for sale.
(Signed) Chester Morrill
Morrill
S-317
Reg. W-43
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
September 9, 1941
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
Questions have been received regarding the application of
Regulation W to extensions of instalment sale credit in cases in which
there is delay in the delivery of the article sold, or in which time is
required for the completion of a job of installation or construction.
The general principle applicable to these cases is that if
the delay in the delivery of the article or in the completion of the
job is bona fide and is not for the purpose of evading any of the provisions of the regulation, the date of delivery or completion may be
used as the base for applying the requirements of the regulation. Hence
the down payment could be obtained in such cases at any time on or before such date of delivery or completion. Similarly, the 18-months maximum maturity in such cases could be calculated from such date of delivery or completion with, of course, the usual option under section 9(b)
of making the 15-day adjustment permitted by that section for calculating the maximum maturity.
For any such case in which any date later than the date of
the contract between the seller and the purchaser is used as the base
for applying the requirements of the regulation, it would be advisable
for the Registrant's records to indicate clearly the facts justifying
such use of a later date.
A related question received by the Board deals with progress
payments under a contract for the installation of a heating system, or
under a contract for a similar construction job. Payment is to be made
for the installation or construction as the job progresses. Each payment is to be made at the completion of a specified portion of the job/
and is to be approximately equal to the cost of that portion, the final
payment being made at the completion of the job. If such an arrangement is a bona fide business practice which is followed for the convenience of the parties concerned and is not an effort to evade any of the
provisions of Regulation W, the regulation does not require any change
in the procedure.
(Signed) Chester Morrill
Morrill
S-318
Reg. W
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 9, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The classification "ironers designed for household use" does not include hand irons, whether electrically
or otherwise operated.
(Signed) Chester Morrill
Morrill
S-319
Reg. W-2
INTERPRETATION O F LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 10, 1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The phrase "principal amount" in section 5(b) of
Regulation W means the principal amount lent to the obligor,
excluding any interest, finance charges, service charges and
insurance costs, whether or not deducted in advance.
For example, if a borrower receives $97$ but signs
a note on a discount basis for $1,020, the loan is in a "principal amount" of less than $1,000 within the meaning of section 5(b).
MORRILL
S-320
Reg. 17-4.6
INTERPRETATION 0?' LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 10, 194-1
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leady - Kansas City
Gilbert - Dallas
Day - San Francisco
The classification "musical instruments composed
principally of metals" does not in general include violins,
guitars, mandolins, accordions, clarinets, oboes or bassoons.
Certain models of some of these instruments, however, have
metal bodies or tubes, in which case they are included in
the classification.
MORRILL
303
S-321
Reg. W-47
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 10, 194-1
TELEGRAM
Young - Boston
Sproul - ITow York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin -- Atlanta.
Young - Chicago
Davi:; - St. Louis
Poyton - Minneapolis
Leeiy - Kansas City
Gilbert - Dal.l.as
Doy - San Francisco
Questions have been received as to whether an extension
of credit which, upon its face, is repayable in only one scheduled
payment is an extension of instalment credit if, at its maturity,
a partial payment is made and the balance is renewed.
Answers to such questions depend upon whether or not
there are any agreements or understandings between the parties at
the time the extension of credit is made.
For example, if at the
time a particular extension of credit is made the Registrant and
obligor have an understanding that the obligor will be required
to make only a partial payment at maturity and that, upon making
such partial payment, the balance will be renewed, the extension
of credit is an extension of instalment credit notwithstanding the
fact that the obligation, upon its face, provides for repayment
in only one scheduled payment.
MORRILL
S-322
Reg. W-48
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
September 10, 1941
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Uhicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
An inquiry has been received regarding the applicability
of section 6(a) of Regulation W to an extension of credit made ty
a builder covering the cost of building a home and secured by a
first lien on the real estate upon which the home is to be constructed.
The general principle applicable to these cases is that
the mortgage and the contract or contracts for the extension of
credit and the construction may be regarded as parts of a single
transaction and that the facts existing on the date of completion
may be used in determining the application of the regulation.
Con-
sequently, the Board is of the opinion that the extension of credit
may be regarded as secured ty a first lien on improved real estate
within the meaning of section 6(a).
The general principle is simi-
lar to that discussed in the second paragraph of W-43.
MORRILL
S-323
Reg. W-49
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 10, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The Board has received a question under Regulation W which may
be stated as follows:
"If an extension of credit which was originally made
as a 3 months' credit conforming to section 6(f) is
renewed or revised, must it be limited to a maturity
of 3 months from the date of the renewal or revision,
or may it have a maturity of as much as 18 months
from the date of the renewal or revision as in the
case of a credit which was not originally under section 6(f)? If the renewal or revision of such a
credit occurs on or after November 1, does it require
a statement of necessity as specified in section 8(a)?"
1. A renewal or revision of a 6(f) credit is not limited to a
maturity of three months from the date of the renewal or revision, and
is limited only to a maximum maturity of 18 months from the date of the
renewal or revision as in the case of renewals or revisions of other
credits under the regulation. If the renewal or revision occurs on or
after November 1, and alters the terms of repayment to terms which would
not have complied with section 6(f) in the first instance, the renewal
or revision may not be made unless a statement of necessity is accepted
in good faith as specified in section 8(a).
2. The preceding paragraph would not apply in the case of the
first renewal or revision on or after September 1 of a credit which was
originally extended before September 1. As indicated in W-19 and W-28
in discussing other pro-September credits, any pre-September credit may
be renewed or revised once without the statement of necessity and on any
terms which the Registrant would have granted in good faith in the absence of the regulation.
s-323
Reg. W-49
-2-
3 0 6
3. It is important to note, as pointed out in W-19, that section 8(g) prohibits any extension of instalment credit in connection
with which there is any evasive side agreement for the subsequent renewing or revising of the credit. Any renewal or revision beyond the period originally permissible for the credit must be the bona fide result
of some development coming after the making of the original extension
of credit. Unless it is such a bona fide result of a subsequent development , it is prohibited by section 8(g).
MORRILL
3-321,
Reg. V / - 5 0
307
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 11, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
P eyt on - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The Board has been asked whether a piece of furniture, such as a table, lamp, or bed, having a radio built in
and a composite part of the article is to be classified as
household furniture or as a radio.
The classification depends
upon the relative value of the component parts.
If the value
of the radio is greater than the value of the table, lamp, or
bed as a separate piece of furniture, then the article is to
be classified as a radio.
MORRILL
308
S--325
Reg. 1-51
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 11, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
IvlcLarin Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Lecdy - Kansas CityGilbert - Dallas
Day - San Francisco
The classification "household furnaces and heating
units for furnaces (including oil burners, gas conversion burners, and stokers)" includes heat generating sources such as
furnaces and boilers, and appurtenances which form a part of
such sources, individually or collectively installed, when
such sources or appurtenances are designed for actual net output of 24.0,000 B.T.U. per hour or less. For purposes of determining the maximum amount of credit the bona fide cash
purchase price of such equipment is considered to include the
cost of installation and the cost of accessories such as fuel
oil storage tanks, heat control units, or coils for heating
domestic hot water installed at the time of the installation
of the furnace, boiler or heating unit. The classification
does not include piping, ducts, radiators, convectars, or registers installed in connection with such equipment, but it is
to be noted that these items may fall within the classification of materials and services referred to in Group E of Part
1 of the Supplement.
Morrill
309
S-326
Reg. W-52
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
September 11, 1941
Payton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The Board has been asked several questions about the application of Regulation W to a case in which a Registrant rents a piano or
other listed article to a customer and the rental contract includes an
option giving the customer the right to purchase the article.
Executive Order No. 884-3 > under the authority of which Regulation W is issued, and section 2(b) of the regulation, define "extension
of credit" as including "any rental-purchase contract, or any contract
for the bailment or leasing of property under which the bailee or lessee ... has the option of becoming the owner thereof ..." Therefore the
type of contract to which the inquiry relates is subject to the provisions of Regulation W.
Under these provisions it is necessary that, under such a contract, the Registrant obtain, at or before the delivery of the article to
the lessee, a deposit equal to the amount of the down payment which the
regulation would require upon an instalment sale of the listed article,
and that the lease call for periodic payments in an amount not less than
the amount of the instalments which Regulation W would require on an extension of instalment sale credit arising out of the sale of the article.
In the event that the lessee decides to exercise his option to purchase
the article, these payments, including the deposit, under the lease will
serve in lieu of both the necessary down payment and the instalments which
would have been due between the date of the original lease and the date
the option to purchase is exercised, and the balance of the sale price may
be paid in instalments subject to the final maturity of 18 months from the
date of the original lease. In the event that the lessee decides not to
exercise his option to purchase, the Registrant may return to him the difference between the payments, including the deposit, which the lessee has
made and the amount of rental that may have been agreed upon' for the period that the lessee has retained the article, and it is permissible for the
lease to contain a provision to this effect.
It should be noted that the regulation does not apply to a bona
fide- rental agreement under which the lessee does not receive a transfer
of ownership, does not obligate himself to pay as compensation a sum substantially equal to or in excess of the value of the article, and does not
receive an option to purchase.
Morrill
310
S-32'7
Reg. W-53
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
leptember 11, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
An inquiry which may be stated as follows has been received under Regulation W:
"Section 8(d) refers to statements of necessity
as provided in paragraphs (a), (b) and (c) of section
8. However, paragraph (c) does not contain the words
'statement of necessity1. Is the 'written statement1
described in section 8(c) to be regarded as a 1 statement of necessity'? If the answer is in the affirmative, would it be desirable as a practical precaution
for any bank or other lender extending instalment loai
credit to take, in every case, the written statement
referred to in section 8(c)?"
The
S
written statement referred to in the last sentence
of section 8(c) is not a "statement of necessity" of the kind referred to in section 8(d).
Section 8(c) refers to statements of
necessity only to the extent that it incorporates ty reference
certain requirements of "section 8(a) or 8(b), including the provisos thereof". With respect to last part of inquiry, see W-35.
Morrill
311
S-32B
Reg. W-5A
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 11, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas CityGilbert - Dallas
Day - San Francisco
An inquiry which may be stated as follows has been
received under Regulation W:
*
»
"Section 8(e) provides that the requirements
of sections 8(a), (b) and (c) do not apply 1 to any
renewal or revision' of an extension of credit made
prior to September 1, and provides in offset that
any such extension of credit may be renewed or revised once on or after September 1. Do the same
principles apply to an extension of credit to retire an obligation held elsewhere, assuming the
latter covers an extension of credit made prior to
September 1?"
Section 3(e) refers specifically to section 8(c), and
therefore the same principles apply as in the case of a renewal
or revision by the original obligee. These principles are dis-
*
cussed in W-19 and W-28.
Morrill
•
312
S-329
Reg. W-55
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 11, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
Peyton - Minneapolis
Leedy - Kansas CityGilbert - Dallas
Day - San Francisco
A question has be on received under Regulation W concerning
a sum of $50 to $100, sometimes called a "pack", which a dealer may
at times include in the price of an automobile as quoted to customers.
When the automobile is sold, all or part of this sum may be eliminated from the price actually paid by the pixrchasar, either by an increase in trade-in allowance or by way of discount ou cash purchases.
The question is whether, in determining the maximum credit that can
be extended to the customer, such an extra sum of $50 to $100 may be
included, either as part of the "bona fide cash purchase price" of
the automobile and accessories or, in the case of a new automobile,
as part of Item 1 or Item 4 of Part 3(a) of the Supplement.
In determining what is the "bona fide cash purchase price"
of a given automobile to be used in determining the maximum amount of
credit under Part 3, padding of any kind—such as the "pack" referred
to in the question if it is to bo eliminated from the price actually
paid by the customer ty an increase in trade-in allowance or try some
other device—must be excluded. In the specific case of a new automobile the maximum credit value can in no event exceed 66-2/3 per cent
of the sum of Items 1 through U of Part 3(a) of the Supplement, and a
$50 to $100 sum such as that described in the present question could
not be included in any of these four items.
Morrill
•
313
S-330
Reg. W- 56
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 12, 194-1
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
Inquiry has been received whether section 4(c) prohibits sale of automobile with first monthly instalment of .$65
and remaining 17 monthly .instalments of $23.
Section 4(c) is worded in the alternative, and instalments must either be substantially equal in amount or. "be
so arranged that no instalment is substantially greater in
amount than any preceding instalment". Therefore answer to
inquiry is negative.
Morrill
S-331
Reg. W-57
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 12, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach McLarin
Young Davis -
Richmond
- Atlanta
Chicago
St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
A question has been received regarding the application of
Regulation W to a case in which an automobile salesman sells his demonstrator . The question also relates to the purchase of the resulting obligation try the dealer-employer of the salesman.
The dealer-employer in such a case, who presumably is a Registrant as described in section 3 and also familiar with the particular
transaction, may not in any event purchase the obligation unless it
complies with the requirements of section 4. This is true because no
Registrant may knowingly purchase any instalment sale obligation which
fails to comply with section A, regardless of who made the original extension of credit.
The regulation does not apply to an isolated extension of
credit by a person who is not "engaged in the business" as described
in section 3(a). However, it is important to note that, whatever the
form in which the arrangement may be set up, an automobile salesman's
financial interest in his demonstrator may represent a relationship
that is substantially different from that of the ordinary automobile
ownership. It may have the formal appearance of a purchase of the
automobile by the salesman, when actually the demonstrator is in effect the property of the dealer-employer rather than the salesman. In
such a case the sale of the demonstrator ly the salesman should, for
the purposes of the regulation, be treated like any other sale made by
the salesman, i.e. as a sale made by him as agent for the dealeremployer, and hence should comply with the requirements of section A
regardless of whether the obligation is purchased by the dealeremployer.
Morrill
S-332
Reg. WINTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 12, 1 % 1
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton- Minneapolis
Leedy - Kansas CityGilbert - Dallas
Day - San Francisco
In view of provisions of section 3(a)(2)(B), bank
which discounts an obligation which is subject to the Regulation is not obliged to ascertain whether the original
lender is a duly licensed Registrant.
Morrill
316
S-333
Reg. W-59
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 13, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
The classification "plumbing fixtures designed for
household use" does not include water meters.
S
Morrill
S-334
Reg. W-6
INTERPRETATION OF LAI OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 13, .1941
Young - Chicago
Davis - St. Louis
Peyton
Minneapolis
Leeay - Kansas City
Gilbert - Dallas
Day - San Francisco
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
The Board has received the following question relating
to Regulation W:
"A purchaser buying a listed article makes a downpayment in excess of the amount required by the regulation. May he be permitted later, in purchasing a second
listed article, to apply any part of the down-payment on
the first article as the required down-payment on the
purchase of the second article?"
He is not permitted to do so.
Morrill
S-335
Reg. W-61
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
TELEGRAM
September 13, 1941
Young - Boston
Sproul - New York
Williams - Philadelphia
Fleming - Cleveland
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Peyton - Minneapolis
Leedy - Kansas City
Gilbert - Dallas
Day - San Francisco
An inquiry which, may be stated as follows has been received under Regulation W:
"The X Electric Company purchases substantial numbers of automobiles for cash and sells them to its
salesmen on a monthly payment plan, with payments spread
over 12 to 18 months.
The X Electric Company does not
make such sales to anyone except its salesmen.
Is the
X Electric Company 'engaged in the business' as described in section 3(a)? Must these extensions of credit comply with the down-payment and other requirements
of the regulation?"
Both parts of the question should be answered in the affirmative
Morrill
S-336
Reg. I
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
September 15, 1941
W-62.
The Board has received the following inquiries:
"Does the term 1 automobile 1 in Group A of Supplement,
Regulation W include automobile, engines purchased separately for
installation in a used car chassis?
"Does term 'mechanical refrigerator 1 , Item 1, Group C,
Supplement, include motor unit replacement. if purchased separate-
ly?"
\
These inquiries raise a general question with respect to
the treatment of replacement or repair parts for listed articles.
It is to be noted that certain parts are mentioned specifically in
the list, as for example, motors for power driven boats, heating
units for furnaces, and certain items that are included in Group
D-4 and Group E. The regulation however does not treat replacement
or repair parts as being included in the list merely by reason of
the listing of the complete article, with the consequence that an
automobile engine purchased separately would not by inference be
classified as a listed article on the ground that automobiles arc
listed. On the other hand, if the Registrant knows or has reason
to know that any purchase is part of a scheme to acquire a complete
listed article by purchasing separate pieces, the Registrant is required tc treat the credit extended as if the piece purchased were
a listed article.
320
3-337, 338, 339, 340
Reg. "W
BOARD OF GOVERNORS OF THE' FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
September 17, 1941
S-337, W-63- The following question has been received under
Regulation W and has been answered in the affirmative:
"Used car has unpaid instalment contract, May dealer payoff unpaid contract, apply the equity in the used car against
down payment on new car and finance the difference (assuming
it is not more than 66-2/3 per cent of the cash price) between
the equity and the price of the new car over 18 equal payments?"
*
,
**
*
S-33&, W - 6 4 . Inquiries have been received as to applicability
of Regulation W to a case where vendor of a listed article requests a
prospective purchaser to allow him to install it in prospective purchaser's home "on trial" or "on approval" for a 60-day period. The prospective purchaser agrees and at end of 60~day period decides to purchase
the article. At what time is the sale of the article to be regarded as
having been made?
Assuming that the transaction is entered, into in good faith
and not for the purpose of evasion, the Board is of the opinion that if
the prospective purchaser has the unconditional right to return the article to the prospective vendor at any time within the 60-day period,
and if the prospective purchaser does not make, and is not obligated to
make, a deposit or payment of any kind to the prospective vendor unless
and until he informs the prospective vendor that he has decided to purchase the article, the date of sale, for the purpose of Regulation W,
may be regarded as the day on which the prospective purchaser informs
the vendor of his decision to purchase the article.
September 18, 1941
S-339, W-65. Regulation W does not require a Registrant to
obtain down payment or otherwise to increase amount received through previous payments when a three months credit conforming to section 6(f) is
renewed or revised in good faith as described in W-49S-340, W-66. Pressure cookers are not included in any of the
classifications of listed articles.
%
S-341, 342, 343, 344, 345
Reg W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
*
321
INTERPREATION OF LAW OR REGULATION
September 13, 1941
S-341. W-67. The classification "mechanical refrigerators"
does not include an electrically operated portable unit for cooling and
dispensing drinking water.
S-342. W-68. An inquiry has been received regarding an instalment sale contract-of a musical instrument which states a single
sum in payment of purchase price of instrument and lessons in playing
thereof and carrying charge on deferred balance. In such case must
amount allocable to lessons be regarded as being for services rendered
in connection with acquisition of article under section 4(f)(2)?
Any sum actually allocated to music lessons is of course not
to be regarded as the cost of services rendered in connection with acquisition of musical instruments.
S-343. W-69. Obligor who has received credit conforming to
section 6(j) and who subsequently receives instalment sale credit on
listed article priced at $100 is not required to make down payment on
original purchase. The 6(j) credit remains a separate transaction.
S-344. W-7P. Question has been asked whether Section 9(b) of
Regulation W permits first instalment to fall due 45 days after date of
contract or note, assuming such date is date of sale, even though the
result is that the obligation may show on its face that credit was extended for 18-1/2 months. Answer is in the affirmative.
S-345. W-71. A question which may be stated as follows has
been received under Regulation W:
"A Registrant sells a $100 radio, receiving in trade or
exchange a used radio which he has previously sold to the customer and on which the customer owes the Registrant an unpaid
balance. The Registrant allows the customer $15 for his equity.
What is the basis price, the maximum credit value and the downpayment requirement of the new radio? How should the maximum
maturity be calculated for such a transaction?"
Under Part 2 of the Supplement, the basis price of the new radio would be .$85 ($100 minus the $15 equity traded in by the customer).
Hence the maximum credit value would be -$68 (80% of $85) and the required
down-payment would be $17, which would be in addition to the $15 allowance
for the customer's equity. The maximum maturity would be 18 months from
the date of the sale of the $100 radio, with the usual option under section 9(b) of making the 15-day adjustment permitted by that section for
calculating the maximum maturity.
S-346
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
September 19> 1941
W-72. Inquiries have been received regarding cases in
which the original instalment purchaser of an automobile or other
listed article arranges the transfer of his equity to another
purchaser, the transfer of the equity being arranged directly between the parties and not by or through any dealer or other Registrant, and the Registrant holding the obligation is in effect
asked to recognize or approve the transfer.
The Board is of the opinion that such a transfer of the
automobile or other listed article subject to the original debt
and lien may be made without restriction under the regulation provided the original purchaser (who is not a Registrant) remains liable on the contract and there is no change in the contract except
the addition of the signature of the new purchaser.
However, if the original purchaser is released from his
obligation under the contract, or if the terms of the contract are
altered except by including the subsequent purchaser, or if a new
contract is entered into between the Registrant and the subsequent
purchaser, the same requirements would apply as if the Registrant
were making an ordinary instalment sale of the listed article. In
such event, if the listed article involved was, for example, an
automobile and the subsequent purchaser agreed to pay $600 for the
automobile, the Registrant could not extend credit to him in excess
of $400.
It may be noted, of course, that under section 8(a) of
the regulation the requirements stated in the preceding paragraph
would not apply to action taken by the Registrant in good faith (l)
with respect to any obligation of a member of the armed forces of
the United States incurred prior to his induction into the service,
or (2) for the Registrant's own protection in connection with any
obligation which is in default and the subject of bona fide collec-'
tion effort by the Registrant.
3-347, 348, 349,
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR. REGULATION
September 19, 1941
W-73. With reference to classification "cooking
stoves and ranges with less than seven heating surfaces" a
warmer drawer in electric ranges is not considered a heating
surface.
W-74. Refrigerators are not "seasonal goods" within the meaning of section 4(d) or 5(c)(3)•
W-75. Taxes and fees payable as prerequisite to
obtaining license plates in name of purchaser of automobile
or motorcycle may be included in purchase price of automobile or motorcycle under section 4(f)(2) and under Parts 2,
3(a), and 3(b) of Supplement.
September 20, 1941
W-76. If a new automobile is sold at a discount,
and the "bona fide cash purchase price" is therefore less
than the sum of items 1 through 4 of Part 3(a) of the Supplement, the maximum credit value is limited to 66-2/3 per
cent of" the "bona fide cash purchase price".
334
S-351
Reg. ff
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LA.: OR REGULATION
September 20, 1941
W-77' An inquiry which may be stated as follows has boon received under section 8(f) of Regulation ¥:
"A purchaser buys an automobile costing $600 and tenders
his old car, which is worth #200, as the required down payment,
Purchaser owed a finance company $100 on the old car, which
was part of its unpaid purchase price, but the purchaser was
able to make arrangements with the finance company whereby the
automobile was released as collateral to this loan and there
was substituted therefor miscellaneous collateral other than
listed articles and he was able to obtain a clear title for
the purpose of making a trade-in. Assuming in each case that
the Registrant involved knows or has reason to know of the
$100 transaction: (1) May a finance company, other than the
one which extended credit on the old car, lend 66-2/3 per cent
of the purchase price of the new car when the loan is secured
by the new car? (2) May the finance company which extended
credit on the old car make a separate loan to the same individual equal to 2/3 of the purchase price of tile new car when
the collateral for the loan is the new car? (3) May a finance
company make two loans to the purchaser, one secured by the
new car equal to 2/3 of its purchase price, the other secured
by miscellaneous collateral other than listed articles, to
pay the $100 which the purchaser owes the other finance company?"
•Section 8(f) in effect prohibits extensions of instalment salecredit under section 4, or of secured instalment loan credit under section 5(a), in any case in which "the Registrant making such extension of
instalment credit knows or has reason, to know that there is, or that there
is to be, any other extension of credit in connection with the purchase
of the listed article which would bring the total amount of credit extended in connection with such purchase beyond the maximum credit value
of such article."
The down payment in the present case is represented by the old
car, which is not sufficient for this p u r p o s e unless taken at its full
value without regard to the amounts still owed by the customer for its
purchase. The down payment therefore includes the $100 of credit which
is outstanding for the purchase of the old car, and the result is that
this $100 brings the total credit in connection with the transaction
beyond the maximum credit value of the new car. Accordingly, when, as
stated in the question, the Registrant knows or has reason to know of •
these facts, the extension of credit is prohibited in each of the three
cases presented in the question.
B O A R D OF G O V E R N O R S
*******
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-352
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
September 23 > 1941
Dear Sir:
This rescinds the part of the Board's letter of February 28,
1936 (X-9506, Item #3440, F.R.L.S.), which requested each Federal Reserve Bank to review annually as of the close of the year the condition of each State member bank in its District which is subject to the
present standard condition of membership numbered 2, or former standard condition of membership numbered 15, respecting the maintenance of
an adequate capital structure, and, in any case where it appears that
the capital structure is not adequate under the provisions of the condition of membership, to advise the Board of the situation with a recommendation as to what action, if any, should be taken by the Board in
the circumstances.
The discontinuance of the request for an annual review and a
report thereon does not reflect in any degree whatsoever a modification of the Board's position that it is essential that banks maintain
an adequate cushion of sound capital and that, as part o f their regular supervisory work, the Reserve Banks use their best judgment and
exert their best efforts to bring about and maintain such a condition
with respect to all State member banks. The request for an annual review has been rescinded since it seems preferable to emphasize the importance of giving constant and continued attention to the adequacy of
the capital structures of all State member banks as part of the regular supervisory work rather than to emphasize the annual review of
only the banks subject to a condition of membership regarding maintenance of capital.
It is assumed that in all cases vihere an examination by the
Reserve Bank discloses inadequacy of capital the analysis on Form 212
submitted to the Board will contain appropriate reference to the situation with a statement as to what action the Reserve Bank has taken
or contemplates taking and a recommendation as to the action, if any,
the Board should take in the circumstances. It is not intended, of
course, that the information ana recommendations be limited to those
336
s-352
contained in Form 212. It is expected, rather, that in all cases the
Reserve Banks will forward fron time to tine such data as may be necessary in order that both the Reserve Banks and. the Board may properly
discharge their supervisory responsibilities.
L. P. Bethea,
Assistant Secretary
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
327
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OF*
T
S-353
Reg. 0-43
DIAL C O R R E S P O N D E N C E
THE BOARD
September 23, 1941
Bear Sir:
As stated in the Board's letter of July 17, 1941, the Board
has been requested both by the office of the Comptroller of the Currency and by one of the Federal Reserve Banks to render an opinion on
the question whether an officer of a member bank, who is also serving
as a director and as a member of the discount cormiittee of the bank,
is to be regarded as an executive officer within the meaning of the
Board's Regulation 0, as amended effective July 1, 1939, notwithstanding the adoption of a resolution by the board of directors providing
that he is not authorized to participate in its operating management.
The Board of Governors has considered this question in the
light of the definition of the term "executive officer" in its Regulation 0, the views expressed by Federal Reserve Banks end others who
have considered this matter, and the authority of the Board to define
the term "executive officer". The Board has concluded that an officer of a member bank, who is also serving as a director and as a member of the discount committee and with respect to whom a resolution
as described above has been adopted by the board of directors, is to
be considered an executive officer within the meaning of Regulation 0
except in a case where a provision of the by-laws of the bank or a
resolution of the board of directors requires the service in rotation
of every director as a member of the discount committee and the directors do in fact serve as members of the committee in accordance with
such by-law or resolution.
Very truly yours,
Chester Morrill,
Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANES
328
S-354, 355, 356, 357
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
September 23, 1941
W-78. The inclusion or exclusion of articles under the classification "ice refrigerators", which is a part of Group D-7 "New household
furniture" in the Supplement, is determined by the same general principles
that have been applied in connection with "mechanical refrigerators". Refrigerators of less than 12 cubic feet rated capacity are included, no
matter what the use to which they are to be put, unless their design and
construction is such that they are clearly usable only for commercial purposes.
W-79. The phrase "bona fide cash purchase price" in section
6(b) means the bona fide cash purchase price of the article and accessories purchased, including any sales taxes thereon and any bona fide delivery and installation charges.
September 24, 1941
W-80. An inquiry has been received regarding the applicability
of Regulation W to a special type of lease contract covering an automobile.
The lessor is a dealer in automobiles and the lessee is a contractor who
has a cost-plus-a-fixed-fee contract with the War Department. The lease
calls for monthly payments of 10% of the purchase price of the automobile
and provides that when 10 payments have been made title to the automobile
will vest in the Government with the option in the Government at any timeto pay the unpaid balance and take title to the automobile. The contract
further provides that the automobile may be transferred to another construction project .and in that event the lessor must enter into a new lease
agreement with the holder of the construction contract at the new location,
payments made under the first lease being credited to the second lease.
The contract does not provide any means whereby the lessee can acquire title to the automobile.
The Board, is of the opinion that in such circumstances the lease
is. not subject to the requirements of the Regulation.
W-61. The classification "radio receiving sets, phonographs, or
combinations" does not include coin-operated phonographs.
8-358, S-359
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
September 25, 194-1
#-82. The classification "new household furniture"
includes a prefabricated fireplace, sold as a complete unit,
that is decorative only and not usable for heating purposes.
September 27, 19-41
W-S3. Section 3(a)(2)(E) permits purchase or discount of 24-month note if note was signed after September 1
pursuant to pre-September commitment.
Similarly, where contractor and home ovmer have
made pre-September contract for repairs to be financed .by a
bank, bank may finance the repairs on terms provided in. contract even though request for financing is not presented to
"bank until after September 1.
S-360
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LA?v OR REGULATION
September 29, 1941
Ya-84. The Board has received several questions regarding the
application of sections 4(f) and 5(c)(1) of Regulation W, which become
effective October 1, 1941, and relate to the "statement of transaction"
required in connection with extension of instalment sale credit or instalment loan credit. The answers are given below:
1. It is not necessary that all of the information required
by section 4(f) or 5(c)(1) be included on a single sheet of paper, but
if parts of the information appear on two or more sheets it is necessary
that these sheets be attached together, and that copies of all of them
be given to the obligor together. The statement referred to in these
sections, and the copy required to be given the customer, need not be
identical in form.
2. It is not necessary that the particular terminology used
in the regulation ("bona fide cash purchase price", "deferred balance",
and "time balance") be used in the statement of transaction, as long as
the statement contains the required information. When the contract is
in the form of a lease agreement, such terminology as is applicable to
a lease, giving the corresponding information, may be used.
3- The bona fide cash purchase price of a particular article
and accessories, including relevant taxes, may be shown as a total without being itemized into various parts. Although section 4(f)(2) requires itemization of (l) the article, (2.) the accessories arid (3) the
services referred to in the section, the items themselves may be itemized without stating the portion of the total purchase price that relates
to each. Accessories which are standard equipment for the article need
not be individually itemized, and a group of accessories which are sold
as a single group by the manufacturer may be shown in the statement as
a unit.
4. The itemization for a new automobile follows this same
rule, and need not show separately the matters referred to in paragraphs
1 through 4 of Part 3(a) of the Supplement. As indicated above, however,
the accessories should be indicated, and so should the relevant services.
5. In the cose of an extension of instalment sale credit subject to section 4 of the regulation, item 2 under section 4(f) requires
that the statement of transaction show the bona fide cash purchase price
331
- 2 -
S-360
Reg. VJ
of the article—the price at which the seller would sell the article
for full cash payment—even though the sale will be made at a "time
price" which includes carrying charges.
6. The information referred to in each of the seven paragraphs of section 4(f) must be set forth, and it is not sufficient that
an item of information may be obtained by mathematical derivation from
other information in the statement. However, if the interest or finance
charge is not included in the face amount of the obligation but is an
additional amount calculated pursuant to an arithmetic formula plainly
set forth in the statement, paragraphs 5 and 6 do not require this
amount to be shown in dollars and cents or to be included in the statement of the time balance.
7. In any case in which a State law or local regulation requires that sales taxes be shown separately or requires in any other
respect more detail than that required by Regulation W, the regulation
does not prohibit such further itemizing.
#
4
8-361, S-362
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
September 30, 1941
W-85. The classification "Heating stoves and space heaters designed for household use" does not include gas heating units
designed to be suspended from the ceiling and operated with a fan
circulator.
W-86. The classification "mechanical refrigerators" includes certain refrigerating systems consisting of (1) one or more
cabinets of which each has less than 12 cubic ieet rated capacity,
and (2) a separate mechanical refrigeration unit servicing these
cabinets. This is true even though the aggregate capacity of the
cabinets included in the system may be 12 cubic feet or more.
333
S-363, 364
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
October 3, 1941
W-S7. Butane, propane, or similar automatic gas systems or
containers are included in Group.E of the Supplement.
October 4, 1941
W-88. Part 3(a) of the Supplement to Regulation W provides
that the maximum credit value of a new automobile shall be 66-2/3 per
cent of th<# purchase price but that such maximum credit value shall in
no event exfeed 66-2/3 per cent of the sum of items numbered 1 through
4 as set fourth under part 3(a). In this connection, the Board has received several questions as to the amounts which may be included under
that portion of item 4 which permits the inclusion of "Any bona fide
charges for delivery . . . not included in the foregoing items."
In general this provision permits only the inclusion of bona
fide charges for services which are actually rendered by the seller in
connection with the delivery of a new automobile and which are not included in the manufacturer's retail quotation (item l) or in transportation charges (item 2). For example, charges for such services as lubricating, cleaning, polishing, or otherwise conditioning the car may not
be included under item 4 if these services are included in item 1 or 2;
but in case any such services are not included in items 1 and 2, a charge
which is reasonably related to the value of such services may be included
in item 4« Likewise, where the contract of sale includes any additional
services connected with the delivery of the car, such as greasing the car
for a certain period or providing antifreeze, a reasonable charge for
such services may be included in item 4. On the other hand there may not
be included in item 4 a charge which the dealer may make, for "advertising"
or for "warehousing", nor any other charges which the dealer may make except bona fide charges for services which are actually rendered by the
seller to the purchaser and are not included in items 1 and 2.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LA'\r OR REGULATION
October 6, 1941
W-89-
The classification "water heaters designed
for house-hold use" includes all water heaters with a storage
tank capacity of S'j gallons, or less.
October 8, 1941
W-90.
The classification "cooking stoves and
ranges -v/ith less than seven heating surfaces" docs not include cooking and baking equipment that io clearly designed,
for commercial use and not suitable for use in households.
even though having less than seven heating surfaces.
A cook-
ing stove or range or oven, which is designed for commercial
use in restaurants and hotels, and which has a single or continuous heating surface or heating unit, is net included.
deep-fat fryer designed for such use is not, included.
A
335
8-367, 369
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OH REGULATION
October 9, 1941
W-91» Question has been received as to whether materials
and services for building a new garage are included in Group E if
the garage is on improved real estate upon which other buildings are
located but is itself a separate new structure. For purposes of
Regulation W, materials and services in such circumstances are not
considered to be "in connection with existing structures" but are
considered to be for new structures, and hence not included in
Group E.
October 10, 1941
W-92. A 24-month note for $650 secured Ly a second mortgage
on a house is not subject to Regulation W if it is given by the purchaser to the seller as part of the purchase price of the house; and
the note may be discounted ty a bank under section 3(a)(2)(B). This
would be true even if plumbing fixtures and other listed articles had
been incorporated in the house, because for the purposes of Regulation
ff the sale would be regarded as the sale of a house and not as the
sale of plumbing fixtures.
Similarly, the fact that a $1500 instalment loan is secured
by a second mortgage on a house that was purchased within 45 days and
which at the time ox purchase contained plumbing fixtures or other
listed articles previously installed, would not cause the loan to be
subject to section 5(a) as a .loan secured Iy a "listed article which
has been purchased within 45 days". The recent purchase is considered to be the purchase of a house rather than the purchase of a
listed article, and the case would not be altered by the fact that
the seller of the house might have purchased and installed the listed
article only shortly before he sold the house and within 45 days prior
to the loan. On the other hand, section 5(a) would apply if the mortgagor had owned the house for some time and had purchased and installed
the listed articles within 45 days prior to the loan, since in such a.
case the mortgagor's recent purchase would be a purchase of a listed
article rather than the purchase of a house.
oou
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
3-368
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
October 10, 1941
Dear Sir:
r
%he Board has received a small amount of correspondence
indicating possible violations of Regulation W and has no doubt
that you have received a somewhat greater amount of such correspondence . Some of the Federal Reserve Banks have asked for advice as to the policy that should be followed in dealing with such
matters.
It has been felt that the most important thing to do at
first was to get the 'purposes and provisions of the executive order and of the regulation understood and at the same time to bring
about the correction of defects in the regulation through amendment as soon as possible. It has been only a little over a month
since the regulation became effective and the trade and financial
organizations generally have shown their desire to cooperate with
the Board and the Federal Reserve Banks to the best of their ability . It seems very likely, therefore, that most of the instances
which appear to be violations have occurred through inadvertence
or through ignorance and in the circumstances that they have been
remarkably few.
CTORY
With these considerations in mind and recognizing the
fact that some at least of the Reserve Banks have been proceeding along these lines, the Board suggests that, when instances
of apparent violations of Regulation W of sufficient importance
to warrant attention are brought to the attention of a Reserve
Bank, the matter be taken up with the person involved, either
orally or by letter as may seem best, proceeding on the assumption that the apparent violation was the result of inadvertence
or of misunderstanding as to the meaning of the provisions of
the regulation. It seems probable that in most cases this will
result in satisfactory assurances being received that there will
be no repetition. If in any particular instance, however, after
BUY
UNITED
STATES
DEFENSE
BONDS
STAMPS
S-368
-2-
every reasonable effort along these lines has been made, this r23u.lt
should not come about, and the instance appears to warrant Board consideration, it will be appreciated if you will give the Board all the
facts in detail with your suggestions, including the advice of your
counsel, as to the course of procedure that would seem to be advisable .
In your acknowledgment of this letter, any comments that
you may have to offer will be welcome.
Very truly yours,
Chester Morrill,
Secretary,
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
#
3 3 7
S-370,
BOARD OF GOVERNORS 0? THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
October.10, 1941
W-93.
The classification "rooa-unit air conditioners"
includes portable units of one horsepower or less,
W-9A.
In the case of a home improvement that is car-
ried out as a single job totaling $995, of v/hi.-.h $550 is for a
furnace and other Group D items while 2445 is for Group E items,
the question has been asked whether a Registrant financing the
entire job may divide the financing into $445 on an instalment
basis subject to the requirements of Regulation W and $550 on a
single-payment basis not subject to the regulation.
This is a single transaction and may rot be divided by
the Registrant in this manner.
BOARD OF GOVERNORS
339
OF THE
FEDERAL RESERVE SYSTEM
oreok
WASHINGTON
S-372
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
October 1.1, 194-1
Dear Sir:
It is understood that each Federal Reserve Bank has established
a pay roll deduction plan to provide a convenient means by which officers
and employees may set aside regularly a part of their earnings for the
purchase of Defense Savings securities.
The Board wishes to be in a position, if called upon, to furnish
figures indicating the extent to which officers and employees of the Reserve Banks and its own organization are participating in pay roll deduction plans, and for that reason would appreciate your furnishing it as of
the last pay day in June and September 194-1 the following information for
your head office and branches (if any) combined:
1. Total number of officers and employees.
2. Number participating in pay roll deduction plan.
3• Aggregate (gross) dollar amount of pay roll deductions made
during the second and third quarters of the current year.
It is realized that data for the second quarter of the current
year, during which the deduction plans were inaugurated, will not be representative, but such data may prove useful for possible future comparisons.
For the purpose of determining currently the progress that is
being made in the sale of Defense Savings securities to Federal Reserve
Bank personnel through pay roll deduction plans, it will also be appreciated if you will furnish the Board with similar data for each succeeding
three-month period until further notice.
Very truly yours,
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
L. P. Bethea,
Assistant Secretary.
Reg.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LA>: OR EEGULA'i.ION
October 13. 194-1
YJ-95«
Questions have been received as to whether a
certain plan of repayment meets the requirements of Regulation
¥ regarding 18 months' maximum maturity and equal monthly payments for instalment, loan credit, There is provision for 11
equal monthly payments, and a larger twelfth payment at the end
of the twelfth month for the remainder.
However, there is an
express agreement between the parties that when the twelfth payment falls due. unless the borrower has defaulted on an earlier
payment or unless there is a material iinpairment of his credit,
only a portion of the twelfth payment will actually be paid and
the remaining portion will be refinanced into six equal monthly
payments in such manner that the net result will be eighteen
substantially.equal monthly payments.
Such an arrangement complies with the specified requirements of the regulation.
S-374, 375
Reg. W.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
October 13> 1941
W-96. The phrase "bona fide cash purchase price" in section
5(a)(1) and section 5(c)(1) means the bona fide cash purchase price of
the article and accessories purchased, including any sales taxes thereon and any bona fide delivery and installation charges.
October 14, 1941
• W-97. A Registrant makes an extension of instalment sale
credit arising out of the sale of materials and services (including
certain Group D articles} in connection with repairs, alterations or
improvements upon urban, suburban or rural real property in connection
with an existing structure. The bona fide cash purchase price of all
the materials and services is $1500 and the bona fide cash purchase
price of the Group D articles is $700. The purchaser makes a cash payment of &150 and remains indebted to the seller in the amount of S1350.
Is the transaction exempt under section 6(b) of the regulation?
The exemption in 6(b) does not apply since the #700 purchase
price of the Group D articles is more than 50 per cent of the over-all
deferred balance of $1350.
W—98. Facts similar to W-97. but the bona fide cash purchase
price of all the materials and services is #3000 and the bona fide cash
purchase price of the Group 0 articles is $1400. The purchaser does not
make any down-payment and remains indebted in the full amount of $3000.
Inasmuch as £>2500 is the maximum amount of a loan which may be insured
by the Federal Housing Administration under Title I of the National Housing Act, the customer's obligation totaling $3000 is divided into two
parts, one in the amount of #2500 which is insured by the Federal Housing Administration, and the other in the amount of $500 which is not insured. The $1400 of Group D items exceeds 50 per cent of the $2500 but
is less than 50 per cent of the $3000. Is the transaction exempt under
section 6(b)?
Since the #3000 represents a single transaction and is divided
into two parts merely for convenient treatment under the National Housing Act, it is permissible to treat the $3000 as a unit, ana hence as an
exempt transaction under Section 6(b).
342
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-376
Reg, W-99
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 17, 1941
Dear Sir:
For your information, there are enclosed a copy of a letter from Mr. Henry D.
Brite, Commercial Manager of the Electric Home
and Farm Authority, and a copy of the Board's
reply, regarding minor deficiencies in payments
required by Regulation W.
Very truly yours,
L. P. Bethea,
Assistant Secretary
Enclosures 2
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
S-376-a
Reg. W-99
ELECTRIC HOME AND FARM AUTHORITY
Washington
October 1, 194-1 •
Mr. Chester Morrill, Secretary,
Board of Governors,
Federal Reserve System,
Washington, D. C.
Dear Mr. Morrill:
A ruling on the following question concerning Regulation W
will be appreciated;
We interpret Regulation W to be specific in stating
the "maximum credit value in per cent of basis price". In
other words, the down payment on listed articles according
to our understanding cannot be an approximate amount, but
fnust be sufficiently large to leave an unpaid balance not
in excess of the maximum credit value. In complying with
this provision in its strictest sense, Electric Home and
Farm Authority has returned a large number of customer contracts to dealers because down payments are a few cents
short. In many cases shortages in the down payments are
only
but even these contracts are returned to the dealers for correction.
It is our understanding now that the Federal Reserve
Bank in Chicago has informed Sears-Roebuck and MontgomeryWard that down payments which are short a reasonable'amount
may be accepted.
An official ruling on this point, including the exact definition of a "reasonable amount" will be appreciated.
It would seem that if additional concessions are being made
to the mail-order houses, other Registrants should be given the same
privileges. It is our recommendation, however, that the Board permit
no exceptions whatever in down payments inasmuch as our own experience
indicates that where certain exceptions are made, it is difficult to
avoid making exceptions to the exception.
Very truly yours,
(Signed) Henry D. Brite
Henry D. Brite,
Commercial Manager.
344
S-376-b
Reg. W-99
October U , 194-1
Mr. Henry D. Brlie, Commercial Manager,
Electric Home and Farm Authority,
Washington, D. C.
Dear Mr. Brite;
»
.
*
«
^
,
*
Receipt is acknowledged of your letter of October 1 regarding
the question whether the phrase "maximum credit value in per cent of
basis price" in the Supplement to Regulation W should be interpreted
literally or whether down payments which are short a reasonable amount
are permissible. You state that in view of this provision, Electric
Home and Farm Authority has returned a large number of customer contracts
to dealers because down payments are short a few cents, in some cases
only four cents, but that it is your recommendation that the Board permit no exceptions whatever in down payments inasmuch as your- experience
indicates that where certain exceptions are made it is difficult to
avoid making exceptions to exceptions.
The Board agrees that the "maximum credit value" provided in
the Supplement is a figure which should be calculated mathematically and
not be arrived at by approximation, and therefore, the Board does not
believe that the Regulation authorizes an extension of credit which is
even a few cents in excess of the maximum provided ty the Regulation.
The Board has, however, been impressed by the evident desire on the part
of those affected ty the Regulation to comply with it in spirit as well
as its letter, and the Board believes that, at least during the initial
few weeks after the effective date of the Regulation, it is proper to
assume, in the absence of facts which would create the opposite presumption, that most apparent violations, as well as minute technical violations of the kind to which you refer, are the result of inadvertence or
of a misapprehension as to the meaning of the provisions of the Regulation. Accordingly, the Board has sent a letter to all Federal Reserve
Banks, a copy of which is enclosed (8-368), and it is hoped that the
letter may be of some assistance to you in handling matters of this
kind.
A copy of your letter and of this reply have been sent to the
Federal Reserve Bank of Chicago for its information.
Very truly yours,
(Signed) L. P. Bethea
L. P. Bethea,
Assistant Secretary.
S-377, 378
Reg. W
3 4 5
BOARD OF GOVERNORS OF THE FEDERAL. RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
October 17, 1941
W-IOO.
The Boated has been asked whether the following pro-
cedure complies with section 4(f) of Regulation Vi.
The seller gives no statement of the transaction to the purchaser but authorizes the finance company which discounts the obligation to furnish the statement to the purchaser in its normal- course of
business, with the result that the purchaser receives the statement approximately two weeks after the obligation is discounted by the finance
company.
•
The Board replied that this procedure does not comply with
the requirements of section 4(f),
»
W-101.
Regulation W does not prohibit the rescission of an
instalment sale contract by agreement of the parties at any time if the
*
seller refunds all amounts received and the purchaser returns the article; as, for example, where the article is found to be defective and the
••t
^
seller is unable to replace it.
However, if the purchaser returns the
article several months after the date of sale on the ground that it is
defective and if the seller does not replace the article but instead
agrees with the purchaser to rescind the sale and sell the purchaser
another article of the same kind or a similar article of a higher price,
these facts may indicate that the rescission was merely a formality used
for the purpose of evading the Regulation and that the transaction
should have been treated as a trade-in as described in W-71.
S-379, 381,
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
October 22, 1941
W-102. A Registrant sells a listed article under a bona
fide agreement that the purchase price will be paid in a single
payment 60 days after the date of purchase. By reason of a change
in circumstances and not in pursuance of any previous agreement or
arrangement, at' about the time the payment is to be made the purchaser asks that the purchase be changed to an instalment basis.
Is it necessary to get a down payment? From what date must the
maximum maturity be calculated?
Since the sale was made under a bona fide agreement and
there were no evasive side agreements between the parties, it is
not necessary under the present terms of the regulation to get a
down payment, and the maximum maturity is 18 months from the date
on which the credit is changed to an instalment basis.
Vf-103. The classification "Home air conditioning systems" includes air cooling units that have a rated capacity of 5
tons' or less of refrigeration and that are designed for use with
a central air circulating system. The classification does not include circulating fans unless they are incorporated in the unit.
The classification of such a unit is not affected by the character
of building in which it is to be used.
W-10A. The' classification "plumbing and sanitary fixtures designed for household use" includes water softeners having
a rated capacity of 120,000 grains or less of hardness removal
between regenerations.
z
347
BOARD OF GOVERNORS
O F THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-380
A D D R C I B OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
********
October 22, 1941
Dear Sir:
Enclosed is a. copy of a letter addressed to a Federal
Reserve Bank relating to the methods of determining the actual
net output of household furnaces and heating units for furnaces
as required ty the Board's Ruling W-51 under Regulation W tor
gether with a copy of a letter to the Stoker Manuf&cturers Association as to the classification of coal stokers.
Because of the technical nature of the subject, the
Board does not wish to give general circulation to this material,
but it is believed that it will prove useful to your staff in
applying the ruling to special cases that are presented to your
Bank.
Very truly yours,
Enclosure
L. P. Bethea,
Assistant Secretary
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
S—380—a
October 16, 194-1
Mr. . Federal Reserve Bank of ^
Dear Mr.
:
This is in reference to your letter of September 23, 1941,
relating to the methods of determining the actual net output of household furnaces and heating units for furnaces under the Board's Ruling
r-5i.
Enclosed is a copy of a letter sent to the Stoker Manufacturers Association accompanied ty a memorandum indicating the way in
which Ruling W-51 should be applied in the case of the stokers manufactured ty the members of the association. This memorandum outlines
principles which have general application in fields other than coal
stokers and it is believed that you will be able to answer most inquiries by reference to these principles.
The Board prefers not to issue a ruling which would say
that the net output for cast iron boilers should be the rating determined in accordance with the Institute of Boiler and Radiator
Manufacturers' code, but it is believed that it will be clear from
the above mentioned memorandum that the I.B.R. code employs the correct method. If this information is given to the Institute it should
be able to notify the manufacturers and dealers accordingly. This
will not preclude manufacturers who are not members of the Institute
from using ratings that are not identified as I.B.R. ratings, provided they are established in accordance with the prescribed method.
No special inquiries have been presented
reference to steel boilers or oil burners. If aiy
gard to these articles are presented and cannot be
ence to the principles previously referred to, the
ciate having the matter brought to its attention.
to the Board with
questions with reanswered by referBoard would appre-
Very truly yours,
(Signed) L. P. Bethea
L. P. Bethea,
Assistant Secretary.
Enclosure
S—380—a
October 13, 1941
Stoker Manufacturers Association,
307 North Michigan Avenue,
Chicago, Illinois.
-
_____
Attention: Mr. Marc C. Bluth, Secretary
Mr. E. C. Webb, Chairman
Engineering and Research Committee
Gentlemen:
This is in answer to your letter of September 20 which relates to the method that may be used to determine, for purposes of
the Board's Regulation W, whether a stoker of a given description is
or is not within the meaning of Item 1, Group D, as set forth in the
Supplement to the regulation. Your letter refers, by implication,
to the Board's Ruling W-51 which prescribes*a certain standard involving a heat generating source designed for actual net output of
240,000 B.t.u. per hour or less.
Enclosed is a memorandum written by a member of the Board's
staff which indicates the way in which Ruling W-51 should be applied
in the case of the stokers manufactured by the members of your association.
The Board suggests that your association assist the manufacturers in making the necessary ratings, which can then be made
available to dealers and sales finance companies. Subsequently, the
identification of the model will be sufficient to enable anyone to
classify the transaction.
Very truly yours,
(Signed) L. P. Bethea
L. P. Bethea,
Assistant Secretary.
Enclosure
S-380-a
CLASSIFICATION OF STOKERS UNDER REGULATION \
In its letter of September 20, 1941, the Stoker Manufacturers Association has made certain suggestions with reference to
the classification, for purposes of Regulation W, of stokers manufactured by its members. This requires an application of Ruling
W-51 which states that the classification "household furnaces and
heating units for furnaces (including oil burners, gas conversion
burners, and stokers)" includes heat generating sources such as
furnaces and boilers and appurtenances which form a part of such
sources, individually or collectively installed, when such sources
or appurtenances are designed for actual net output of 240,000 B.t.u.
per hour or less.
Since fum&ces, boilers, and separate heating units are to
be rated .similarly, and since a heating unit cannot be used except
in a furnace or boiler, the basic concept is a furnace or boiler of
specified capacity. The capacity to be measured is the net output,
which is the gross output less allowance for piping and pick-up.
This, for example, in the case of the boiler, is interpreted as the
installed radiator load where average or normal installation conditions exist. Then the rule is applied to heating units like stokers
by determining the appropriate stoker for the boiler of the stated
capacity. This means that the maximum size of stoker covered by the
regulation is one which is suitable for a boiler designed for a net
output of 240,000 B.t.u. per hour.
Coal stokers are customarily rated according to the number
of pounds of coal per hour they are designed to deliver to the fire
box. The classification, therefore, depends upon selection of a
stoker delivering the appropriate number of pounds of coal for a
boiler such as the one described in the previous paragraph. This
means that it is first necessary to take the B.t.u. value of the
pounds of coal delivered by a given stoker and convert that value
into the equivalent net output. This must take into account the
operating efficiency of the stoker as well as the piping and pick-up
factor of the boiler.
'
The Board desires to have the regulation apply uniformly,
so that credit sales of a particular model of stoker either will or
will not be subject to the regulation, no matter what the circumstances of an individual installation. This means that a particular
figure must be selected for the B.t.u.value of the coal, for the operating efficiency of the stoker, and for the piping and pick-up
factor. The B.t.u,value of the coal should be an average, and the operating efficiency and piping and pick-up allowances should conform
with generally accepted standards for cases in which average or normal installation conditions exist.
3 5 0
The following is the application of the rule: Coal of
12,000 B.t.u. value is taken as average and therefore as the basis
for the formula. Using such coal, a 45 pound stoker would deliver
coal having 540,000 B.t.u. per hour. If the operating efficiency
is 65 per cent (which the Stoker Manufacturers Association has
adopted as average) the gross output would be 351,000 B.t.u. per
hour. If then the piping and pick-up factor of 1.466 is utilized,
the net output is 239,000* B.t.u. per hour, and the stoker is subject to the regulation.
352
S-383
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
October 22, 1941
W-105.
Section 4(g) of Regulation W provides that where
a listed and an unlisted article are sold at the same time, the
permissible terms shall be determined by dividing the transaction ,
into two parts, so that the sale of the listed article will comply
with Regulation W and the sale of the unlisted article will be on
terms which the seller would have granted on that sale if standing
alone.
Seme sellers have established their own minimum down payment or minimum periodic payment requirements in connection with
instalment sales, but when two or more articles are sold at the
same time these requirements apply to the total.
The Board has
been asked whether section 4(g) requires such a seller to apply
his minimum payment requirements to the sale of the unlisted article as though the listed article had not been sold to the customer.
The Board replied that the Regulation does not require him
to do so, but permits him to give the same terms on the part of the
sale represented by the unlisted article which he would have given,
in a similar combination sale, in the absence of the Regulation.
353
BOARD OF GOVERNORS
OF THE
*******
FEDERAL RESERVE SYSTEM
3i»58U
WASHINGTON
A D D R K I I OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
2SKK?
TO THE
October 2k* 19^1
Dear Sir*
Referring to ay letter of May 29# 1941*
8-268, will you kindly have the reports of the
Federal Reserve Defense Contract officers submitted on a quarterly basis instead, of monthly as
heretofore# the next report to be submitted as of
December 31* 1941*
It will not be necessary in
future reports to comment on any activities of the
District Coordinators* Offices and of the Offices
of the Priorities Division,
Very truly yours,
PRESIDENTS OF ALL. FEDERAL RESERVE BANKS
S-385
Sec. 23A, FRA-1
INTERPRETATION OF LAW OH REGULATION
(Copies to be sent to a U Federal Reserve Banks)
October 24, 1941
Washington, D. C.
Dear Mr.
:
This refers to your letter of October 14, 1941, in which you
request an expression of the Board's views with regard to an affiliate
question raised by one of your examiners.
It appears that a national bank has during the past several
years made loans to a realty company and also to a subsidiary company
owned by the first company. In order to obtain additional protection
against loss on loans to both concerns, the bank acquired from the
first company approximately 80 per cent of the outstanding stock of
its subsidiary as additional collateral and as a result such subsidiary became an affiliate of the bank. Your examiner inquired whether
advances to this affiliate are exempted from the provisions of section
23A of the Federal Reserve Act by the provision in section 23A which
makes the requirements of that section inapplicable to an affiliate
"where the affiliate relationship has arisen out of a bona fide debt
contracted prior to the date of the creation of such relationship".
The Board has mot heretofore had occasion to make a ruling
on a question of this kind but it would appear that in view of the circumstances described the affiliate would clearly' come within the provisions of the exemption quoted above.
The above exemption was enacted ty Congress in the Banking
Act of 1935. We have been unable to find any statements in the legislative history of this Act relating to this exemption. However, an
identical provision was contained in the omnibus banking bill of 1934
but was not enacted into law at that time, and it is of interest to
note that the Committee on Banking and Currency of the Senate, in its
Report No. 1260, made the following statement with regard to this provision;
"Section 14: This amende section 23A of the Federal
Reserve Act, which prescribes certain limitations and conditions on loans by member banks to their affiliates.
S-385
Sec. 23A, FRA-1
-2-
"Subsection (a) exempts from such limitations and conditions loans where the affiliate relationship has arisen out
of a bona fide debt contracted prior to the creation of the
relationship. The object of this amendment is to avoid the
severe loss that may be occasioned ty banks under the present
law where they control an affiliate through having obtained
its stock fcy foreclosure or otherwise in satisfaction of a
previously contracted debt. It is frequently found necessary
to advance funds to such an affiliate either for the purpose
of continuing its operation or of assisting its liquidation,
so as to salvage the real value out of the assets and reduce
or avoid loss by the bank on the debt which had been secured."
While the situation described in this report is not precisely
the same as that described by your examiner, it is believed that the
exemptive provision is broad enough to include the case described ty
your examiner.
Very truly yours,
(Signed)
L. P. Bethea •
L. P. Bethea,
Assistant Secretary.
S-386
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
October 29, 1941
W-106.
The determination of whether listed articles are
"seasonal goods" within the meaning of sections 4(d) and 5(c)(3) of
Regulation W depends on their typical use, rather than on the distribution of their sales during the year or the use to which the
article is put in a particular case.
For these reasons, Group D-l listed articles (furnaces,
etc.) and Group C-6 articles (heating stoves, etc.) are winter "seasonal goods", even though occasionally such articles may be used
the year round.
Similarly, Group C-8 articles (room-unit air con-
ditioners) , Group D-5 articles (home air conditioning systems), and
Group D-6 articles (attic ventilating fans) are summer "seasonal
goods" even though occasionally they may be used throughout the
year.
However, as pointed out in W-74,
a
refrigerator is not a
"seasonal good", since refrigerators are typically used the year
round.
The fact that some refrigerators may go unused during winter
months does not alter this general classification.
357
3-347, 391
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYST£M
INTERPRETATION OF LAW OR REGULATION
October 30, 1941
W-107. In response to several inquiries regarding W-47, the
Board said that an ordinary bank loan evidenced by a promissory note repayable in full at maturity is not subject to Regulation W, even though
the bank may anticipate that at the maturity of the note it may accept
a partial payment and a renewal note for the balance; provided the bank
makes no commitment to do so and the transaction is entered into in good
faith and not as a means of avoiding or evading the Regulation.
October 31> 1941
W-108. Amendment No. 2 to Regulation W will affect certain
interpretations previously issued by the Board, and the following comments will be pertinent to the interpretations indicated:
W-15
See sec. 9(f) as amended relating to "Farmer Plans".
W-16
Even if not instalment sale credit, transaction would
involve a "purpose loan" under sec. 5(a) as amended.
W-19, W-28, W-49 and W-65 Note postponement of effective
date of sees. 8(a) through 8(d) as amended; note the
provisions of amended sec. 8(b) relating to add-ons;
and note provisions relating to the statement of necessity now contained exclusively in sec. 8(d) as
amended. Otherwise the principle stated in W-19,
W-28, W-49 and W-65 will not be affected.
W-25, W-26, W-27. W-30 and W-48 Not affected, but note that
sec. 6(a) has been amended and broadened.
W-33
Note amendment of sec. 5(a) as to "purpose loans"; and
note amended sec. 4(e) relating to down payments.
W-45
Note that the figure in sec. 5(b) as amended is $1,500.
W-92
Note that sec. 6(a) has been amended and broadened, and
note change to $1,500 in sec. 5(b), as amended.
W-24, W-36, W-37 and W-53 will be obsolete after November 30.
W-35 will be obsolete after December 31.
amended.
See sec. 5(d) as
358
S-388
Sec. 5136 R.S .-19
INTERPRETATION OF LAW OR REGULATION
(Copies to be Sent to All Federal Reserve Banks)
October 25, 1941
;
Mr.
Assistant Vice President,
Federal Reserve Bank of
,
Dear Six-:
This refers to your letter of September 11, 194-1 raising
a question as to the basis to be used in calculating the 10 per cent
limitation under the provisions of section 5136 of the Revised Statutes where, as in the case of certain (name of State) banks, a member bank's common stock is shown on the bank's books in an amount
less than its par value.
As you point out, under the Board's instructions, the par
value of the stock, rather than the written-down amount at which it
is shown on the bank's books, is used in determining the amount of
Federal Reserve Bank stock which the member bank is required to hold
in such a case. It is the Board's view that, likewise, the writtendown amount should be disregarded in determining the limitation under
section 5136. However, such limitation is based upon the bank's
" capital stock actually paid in and unimpaired and * *
its unimpaired surplus fund," instead of "paid-up capital stock and surplus"
which is the basis for calculating the amounts of Federal Reserve
Bank stock. So, for the purposes of section 5136, instead of using
par value, the stock should be included only at par value less the
impairment thereof, if any.
Very truly yours,
(Signed) L. P. Bethea
L. P. Bethea,
Assistant Secretary.
#
359
BOARD O F GOVERNORS
O F THE
FEDERAL RESERVE SYSTEM
WASHINGTON
8-389
A O D R I M OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
October 31, 1941
Dear Sir:
Permit me to pass along to you informally a suggestion
which I think would be helpful in the administration of Regulation
W. It is simply that public relations officers of the Banks make a
point of visiting in their respective districts the editors of labor
and farm papers, many of which are published weekly or monthly and
are influential in affecting the opinions of important groups that
will increasingly feel the impact of the Regulation.
Ity idea is that in talking with the publishers or editors
of these labor and farm publications, the opportunity be used to ascertain from them what the opinion of their readers is with regard
to the Regulation. It should be emphasized that it is helpful to
the System to know what people are thinking about the Regulation;
whether they understand it and its purposes; what they have to say
about it; and what might be done to inform them more fully about it
if that seems to be required. By approaching the matter in this
way, seeking information rather than fcy trying to impose it, it is
likely that some of the grass roots feeling about the Regulation and
the way it is operating will be brought out and an opportunity offered to present information or to correct misunderstanding about it.
Similarly, it would be helpful if visits were made to some
of the leading representatives of labor and agriculture in order to
talk over with them questions of how their groups feel and what they
think might be done to gain a better understanding and cooperation.
The leaders in farm and labor organizations sometimes feel that their
views are neither sought nor desired in connection with System matters such as this Regulation, and this erroneous impression .needs to
be removed by visiting with them and having them come to the Banks
for meetings or luncheons at which they can meet senior officers and
staff.
*
—2—
S-389
While the daily press has on the whole been favorably disposed, judging from editorial comments in all parts of the country,
the farm and labor papers of the type indicated have not been so generally favorable and, in some cases, have been extremely hostile,
apparently because of genuine misunderstanding.
These publications are particularly influential in many
communities in shaping opinion that later wells up in letters, resolutions, and other forms of protest to members of Congress who, in
turn, refer such matters to the Board. It may be possible by the
suggested contacts to correct and halt at the source a good deal of
this backfiring.
Some of the Banks are doubtless undertaking this sort of
public relations work and this suggestion may, therefore, be superfluous . However, I think it desirable that some special effort be
exerted along this line, primarily to obtain information and the
help and guidance of these editors rather than to attempt to propagandize or convert them if they happen to be hostile. The Board
would be interested in having any information that you obtain in
this way as to the attitude of these publications and what they are
saying in their columns.
There are, as you know, sharp differences of opinion, particularly in the labor groups, some regarding the Regulation as a
boon to the worker and in his best interest, others attacking it on
various grounds all the way from broad philosophical ones to complaints that this is class legislation that bears heaviest on the
poor. A good deal of tha criticism, however, clearly originates
from failure to understand the purposes, and when this situation develops in conversations with these editors and publishers, it would,
I think, be helpful to give them the other side of the stoiy, not in
the effort to argue with them but merely to bring out the whole picture.
The Board would appreciate it if you would give this suggestion your earnest consideration arid make it a part of the public
relations efforts which your Bank is making.
As you know, a meeting with Reserve Bank representatives
will be held in Washington in November—the date to be determined
later—for a general conference on the Regulation, and subsequently
the Banks will be visited fcy staff members for the purpose of having
discussions with you and with those of your officers and staff who
are responsible for the successful administration of the Regulation.
Sincerely yours,
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
3 6 0
361
BOARD O F GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
I
XSSR5
S-390
A D D R E S S OFFICIAL C Q R R O P Q N D C N C C
TO THE BOARD
October 31, 1941
Dear Sir:
Replies to the Board's letter (R-901) of October 11,
indicate that all of the Federal Reserve Banks favor the
discontinuance of the monthly Bank Relations Reports. Accordingly, the Board herewith rescinds the instructions contained
in its letters X-9680 and X-9793 (F.R.L,S. 3943 and 3944) of
August 25, 1936 and January 13, 1937, respectively.
x1941,
Several of the Banks, however, have stated that they
would like to continue receiving figures showing, by Federal
Reserve districts, the number and aggregate deposits of State
banks currently admitted to membership in the Federal Reserve
System. Therefore, such information will in the future be
made available a few days after the end of each month, in mimeographed form and without a covering letter, by the Board's
Division of Bank operations. The enclosed table shows, among
other things, the number and aggregate deposits of State banks
admitted to membership during 1940 and the first nine months
of 1941.
Very truly yours,
L. P. Bethea,
Assistant Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
S-390-a:
STATE BANKS ADMITTED TO FHDERAt RESERVE MEMBERSHIP
(Deposits are in thousands of dollars)
Number
Deposits
Number of nonmember commercial banks with sufficient
capital stock to meet the minimum statutory
requirements for Federal Reserve membership*
By size of de
Number
Total
On Par
Under $1
Si - 10 #10 millions
Number
**
List
and over
millions
million
01
Banks admitted
to membership
during 1940
I
Federal
Reserve
District
Banks admitted
to
membership during
Jen. - Sept. 1941
Deposits
Number
Boston
New York
Philadelphia
1
34
8
1,730
83,520
8,920
0
8
4
0
12,026
3,777
141
224
225
45
76
101
87
126
108
8
21
13
141
224
225
Cleveland
Richmond
Atlanta
13
10
1
8,890
10,480
730
25
18
3
37,595
21,868
5,298
475
394
484
327
301
415
139
86
65
6
7
2
474
232
52
Chicago
St. Louis
Minneapolis
42
18
1
126,840
14,080
250
62
21
9
74,483
12,412
10,382
.1,219
664
420
1,008
578
391
10
3
0
1,079
434
78
2
7
2
640
5,790
830
10
24
4
14,197
21,154
5,125
487
282
194
459
253
138
28
29
37
0
0
9
402
174
182
***139
262,700
****188
218,317
5,209
4,092
1,010
79
3,697
Kansas City
Dallas
San Francisco
Total
200
78 .
27
* These figures are as of December 31, 1939, the latest date for which such data have been compiled.
** These totals include, and the distribution by amount of deposits excludes, 28 banks with no deposits or
for which deposit figures were not available.
*** Includes one newly organized bank with no deposits; excludes one bank organized to succeed a national bank.
***** Excludes two banks organized to succeed national banks, one organized to succeed a State member as part
of a rehabilitation program, and one organized to succeed a State member whose charter had expired.
363
BOARD O F GOVERNORS
O F THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-392
A O D R I I I OFFICIAL o o r r e s p q n o c n c e
TO THE B O A R D
November 3, I941
Dear Sir:
The Board of Governors concurs In the action taken by the Conference of Presidents at the
meeting held on September 27-28, 1941, in accepting
and approving the September 17, 1941 report tod recommendations of the Committee on Handling of U. S.
Postal Money Orders together with the suggested circular letter, as revised.
As soon as formal approval of the Treasury
Department is obtained of the tentative arrangements
worked out between the Committee and the Treasury
with respect to collecting certain money orders deposited with the Federal Reserve Banks ty Government
agencies and officials, the Board will advise the
Chairman of the Presidents' Conference thereof so
that a date may be fixed for issuing the circular
and making the revised procedure effective.
Very truly yours,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
6-393
Reg. W
BOARD OF GOVERNORS -OF THE FEDERAL RESERVE SYSTFM
INTERPRETATION OF LAW OR REGULATION
November 7, 1941
W-109.
Since Amendment No. 2 of Regulation v¥ increases
the figure $1,000 to $1,500 in the definition of instalment loan
credit but leaves the figure $1,000 in Group E of the Supplement,
the Board has been asked whether the Amendment will permit a vendor to make an instalment, sale of Group E materials and services in
the amount of $1,200 on easier terms than it will permit a lender
to make an instalment loan to finance the same transaction.
Section 6(b) of the Regulation equalizes the application
of the Regulation to vendors and lenders in such cases.
If the $1,200 transaction does not include any articles
in Group C or D, Section 6(b) exempts it for both lender and vendor.
If the $1,200 transaction does include articles listed in
Group C or D, its status under Section 6(b) is likewise the same
for both lender and vendor:
the transaction is exempt for both lend-
er and vendor if the bona fide cash purchase price of the Group C or
D articles does not exceed $600 (that is, 50% of the total over-all
deferred balance of $1,200); and it is not exempt for either lender ,
or vendor if the purchase price of the C or D articles exceeds $600,
365
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
8-394
A D O R E I I OFFICIAL C O R R C I C Q N O C N O E
TO THE BOARD
November 10, 1941
Dear Sir;
There Is enclosed for your Information a copy of a letter which the Board is
sending today to Mr. Stradella, Vice President,
General Motors Acceptance Corporation, New
York City.
Very truly yours,
Chester Morrill,
Secretary.
Enclosure
TO TEE P R E S I W T S OF A L L ' B A l E S
S—3<?4-—a
November 10, 1941
Mr. Charles G. Stradella, Vice President,
General Motors Acceptance Corporation,
Broadway at 57th Street,
New York, New York.
Dear Mr. Stradella:
The Board has received a letter from the Federal Reserve
Bank of San Francisco enclosing an inquiry received from the branch
manager of your corporation asking for an interpretation of the provisions of section 3(a)(2)(B) of Regulation W. It is our understanding that several of your branch offices have requested an opinion on
this question, and this letter is being written to you with the
thought that your office can advise all your branches.
The question is whether or not it is necessary for the
dealer's finance agency to have a more detailed statement of the
transaction than that which was given to the purchaser. Section
3(a)(2)(B) provides that the Registrant may not'receive any payment
arising out of the obligation if, when the Registrant purchased or
discounted the obligation, it "showed on its face" some failure to
comply with the requirements of the Regulation or the Registrant
"knew" any fact by reason of which the extension of credit failed
to comply with such requirements.
Therefore contracts covering the purchase of automobiles
may be purchased by your corporation without further investigation,
if the contract does not show on its face some noncompliance and if
at the time of purchase your corporation did "not know any fact by
reason of which the extension of credit under the contract failed
to comply with the Regulation.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary
S-395
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
November 19, 19Z.1
W-110.
The classification "mechanical refrigera-
tors" does not include refrigerated locker plant systems
composed of a group of frozen food storage lockers which
are not individually refrigerated but are installed in a
refrigerated room, even though the individual lockers are
of less than 12 cubic feet capacity.
8-396
Reg.W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
November 21, 1941
»
W-I1I.
The classification "automobiles" under Grotip
A-l of the Supplement includes station wagons.
*
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
S-397
Reg. W
INTERPRETATION OF LAW OR REGULATION
December 2, 1941
W - H 2 . The Board has been asked whether, in view of section
9(c) covering "lay-away" plans, Regulation W permits a dealer to accept
a small deposit (less than the required down payment) on an article
which he agrees to hold until the purchaser has accumulated and paid
the required down payment, if as a part of the same transaction the ,
dealer delivers another similar article (such as a demonstrator) to
the purchaser for him to use in the meantime #
The Board has answered this question in the negative.
The Board has also been asked whether Regulation W permits a
dealer to deliver a demonstrator to a prospective purchaser, receiving
a small deposit (less than the required down payment) and, in some cases,
an old article which the seller is willing to take as a trade-in, if the
prospective purchaser has and knows that he has the unconditional legal
right to require the dealer to take back the demonstrator and give back
the deposit and the trade-in, if any, without being under any obligation
to purchase the demonstrator or similar article or under any further obligation whatsoever to the dealer.
The Board has answered this question in the affirmative.
The difference between these two cases is that in the first
case there was a contract of sale coupled with a side agreement which,
in effect, would avoid the Regulation? while in the second case there
was no contract of sale and the prospective purchaser had the right to
return the demonstrator and receive back the deposit and old article,
if any. On the other hand if, in the second case, there had been a contract of sale, even though it was conditional and the purchaser had the
right to rescind, it would have been necessary for the seller to obtain
the required down payment and to calculate the maturity (in the event
the contract became unconditional) from the date of the contract rather
than the subsequent delivery of the article.
S-398
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTSM
INTERPRETATION OF LAW OR REGULATION
December 4, 1941
W-111. Under section 4(e) of Regulation W, as amended effective December 1, 1941, a seller may disregard the downpayment requirement in connection with the sale of# any listed
article on which the requirement would be #2 or less.
It is to be noted that section 4(e) applies only in
case the entire down-payment otherwise required on the particular sale would be $2 or less; it does not permit a seller to
reduce a down-payment which would be more than $2. For example,
if the required down-payment would be $38, the provision does
not authorize this to be reduced to $36.
If several separate articles are sold to a customer,
section 4(e). permits each to be treated separately for the purpose of determining whether the down-payment requirement may be
disregarded. This would be true oven though all the articles
were covered by a single invoice or bill. On the other hand,
where the sale consists of a group of closely related items sold
as a unit, such as a suite of furniture, the entire group should
be considered as a unit in determining whether the sale is exempted from the down-payment requirement, and this would be true
regardless of how the sale was invoiced or billed.
371
BOARD OF G O V E R N O R S
O F THE
FEDERAL RESERVE SYSTEM
S-399
WASHINGTON
ADORCBS OFFICIAL OOHREBFONDCNCE
TO THE BOARD
December 5> 1941
Dear Sir:
In 1937 the Board requested one of the members of its legal staff
to make a survey of the legal divisions of the Federal Reserve Banks. Following the submission of the reports of these surveys the Board, in June 193fi>
adopted a resolution in which, in view of the material differences in the
practices of the Federal Reserve Banks with respect to the employment of
counsel and the manner in which their legal work was handled, the position
was taken that as a matter of general policy the legal work of each Federal
Reserve Bank should be conducted under the direction of a full-time general
counsel who represents only the Federal Reserve Bank; that, however, with
"respect to the Banks which did not have such counsel the adoption of this
polity should be regarded as an ultimate objective to be attained when circumstances permitted without disturbing existing arrangements if otherwise
satisfactory; and that the President of each Federal Reserve Bank should
be advised that it was the desire of the Board to be consulted informally
before the Bank made any change in the manner of conducting its legal work
or the principal personnel engaged therein.
Advice of the adpption of the policy as set forth in the resolution was not sent to the Federal Reserve Banks at the time for the reason
that it was felt that the policy could be brought to the attention of the
respective Federal Reserve Banks as occasion might require, but in accordance with the last clause of the resolution a letter was sent to the President of each of the Federal Reserve Banks on June 8, 1938, stating that
it would be appreciated if, whenever circumstances developed in the future
indicating the desirability of a change in the principal legal personnel
or the manner in which the legal work of the Bank was conducted, the Bank
would advise the Board informally before action was taken.
Recently the Board has'had occasion to reconsider and reaffirm
the polity as set forth above and requested that all Federal Reserve Banks
be advised of the position which the Board had taken.
Very truly yours,
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
Chester Morrill, .
Secretary,
372
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
S-400
WASHINGTON
ADDREBB OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 3," 1941
Dear Sir:
At the recent Fiscal Agency Conference held at the Federal Reserve Bank of Atlanta, the Reserve Bank representatives were
requested to furnish the Treasury with their suggestions and comments with respect to a number of topics after returning to their
respective Banks. It will be appreciated if you will have your
representatives at the Conference furnish the Board with copies of
all letters and memoranda forwarded to the Treasury in response to
such requests.
Some of the Federal Reserve Banks had a senior employee
in the Fiscal Agency Department accompany the officer in charge of
that Department when he attended the Atlanta Conference. This policy seems to the Board to be a good one, particularly since it gives
senior employees who are good prospects for further advancement an
opportunity to get a broader viewpoint of System problems which relate to their particular assignments.
/
The Board will appreciate being advised of all Fiscal
Agency and allied matters of importance taken up with the Treasury
by the Federal Reserve Banks and by the Treasury with the Federal
Reserve Banks.
In order to facilitate closer relations between the Treasury, the Board, and the Federal Reserve Banks in this field, the
Board is arranging for a conference with the Treasury on this subject and will advise you of the outcome of the conference. In the
meantime, your courtesy in keeping us informed in respect to these
matters will be appreciated.
Very truly yours,
TO THE PRESIDENTS OF ALL
FEDERAL RESERVE BANKS
Chester Morrill,
Secretary.
373
5-40.1
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL-RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
December 8, 1941
W-114.
Instalment sale or loan credit granted to
a farmer before December 1 may be revised after December 1
on any teras which would have been permitted if section 9(f)
had been in effect when the credit was originally granted.
..-v .
374
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
8-402
ADDREBB OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 8, 1941
Dear Sirs
There are enclosed for your files copies of four
letters from Chairman Fahey of the Federal Home Loan Bank
Board, and of the four replies of Chairman Eccles regarding the applicability of Regulation W to:
(1) Federal Home Loan Banks,
(2)
Federal Savings and Loan Insurance
Corporation,
(3)
Home Owners' Loan Corporation, and
(4) Federal Savings and Loan Associations.
Very truly yours
L. P. Bethea,
Assistant Secretary.
Enclosures B
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
S-402-a
FEDERAL HOME LOAN BANK BOARD
Washington
October 14, 1941
Honorable Marriner S. Eccles
Chairman, Board of Governors of the
Federal Reserve System
Washington, D. C.
%
dear Mr. Eccles:
The Federal Home Loan Bank Board has recently received numerous inquiries from its Federal home loan banks as to the extent to which
they are subject to Regulation W. In order that they may be properly
informed, we would appreciate your confirmation of our understanding
that they are not subject to the terms of the Regulation and need not
register thereunder.
These banks make advances secured try first liens on real estate or obligations of the United States. They also make secured advances for periods which are required try law not to exceed one year.
In addition, they make unsecured advances for periods not to exceed
one year.
Although some of the functions enumerated may fall within the
terminology of Regulation W, the transactions involved are in all cases
between the banks and other lending institutions and, in the ultimate
use of the funds advanced to such lending institutions, there must be
compliance with the terms of the Regulation. Therefore, it would not
appear that the transactions of the Federal home loan banks are of
types which the Regulation is designed to limit. If they are excluded,
the purposes of the Regulation will not be defeated and the operations
of the banks will not be subject to the detailed procedures required
t&r the Regulation.
Your e^rly clarification of this matter will be appreciated.
Very truly yours,
(Signed)
John H. Fahey
John H. Fahey
Chairman
S-402-b
November
1941
Mr. John H. Fahey, Chairman,
Federal Home Loan Bank Board,
Washington, D. C.
My dear Mr. Fahey?
I have your letter of October 14, 1941, regarding the application of Regulation W to Federal Home Loan Banks.
Regulation W applies to persons "engaged in the business"
of making instalment, sales of certain articles listed in the Supplement to the Regulation or in the business of making instalment
loans which are secured by such articles or which although not so
secured are in a principal amount of $1,000 or less (after December 1, the figure will be #1,500). It also applies to persons "engaged in the business of lending on the security of or discounting
or purchasing obligations or claims arising out of such extensions
of credit". However, section 9(e) provides that in the case of a
loan secured ty instalment obligations, the application of the Regulation is determined on the basis of the loan rather than the obligations which secure it.
It is ray understanding that the only loans made by the
Federal Home Loan Banks which would come within these classes are
instalment loans not secured by listed articles, and that the Banks
make such loans of $1,500 or less only on rare and isolated occasions.
In the circumstances the Board of Governors as of the opinion that the Federal Home Loan Banks are not "engaged in the business" described in section 3 of Regulation W, and that therefore the
Regulation does not apply to them.
Very truly yours,
(Signed) Marriner S. Eccles
M. 5. Eccles,
Chairman.
FEDERAL HOME LOAN BANK BOARD
Washington
S—402—c
Octobet* 21, 1941
Honorable Marriner S. Eccles,
Chairman, Board of Governors of the
Federal Reserve System,
Washington, D. C.
My dear Mr. Eccles:
Issuance of Regulation W, governing consumer credit, by the Board
of Governors of the Federal Reserve System has raised the question of the
application of this Regulation to the Federal Savings and Loan Insurance
Corporation. In order that the Corporation may know its status under the
Regulation, your clarification of its position thereunder would be appreciated.
Section 1 of Regulation W states that it is to apply to any person who is engaged in the business of making extensions of instalment credit or of discounting or purchasing obligations arising out of extensions of
instalment credit. The primary function of the Federal Savings and Loan
Insurance Corporation is .to insure individual accounts in institutions of
the savings and loan type, which meet the requirements of Title IV of the
National Housing Act, as amended, and the regulations issued pursuant
thereto. In some instances, upon the default of an insured institution,
the Insurance Corporation is appointed as conservator or receiver and is
authorized as such (l) to take over the assets of and operate such association, (2) to take such action as may be necessary to put it in a sound and
solvent condition, (3) to merge it with another insured institution, (4)
to organize a new Federal savings and loan association to take over its assets, or (5) to proceed to liquidate its assets in an orderly manner, whichever shall appear to be to the best interests of the insured members of the
association in default. In this capacity it is an agent of state or Federal authorities, and such principals are not persons within the definition
of Regulation W.
In addition, it would seem that the Corporation as receiver is
not engaged in the "business of extending instalment credit" within the
meaning of the Regulation. It should be free to carry out its receivership
operations provided for by Title IV of the National Housing Act, as amended,
without its activities being limited although they might in some instances
fall within the terminology of Regulation W. Extensions of credit by the
Insurance Corporation as a receiver of a defaulting institution would only
be made when necessary to conserve its assets or promote the orderly liquidation of such institution.
An early clarification of the status of the Federal Savings and
Loan Insurance Corporation will be appreciated.
Very truly yours,
(Signed) John H. Fahey
John H, Fahey
Chairman
378
S-402-d
October 30, 1941
Mr. John H. Fahey, Chairman,
Federal Home loan Bank Board,
Washington, D. C.
%
dear Mr. Fahey:
I have your letter of October 21, 1941, regarding the application of Regulation W to the Federal Savings and Loan Insurance Corporation.
You state that the primary function of the Corporation is to
insure certain individual accounts in institutions of the savings and
loan type, but that, in some instances, upon default of an insured institution, the Corporation is appointed as conservator or receiver and
is authorized as such (1) to take over the assets of and operate such
associations, (2) to take such action as may be necessary to put it in
a sound and solvent condition\ (3) to merge it with another insured institution, (4) to organize a new federal savings and loan association
to take over its assets, or (5) to proceed to liquidate its assets in
an orderly manner, whichever shall appear to be in the best interest of
the insured members of the association.
The powers enumerated above are those given by the statute (12
U.S. Code 1729), but X understand that the power referred to under (1)
to take over the assets of and operate an association has not actually
been exercised ty the Corporation in any case to the extent of continuing the ordinary business operations of the association, but, on the
contrary, that the Corporation has merely taken over the assets and
held them pending reorganization, merger, liquidation or one of the
other steps enumerated above. With respect to the power referred to
under (5) above, the Board of Governors is of the opinion that Regulation W is not applicable to a receiver engaged in liquidating the assets of an organization, and since it appears that none of the other
courses of action enumerated above would result in the Corporation's
being engaged in the business described in section 3 of Regulation W,
it appears that the Corporation is not subject to its provisions.
Very truly yours,
(Signed) Marriner S. Eccles
M. S, Eccles,
Chairman.
.
379
8—^.02—6
FEDERAL HOME LOAN BANK BOARD
Washington
October 14, 1941.
Honorable Marriner S. Eccles,
Chairman, Board of Governors of the
Federal Reserve System,
Washington, D. C.
My dear Mr. Eccles:
The question of the application of Regulation W to the operations of the Home Owners' Loan Corporation has been recently brought
to our attention. To assure full cooperation, pending a clarification
of its application, emergency steps have been taken by the Corporation
tc see that it complies fully with the Regulation. It is anticipated,
however, that the restrictive steps taken, if made permanent, would be
cumbersome, detailed, and expensive to the Government from the standpoint of both this Corporation and your Board. In order to avoid these
difficulties, your consideration is invited to the possibility of the
Home Owners' Loan Corporation being made free from the operation of Regulation W.
Regulation W, section 1, states that the Regulation applies
to any person (meaning an individual, partnership, association, or corporation) who is engaged in the business of making extensions of instalment credit or of discounting or purchasing obligations arising out of
extensions of instalment credit. Since June 12, 1936, Home Owners' Loan
Corporation has not been engaged in the business of making extensions of
instalment credit or of discounting or purchasing obligations arising
out of extensions of instalment credit. However, in many instances it
is necessary for the Corporation in order to protect its security, to
facilitate the payment of obligations owing to it, or to promote the orderly liquidation of its assets, to advance its funds in payment of
taxes, insurance premiums, repairs to or the reconditioning of, improvements situated, upon the security real estate, and attorney fees, title
examination, recording fees and other incidental expenses in connection
with extending the terms of its existing obligations. Such advances,
usually under $1,000 in amount, are charged to the home owner's account
and, unless payable on demand, are generally amortized over the unexpired
term of the home owner's obligation and may, or may not, be secured by
the existing duly recorded first lien on real estate, depending upon the
provisions of the particular security instrument and the laws of the particular jurisdiction.
9
380
*2—
S—4-02—e
It is deemed, desirable to point out that the Corporation-is
entirely owned by the Government and that its gains or losses in the liquidation of its assets will be the gains or losses of the Government
and its taxpayers. If it should be determined that the Corporation,
under Regulation W, is required to amortize within a period of 18 months
such of the advances pointed out above as may not be on demand and may
not be secured by existing duly recorded first liens on real estate,
burdens will be imposed upon the home owners which in a large number of
cases will exceed their carrying ability, thereby resulting in a larger
number of foreclosures, the added costs and expense of liquidation, and
the attendant increased risk of losses in the disposition of such acquired properties.
'
Your early consideration of this matter will be greatly appreciated.
Sincerely yours,
(Signed) John H. Fahey »
John H. Fahey,
Chairman.
381
S-A02-f
October 25, 1941
.
Mr. John H. Fahey, Chairman,
Federal Home Loan Bank Board,
Washington, D. C.
Dear Mr. Fahey:
r
I acknowledge receipt of your letter of October 14, 1941, regarding the application of Regulation W to the operations of the Home
Owners' Loan Corporation.
E
o
*
*
*
9
»
*
You state that since June 12, 1936 the Home Owners' Loan Corporation has not been engaged in the business of making extensions of
instalment credit or of discounting or purchasing obligations arising
out of such extensions, but that in many instances it is necessary for
the Corporation, in order to protect its security, to facilitate the payment of obligations owing to it or to promote the orderly liquidation of
its assets, to advance its funds in payment of taxes, .Insurance premiums,
and repairs to or reconditioning of improvements situated upon the real
estate held as security, as well as attorney's fees, title examination
and recording fees and other incidental expenses in connection with extending the terms cf its existing obligations. Such advances, usually
under $1,000 in amount, are generally amortized under the unexpired term
of the home owner's obligation, and may or may not be secured by the existing first lien on the real estate.
I understand from your letter that Home Owners' Loan Corporation is not engaged in any business except such as is necessary to the
orderly liquidation of the loans made by it prior to June 13, 1936. In
these circumstances the Board of Governors is of the opinion that the
Home Owners' Loan Corporation is not "engaged in the business of making
extensions of instalment sale credit or instalment loan credit" (section
3(a) of Regulation W), and therefore that the Regulation is not applicable to the Corporation.
I take this opportunity of thanking you, on behalf of our
Board, for the attitude of full cooperation which has been adopted by
your Corporation in connection with this Regulation.
Sincerely yours,
(Signed) M. S. Bccles
M. S. Eccles,
Chairman.
383
FEDERAL HOME LOAN BANK BOARD
Washington
S—402—g
October 21, 1941
Honorable Marriner S. Ecoles
Chairman, Board of Governors of the
. Federal Reserve System
Washington, D. C.
%
dear Mr. Ecoles:
The Federal Home Loan Bank Board has received a number of inquiries from Federal savings and loan associations as to the application of Regulation W to their operations. In order that they mill not
be unduly burdened, we would appreciate your clarification of their
position under the Regulation.
Federal savings and loan associations are chartered and regulated by our Board, in accordance with the provisions of the Home Owners' Loan Act of 1933, as amended. These institutions may only make
loans secured by first liens on real estate or loans on the security
of the shares of their members. They may in some cases make advances
for the protection of the security property. These advances in all
cases are secured either by the existing first lien, or, in a few
states, where this is not permitted, they are secured ty a bona fide
second lien.
If loans on shares were refused to members requesting the
same they would, of course, request the repurchase of their shares in
such associations. Consequently, no new credit is created ty such a
loan. If share loans should be limited as to time and use of proceeds
so that members would request the repurchase of their shares rather
than borrow on them, the result might be (l) the release of more consumer's purchasing power than under the present practice and (2) the
loss by associations of funds for possible loans on the security of
first liens on real estate.
An early clarification of the application of Regulation W to
the activities of these associations would be appreciated.
Very truly yours,
(Signed) John H. Fahey
John H. Fahey
Chairman
383
S-4-02-h
November 5, 194-1
Mr. John H. Fahey, Chairman,
Federal Home Loan Bank Board,
Washington, D. C.
%
dear Mr. Fahey:
I have your letter of October 21, 194-1? regarding the application of Regulation W to Federal Savings and Loan Associations.
As you know, section 6(a) of Regulation W at present exempts
from the down payment and maturity requirements of the Regulation all
extensions of credit which are secured by recorded first liens on improved real estate, and after December 1 that section will also exempt
all extensions ox credit "for the purpose of financing or refinancing
the construction or purchase of an entire residential building or other
entire structure". Moreover, the Board of Governors has issued an interpretation (Vv-92) stating that, even prior to December 1, a second
mortgage given ty the purchaser to the seller as part of the purchase
price is not covered by the Regulation. In addition, a lender may of
course take such action as it shall deem necessary for its protection
in connection with any obligation which is in default and which is the
subject of collection effort.
However, the Regulation is applicable to any lender engaged
in the business of making instalment loans of $1,000 or less (after
December 1 the figure will be $1,500), and there is no exception in
the Regulation which would exempt a loan by a Federal Savings and Loan
Association to one of its members upon the security of his paid-up
shares. For this reason the Board of Governors is of the opinion that
an association engaged in the business of making such loans is subject
to the requirements of the Regulation.
Very truly yours,
(Signed) Marriner S. Eccles
M. S. Eccles,
Chairman.
384
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
S-I103
WASHINGTON
ADDRESS
OFFICIAL C O R R E S P O N D E N C E
TO THE
BOARD
December 10, 19^1
Dear Si
There have been forwarded to you today under separate cover
the indicated number of copies of the following forms, a copy of each
of which is attached hereto, for the use of State bank members and
their affiliates in submitting reports as of the next call date:
Number of
copies
Form F.R, 105 (Call 89, Revised December 19^1), Report
of condition of State bank member.
Form F.R. 105b (Revised August 1939), Loans and advances to affiliates and investments in, and loans
secured by, obligations of affiliates.
Form F.R. 105e (Call 89), Publisher's copv of report
of condition of State bank member.
Form F.R. 105-i (Schedule A.l, Revised December 19*il),
Personal and rotail instalment paper.
Form F.R. 220 (Revised August 1935)» Report of affiliate
or holding company affiliate.
Form F.R. 220a (Revised December 193s), Publisher's
copy of report of affiliate or holding company
affiliate.
Form F,R. 220b (Revised February 1938), Instructions
for preparation of reports of affiliates and holding
company affiliates.
385
With the exception of form 105~i» a nd Schedule B of form
F.R# 105> no changes have been irade in any of the forms listed above
since the last time they were used.
In form 105-i item 1 has been changed to segregate retail
instalment paper arising from sales of automotive vehicles from other
retail instalment paper. Item 2 in this form has been changed to exclude loans for the purpose of financing new construction (so-called
"Classes 2 and 3** of F.H.A. Title I loans), and to include repair and
modernization instalment loans other than those insured under Title I
of the National Housing Act* * A note has been added to the instructions on this form which, it is hoped, will assist the banks in properly reporting their personal and retail instalment paper in Schedule A
of the call report. The Comptroller of the Currency is asking national
barks and the Federal Deposit Insurance Corporation is asking insured
nonnember banks to report their holdings of personal and retail install
ment paper. It will not be necessary, however, for your bank to examine
the schedules submitted by national banks as was done on the last June
call; this, together with any necessary correspondence, will be handled
by the Comptroller's office.
In Schedule B of form F.R. 105 provision has been made for
reporting the par value, in addition to the book value, of United
States Government obligations, It is suggested that this section of
the report bo carefully scrutinized to see if the par values reported
appear to be consistent with the book values.
In addition to the preliminary summary of asset items 1 to 5,
by classes of banks, which is now furnished the Board within three weeks
after the call is made, please frrnish at the same time corresponding
summary figures of the aggregate par values of Government securities as
reported in the new left-hand column opposite item 1 in Schedule B.
Such data should also be furnished as of future call dates.
Very truly yours,
L»
3) the a,
Assi start Sccretary.
Enclosures 7
TO TEE PRESIDENTS OF ALL FEDERAL RESERVE BAkKS
S—4-04Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
December 12, 1941
W-115.
Board has been asked the following question:
"Registrant is asked to consolidate three outstanding obligations
repayable #10 each on 10th, 15th and.20th of current month respectively with
an additional advance of $90 repayable $5 per month. In consolidating these
obligations may Registrant, under section 3(b) 'Option One', schedule first
payment of $35 one month from date of such consolidation even though this
may result in extending credit on outstanding obligations beyond the maximum
18 months maturity
Option 1 requires that the terms of the consolidated obligation
shall be such as would have been necessary to meet the requirements of the
Regulation if no consolidation had taken place, and therefore the consolidated obligation can not have a schedule of payments which would have the
effect of omitting a payment which would have been due on the outstanding
obligations during the month when the consolidation took place, or which
would have the effect of extending the maturity of any of the outstanding
obligations beyond the terms permitted ty the Regulation, namely, 18 months
plus the- 15-day adjustment permitted by section 9(b) .
Under Option 1 the consolidated obligation can provide for one
payment each month, and in order to accomplish this result the date of payment may be earlier in the month than the dates on which the instalments
on any of the outstanding obligations were payable, or it may be later to
the extent permitted by section 9(b) with respect to the outstanding obligations. For example, in the case described in the question, if the outstanding obligation which was repayable on the 10th of each month had been
originally made on the 5th so that only 5 days out of the 15 days permitted
ty section 9(b) had been used, the consolidated obligation could call for
instalments payable on the 20th.
Furthermore, the
payable on account of the new $90 advance
would not have to be included in the first instalment but could be included
in the instalment falling due in the month after the consolidation took
place. In other words, the consolidated loan could have a $30 instalment
in the current month, and $35 instalments in the next months.
387
5-405
Reg.?/
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
December 15, 1941
W-116.
The Board has been asked whether the deferred bal-
ance on an automobile equipped with radio and heater is limited to
66-2/3 per cent of the total price or whether it can be 66-2/3 per
cent of the price of the car plus 30 per cent of the price of the
radio and 100 per cent of the price of the heater.
The deferred balance may not exceed 66-2/3 per cent of the
total price of the car and accessories, in view of Part 3(a) of the
Supplement, and this would also be true if the accessories were not
installed in the car at the time of sale but were sold at about the
same time.
An automobile radio sold at a different time would be included in the classification "Radio receiving sets, phonographs, or
combinations" in Group C.
388
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
S-Z.,.06
Reg. F-29
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 15, 1941
Dear Sir:
There is enclosed for your information a ruling by the Treasury Department, dated December 9, 1941,
together with the Board's reply thereto, on the investment ty member banks of Common Trust Funds in United
States Savings Bonds.
In this connection your attention is called
to the Board's ruling of June 2.3, 1941, S-272, (F.R.L.S.
#4101.1) as to the periodical valuation of such bonds
in the assets of a Common Trust Fund.
Very truly yours,
L. P. Bethea,
Assistant Secretary
Enclosures 2
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
389
TREASURY DEPARTMENT
Washington
5—4-0o—B
Reg. F-29
December 9, 1941
%
dear Mr. Wingfield:
]My attention has been called to your request try telephone that
you be advised of the position taken by this Department as to whether a
Common Trust Fund, established and maintained in conformity with Section
17 of Regulation F of the Board of Governors of the Federal Reserve System, may be considered a duly constituted and wholly independent trust
estate and, as such, entitled to hold United States Savings Bonds without regard to any such bonds held by participating estates. It is understood that you propose to call the matter to the attention of the
member banks of the Federal Reserve System.
Where a national bank or other financial institution, duly authorized to act as a fiduciary, has established and maintains a Common
Trust Fund in conformity with Section 17 of Regulation F of the Board of
Governors of the Federal Reserve System and as recognized in Section 169
of the Internal Revenue Code, if authorized under the laws of the state
where the institution is located, this Department will consider the Fund
as a duly constituted and wholly independent trust estate within the
meaning of Section 315.2 (c) (2) of Treasury Department Circular No. 530,
Fourth Revision, as amended. Such a trust estate may hold United States
Savings. Bonds for which the fiduciary form of registration is authorized
in the full amount of the established limit, as prescribed in Section
315.4 of the circular, without regard to any such bonds held try participating estates. Savings Bonds of Defense Series F or Defense Series G,
the only series of savings bonds now on sale which may be registered in
fiduciary form, purchased with funds held try a Common Trust Fund so established and maintained, may be registered in substantially the following form:
"
Trust Company of
,
, trustee of Common
Trust Fund under Declaration of Trust approved ty resolution
of the board of directors adopted
(date)."
The Department will appreciate your calling this matter to the
attention of the member banks of the Federal Reserve System.
Mr. B. McGruder Wingfield,
Assistant General Counsel,
Board of Governors of the
Federal Reserve System,
Washington, D. C.
Very truly yours,
(Signed) D. W. Sell
Under Secretary of the Treasury.
390
3—/f06—"b
Reg. F—29
December 15, 1941
Honorable D. W. Bell,
Under Secretary of the Treasury,
Washington, D. C.
Dear Mr. Bell:
This refers to your letter of December 9, 1941, addressed to Mr. B. Magruder Wingfield, Assistant General Counsel
to the Board, advising of the position taken qy the Treasury
Department as to whether a duly established Common Trust Fund
may be considered a wholly independent trust estate and, as
such, entitled to hold United States Savings Bonds without regard to any such bonds held ty participating estates.
In accordance with your request, we expect to bring
this ruling to the attention of the member banks of the Federal
Reserve System by publication in the next issue of the Federal
Reserve Bulletin.
Very truly yours,
(Signed) L. P. Bethea
L. P. Bethea,
Assistant Secretary.
391
S—l.1.07
Reg. ¥
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
December 17, 1941
W-dl7.
Inquiries have been received as -to the appli-
cation of Regulation W to loans of $1,000 or less for the purpose of constructing new farm buildings, such as barns, silos,
poultry houses and the like, on property where there are existing buildings, such as*a farm house. The question is whether or
not the materials and services used in such construction are included in Group E-l of the Supplement. The Board has ruled that
the building of a completely new structure is not a repair, alteration, or improvement in connection with existing structures
and the materials and services would not be in Group E-l.
X-
§-408
Reg. QINTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
December 17, 194-1
TELEGRAM
Young - Boston
Sproul - New York
Williams - Philadelphia
Leach - Richmond
McLarin - Atlanta
Young - Chicago
Davis - St. Louis
Leedy - Kansas CityGilbert - Dallas
Day - San Francisco
In response, to inquiries from two Federal Reserve Banks
with respect to the question whether permission should be given
for the withdrawal, for the purpose of purchasing United States
Defense Bonds, of time deposits before maturity, or of savings
deposits without requiring notice of withdrawal (where it is the
practice of,the bank to require such notice), the Board has replied as follows, having in mind that Regulation Q permits the
payment of time deposits before maturity in certain emergencies
but does not extend this privilege to savings deposits;
"Emphasis of defense bond campaign is on voluntary
character of investment and upon use for this purpose
of funds currently available. Therefore, circumstances
do not constitute an emergency within meaning of section 4-(d) of regulation Q and to amend regulation so
as to permit immediate withdrawal to purchase defense
bonds might result in misunderstanding as to Government's need of funds from this source."
(Signed) Chester Morrill
S-409
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAI: OR REGULATION
December 20, 1941
W-118. The Board has been asked whether, in view of the
provisions of sections 8(a), (b) and (c) of Regulation W, a Registrant "taking over an extension of instalment credit that has been
made by a vendor and that, has no connection whatever with the sale
of a listed article, must be'bound.by the terms granted by that
vendor".
The Board has answered that, since the obligation being retired in such case is neither "instalment loan credit" nor "instalment sale credit" as defined in the Regulation, and therefore was not
itself subject to Regulation W, a Registrant making a loan to retire
such an obligation is not bound by the terms granted by the vendor.
This, of course, does not exempt the loan from the maximum maturity
and other provisions of the Regulation applicable generally to instalment loan credit. Moreover, in such a case, if a Registrant making
the loan wished to grant terms more liberal than those granted, by the
vendor, it would be necessary for him to ascertain that the credit being refinanced was in fact credit arising from the sale of a.n unlisted article.
In this connection, the "Statement of Borrower" prescribed
by the Board provides a means for the Registrant to ascertain certain
facts, including facts as to whether the proceeds are to be used to
retire an instalment obligation, and it protects the Registrant in relying in good faith on such facts when so ascertained. However, the
"Statement of Borrower" does not provide any means for ascertaining
facts in addition to those developed in answering the questions contained in the prescribed form. Certain other provisions of the Regulation provide means for establishing certain pertinent facts by
accepting in good faith a statement of the obligor with respect to
such facts; but neither the "Statement of Borrower" nor any provision
of the Regulation provides any means for ascertaining whether instalment credit being retired, instead of being "instalment loan credit"
or "instalment sale credit", is some different type of instalment
credit. Accordingly, if the Registrant wishes to disregard the terms
of the instalment obligation being retired, he must ascertain the necessary facts independently of the "Statement of Borrower", and the
treatment which he may accord to the instalment obligation being retired will be controlled by the facts themselves.
- 2 -
S-409
Reg. W
It may be noted that a similar problem arises in the case
of a loan to retire an extension of "instalment sale credit" or "instalment loan credit" which was originally granted with a shorter
maturity than that required by the Regulation and on which, therefore, the Regulation would permit the rate of payment to be reduced
to that permissible in the first instance. The question whether a
particular outstanding obligation is one on which the rate of payment
could be reduced in this manner is another question which is not answered in the "Statement of Borrower" and on which the Registrant is
not authorized to rely on any other statement of the obligor. Therefore, if the Registrant making the loan to retire the obligation
wishes to reduce the rate of payment, he must act independently of
the "Statement of Borrower", and the treatment which he may accord
to the instalment obligation being retired will depend upon the facts
themselves.
395
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS
OFFICIAL C O R R E S P O N D E N C E
TO THE
December 22, 1941
Dear Sir:
Enclosed is a copy of a letter with
respect to the application of Regulation W to
the financing of special wiring installations
made in connection with electric ranges or
water heaters.
Very truly yours,
Chester Morrill
Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
BOARD
S-410-a
December 17, 194-1
Mr.
Dear Mr.
:
It has been noted that in previous communications to
you the Board has failed to comment upon a memorandum from your
office which was enclosed with your letter of
.
This memorandum raised a question as to the application of Regulation W to the financing of special wiring installations made
in connection with electric ranges or water heaters.
These special wiring installations are considered to
be improvements and, when they are made under the conditions
referred to in Group E-l of the Supplement, the contracts would
.be subject to the 18-month limitation.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
,
o
BOARD O F G O V E R N O R S
o q ^
f
o l ? »
the
FEDERAL RESERVE SYSTEM
washington
S-411
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 22, 1941
Dear Sir:
Referring to the Board's letter of November 19, 1941
(R-918), regarding the use of Form F.R. 158 by officers and employees of the Federal Reserve Banks in obtaining exemption
from the Federal tax on the transportation of persons, a question has arisen as to whether such exemption extends to the
directors of the Federal Reserve Banks.
In 1921, under a similar transportation tax, the
Bureau of Internal Revenue ruled informally that a director of
a Federal Reserve Bank who was traveling in the performance of
his official duties and whose transportation charges were paid
by the Federal Reserve Bank was exempt from that tax.
A member of the Board's staff in a telephone conversation with a representative of the Bureau of Internal Revenue
has recently been advised informally that the same principles
are applicable under the present statute. Therefore directors
of Federal Reserve Banks and their branches, as well as officers and employees of the Federal Reserve Banks, when traveling on official business, may use Form F.R. 158, as revised
November 1941, in order to obtain exemption from the Federal
tax on the transportation of persons.
Very truly yours,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
S-412
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
December 22, 1941
W-119»
Notes payable to insurance agents or brokers
for premiums are not subject to Regulation W, because insurance
is not a "listed article" under the Regulation, and the agents
and brokers are "sellers" within the meaning of section 2(d).
Financial institutions may purchase such notes regardless of the requirements of the Regulation.
However, instalment loan credit extended ty a financial institution for the purpose of paying premiums is subject
to the Regulation, except as provided in section 6.
399
S-U3
Reg. 0-44
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
' December 23, 1941
Mr.
Federal Reserve Bank of
_, President,
,
Dear Mr.
This refers to the report of examination of The
Bank,
,
, as of October 28, 1941, on page 21 of
which it is stated that the executive officers of the bank have not
filed with the board of directors statements of their existing indebtedness to other banks for the reason that "officers' loans from
other banks existed at the time of admission to the System".
The Board has not heretofore ruled on this specific question, but has taken the position that the indebtedness of an executive officer to another bank incurred prior to the time he became an
executive officer should be reported to the board of directors. Section 22(g) of the Federal Reserve Act provides in part that "If any
executive officer of a member bank borrow from or if he be or become
indebted to any bank other than a member bank of which he is an executive officer, he shall make a written report to the board of directors of the member bank".
In view of this language, it is the
opinion of the Board that the indebtedness of the executive officers
of the bank in question should be reported to its board of directors,
notwithstanding that the loans existed at the time of the admission
of the bank bo the Federal Reserve System.
We will leave it to your discretion as to whether you
should take this matter up with the member bank prior to its next examination, but in any event the attention of your examiner should be
called to the Board's position in this matter.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Assistant Secretary.
400
BOARD O F G O V E R N O R S
of
the
FEDERAL RESERVE SYSTEM
washington
S-4U
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 26, 194-1
Dear Sir:
For your information there is enclosed a copy of a letter written to a Federal Reserve Bank regarding section 8(b) of
Regulation W.
Very truly yours,
Chester Morrill,
Secretary.
Enclosure
»
,JQ -PYG PRESIDENTS OF ALL FEDERAL RESERVE BANKS
401
S—/4,1-Z^—8.
December 26, 194-1
Mr.
, Vice President,
Federal Reserve Bank of
,
Dear Mr.
:
Receipt is acknowledged of your letter ,of December 16 addressed to Dr. Parry regarding section 8(b) of Regulation W.
The question, which is raised try an example in an interpretation of Regulation W prepared by the American Association of
Personal Finance Companies, and also by another inquiry received ty
you, is as follows: Where a loan which was originally made for less
than 18 months is consolidated under section 8(b) with an additional
advance, do Options 1 and 2 require that the payments on the consolidated obligations be arranged on the basis of the terms which were
in effect on the outstanding obligation at the time of consolidation,
or may the terms of the consolidated obligation be arranged on the
basis which would have been permissible under Option 1 or Option 2
if the terms of the outstanding obligation had been extended to the
full 18 months prior to the consolidation?
Section 8(b) refers to the rate of payment on the outstanding obligation which was in effect at the time of consolidation, and
therefore might be interpreted as prohibiting a consolidation based
on any longer terms. However, under section 8(a) and section 8(c)
the outstanding obligation could be revised to an 18-month basis,
and immediately after such revision an additional loan could be made
and then consolidated with the previous obligation, as revised. In
other words by performing the transaction in two steps, the result
could be accomplished without violating the literal terms of the
Regulation. Accordingly, it would be futile to say that the Registrant is prohibited from accomplishing the result in one step.
Therefore the Board is of the opinion that the example given b/ the
American Association of Personal Finance Companies is correct.
Very truly yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
402
BOARD O F G O V E R N O R S
of
the
FEDERAL RESERVE SYSTEM
washington
S-415
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
December 30, 194-1
Dear Sir;
For your information there is
enclosed a copy of a letter written to a
Federal Reserve Bank regarding the question whether a proposed schedule of payments complies with the requirements of
Section 5(c)(2) of Regulation W.
Very truly yours,
Chester Morrill
Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
403
S—2*15—8.
December 24-, 194-1
Federal Reserve Bank of
Dear Mr.
:
Receipt is acknowledged of your letter of December 11 enclosing a copy of a letter dated December 3 from the
Finance Corporation to Mr.
5 Assistant Deputy Superintendent, Banking Department,
State of
.
The question is whether a proposed schedule of payments complies with the requirements of section 5(c)(2) of Regulation W which
requires that no instalment shall be substantially greater than any preceding instalment. The schedule calls for 15 monthly payments which are
equal in amount, followed by 3 smaller payments to cover the remaining
balance of principal and interest. However, in order to avoid undue complexity in calculating the amounts of the various payments, and also in
order to avoid a conflict with certain State requirements, the last payment is larger than the preceding payment, although, as stated above, all
of the last 3 payments are substantially smaller than the 15 preceding
payments.
The principal purpose of section 5(c)(2) was to prevent a balloon note at the end of the series. Obviously the schedule of payments
described in the letter of the
Finance Company is not in conflict
with this purpose, and in view of the fact that the last payment is very
much smaller than any of the first 15 payments, the Board is of the opinion that it should not be regarded as violating the above requirement of
the Regulation.
A somewhat similar question was presented by another inquiry
received from Mr. ______ in
. In that case certain of the instalments were increased by adding semiannual or other periodic interest payments. In case you may be interested, a copy of the Board's
reply to Mr.
is enclosed.
Very truly yours,
(Signed) Chester Morrill
Enclosure
Chester Morrill,
Secretary.
404
lS-415-b
November 28, 194-1
Mr.
Federal Reserve Bank of
Dear Mr.
Receipt is acknowledged, of your letter of November 7 and
enclosures regarding the practice of certain banks in your district
of making instalment loans calling for repayment of the principal
in equal monthly instalments but for payment of interest quarterly
or semiannually on the diminishing balance. mhe question is whether
this practice is permissible in view of section 5(c)(2) which provides that no instalment shall be substantially greater in amount
than any preceding instalment.
The principal purpose of section 5(c)(2) was to prevent a
balloon note at the end of the series, and obviously the practice to
which you refer is not in conflict with this purpose. Furthermore,
where the difference in the size of various monthly payments is the
result of adding interest, the difference will usually be small as
compared with a difference resulting from a larger payment of principal. Of course extreme cases may be imagined, as where all of the
interest on a 12-month loan is payable with the final instalment,
which might result in a final instalment nearly double the amount
of the preceding instalment. On the other hand, where the interest
on such a loan is payable quarterly, the arrangement would usually
not be in conflict with the Regulation.
It is not possible to lay down a fixed rule, since the
word "substantially" must be interpreted in the light of the facts
of each case, but it is hoped the general principles discussed
above will enable you to handle particular inquiries.
Very truly- yours,
(Signed) Chester Morrill
Chester Morrill,
Secretary.
S-416, S-417
Reg. W
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTERPRETATION OF LAW OR REGULATION
December 31, 1941
W-120. The classification "Plumbing and sanitary
fixtures designed for household use" does not include piping
or other plumbing supplies not a part of such fixtures, although these items may fall within tho classification of
materials and services referred to in Group E-l of Part 1
of the Supplement. It is to be noted, however, that for
purposes of determining the maximum amount of credit, the
bona fide cash purchase price of the fixtures includ.es the
cost of accessories such as faucets, cabinets, or shower
attachments installed with the fixtures. Also included in
the bona fide cash purchase price of the fixtures is the
cost of installation of the fixtures ana accessories but
not the cost of installation of separate piping and fittings.
W-I21. The classification "Water pumps designed
for household use" includes windmills designed for pumping
water to a tank from which the water is piped for various
uses. The windmill is the principal part of the pumping
mechanism in these cases and therefore is included even
though purchased separately.
406
BOARD OF G O V E R N O R S
of
*******
/JfiSSSfe.
the
FEDERAL RESERVE SYSTEM
jit
washington
P-1261
(On office copies
only)
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
October 3, I9I1I
Dear Sir:
The Presidents, at their Conference held in Washington
on September 28, discussed with the Board their employment problems arising out of the present National emergency# The Board
recognizes the necessity of taking steps to meet these problems.
Therefore, it authorizes the Federal Reserve Banks to pay such
supplemental compensation or allowance as their Directors deem
necessary from time to time up to a maximum of 10 per cent per
annum on the first $1,800 of annual salary to members of their
staffs receiving salaries of less than $6,000, provided, however,
that such supplemental compensation shall not increase total compensation beyond $6,000 per annum#
Such supplemental compensation may be made retroactive
to September 1 if desired and may be paid monthly or at other
intervals, if preferred* Supplemental payments should not be
considered as a part of basic salary nor should they be referred
to as bonuses and no contributions to the Retirement System
should be made in respect thereto.
It is expected that each Bank, in fixing its own rates
of supplemental compensation, will be guided by such factors as
the local employment situation, including increasing opportunities for employment elsewhere at higher salaries, the policies
being followed by other institutions in its area, the extent to
which it may have increased salaries during recent months, and
changes that have taken place in living costsIt should be
right either to cancel
herein for the payment
has given its approval
understood that the Board reserves the
or amend at any time the authority granted
of supplemental compensation# The Board
to the above plan in the belief that it
-
2
-
3-1261
407
(On office copies
only)
represents a better method of dealing with emergency conditions
than would increases in basic salaries.
Very truly yours,
Chester Morrill,
Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BAMS
B-1263
BOARD O F G O V E R N O R S
,*****»,
of
gjffijfe
408
the
FEDERAL RESERVE SYSTEM
washington
,,'i
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
November 19, 192:1
Dear Sir:
It will be appreciated if you will mail to the Board as
soon as practicable after January 1 a copy of the budget approved
by your bank for its head office and each of its branches, if any,
and for the head office ard branches combined, for the calendar
year 19lt2.
It will also be appreciated if the 19h2 budgets furnished
to the Board are prepared along functional lines in accordance
with the sample form, B-126%, attached, totals for each function
being shown as in the functional expense report, Form B.
Please also submit statements on Form B-126^b and B*-l263c
showing the itemization of the budgets of the statistical and
analytical and bank examination functions.
In addition kindly prepare and submit with each budget
statement a memorandum setting forth in general the reasons for the
principal increases and decreases in the budget estimates for 19li.2
as compared with actual expenses during 19-1:1.
A supply of forms B-1263a, 8-126%, and B-126^c is enclosed.
Vsryf trul;
L. P, Bethea,
Assistant Secretary.
Enclosures
TO THE PPESIDS1TS OF ALL FEDERAL RESERVE BAI KS
(Enclosures with addressed copies only)
SUMMARY OF BUDGET ESTIMATES, 19^2
Federal Reserve Bank of
Function
409
(TnIioaTe™Weth?r~heaa' office";
branch or "combined* report)
Expenses,
Year 1<&1
Budget,
Tear 19h2
General overhead « Controllable
General overhead + Nonoontrollable
Provision of space (less income and
distribution)
Furniture and equipment
Provision of personnel
General service
Postage
Insurance
Failed banks
Loans, rediscounts, and acceptances
Rational defense
Securities
Currency and coin
Check collection
Noncash collection
Accounting
Legal
Bank and public relations
Auditing
Bank examination
Federal Reserve note issues
Statistical and analytical
Securities exchange
Fiscal agency, custodianship, and
depositary*
Reimbursable expense
Expense not reimbursable
foreign
TOTAL (column 1 must agree
with Form E)
•'*' '""'i*'ill P'W#
3-126%
STATISTICAL AND ANALYTICAL BUDGET, 19^2
F-ederal Reserve Bank of
Expense unit
41.0
TlndTcate whetKer head office,
branch or "combined" report)
Expenses,
Year 19Ul
Budget,
Year 191*2
1. Statistical:
a. Salaries - Officers*
b. Salaries - Employees
c. Retirement system contributions
for current service
d. Traveling expenses
e. Printing, stationery, and supplies
f. Telephone and telegraph
g. Postage and expressage
h. All other
TOTAL
2. Monthly letter:
al Printing and stationery
b. Postage and expressage
TOTAL
3. Library:
a. Salaries - Officers*
b. Salaries - Employees
c. Retirement system contributions
for current service
d. Traveling expenses
e. Printing, stationery, and supplies
f. Telephone and telegraph
g. Newspapers, periodicals, books,
binding, clipping service, etc.
h. All other
TOTAL
TOTAL, STATISTICAL AND
ANALYTICAL
Number of copies of Monthly Letter
printed for month of December I9UI
=> Indicate in a footnote the complete allocation of the time and salary
of each officer whose salary is charged in whole or in part to this
unit.
B-126%
BANK EXAMINATION BUDGET, 191+2
Federal R^erve Bank of
'
Bank Examination Function
"
411
' —(Tntic'aFe-wheTh~r"~headf office" "*
branch or "combined" report)
Expenses,
Year 19*4
Budget,
Year 19^2
a. Salaries - Officers*
b. Salaries - Employees
c. Retirement system contributions
for current service
d. Traveling expenses
e. Printing, stationery, and supplies
f. Telephone and telegraph
g. Copies of bank examination reports
h. All other
TOTAL
DEDUCT - EXPENSES CHARGED AGAINST
BANKS EXAMINED
NET TOTAL, BANK EXAMINATION
•Indicate in a footnote the complete allocation of the time and
salary of each officer whose salary is charged in whole or in
part to this function.
B-1263C
412
BOARD O F G O V E R N O R S
of
the
FEDERAL RESERVE SYSTEM
B-126L
fOn office copies
only)
washington
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
November 19, 19^+1
Dear Sir:
It will be appreciated if you will furnish
for the Board* s forthcoming annual report the usual
data relative to the number of member banks accommodated through the discount of paper, the number of
member banks in operation, and the number of nonmember banks on and not on the par list.
The data should
be prepared in the manner and include information
similar to that requested in our letter of November 8,
191:0 (R-728) .
Very truly yours.
E. L. Smead, Chief,
Division of Bank Operations
TO THE PRESIDENTS Of ALL FEDERAL RESERVE B A M S
413
BOARD OF G O V E R N O R S
of
*******
the
FEDERAL RESERVE SYSTEM
B-1265
(On office copies
only)
washington
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
December
8, 19l|.l ?
Dear Sirs
There are being forwarded to you under separate cover
the number indicated of the following forms for use by your Bank
during 19^2:
Number of
copies
Form
Form E
F. R, 38
F. R. 95
F. R, 96
F. R. 96a
Functional Expense Report
Classification of Discounted and Purchased Bills Held at End of Month
Current Earnings of Federal Reserve Bank
Current Expenses of Federal Reserve Bank
Reimbursable Expenses of Federal Reserve
Bank
F. R. 160 )
l60A) Receipts and Payments of Paper Currency—
l6oB) Monthly report
l60C)
Form F. R. jh is now in ths hands of the printer and your
supply will be forwarded in due course.
The supply of forms for branches has been mailed direct.
Very truly yours,
(C,
l/CM. (A/ <j/ /
J. R, Van Fossen, Assistant Chief,
Division of Bank Operations.
TO TEE PRESIDENTS OF ALL FEDERAL RESERVE BAMS
414
BOARD O F G O V E R N O R S
of the
FEDERAL RESERVE SYSTEM
Brl266
(On office
copies only)
washington
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
December 19, 19W-
Dear Sir:
For use in connection with discussions of the
subject of bank debits at the forthcoming conference of
representatives of the Reserve Banks' research and statistical divisions, there is enclosed a draft of a letter and accompanying forms which we may send to the
Federal Reserve Banks early next year. The information
proposed to be called for would be useful in determining whether it is feasible and desirable to obtain bank
debits figures from nonreporting banks located in reporting centers. It is hoped that the conferees will be in
a position to express some views on this question even
in the absence of the contemplated statistics. Some
consideration may also be given to the desirability of
adding any important centers that do not now report,
particularly in areas not adequately represented.
Very truly yours,
E. L. Smead, Chief,
Division of Bank Operations.
Enclosures 3
TO THE HEADS OF STATISTICAL DIVISIONS OF ALL FEDERAL RESERVE BANKS.
DRAFT
415
BOARD O F G O V E R N O R S
of
the
FEDERAL RESERVE SYSTEM
washington
January
, 19^2
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
Dear Sir:
'
»
*
In order to ascertain which banks in reporting
centers are covered by the present bank debits statistics and
which ones are not c o v e r e , as well as the amounts of their
deposits, it will be appreciated if you will have prepared
the summary data called for by the enclosed form, to be
supplemented by a list, made up in accordance with the accom^
panying outline, showing the name and deposits of each indi*
vidual bank (exclusive of mutual savings banks) in all centers
included in the Board's bank debits statements* If the debits
of any banks in centers not included in the Board's compila*
tions are now being regularly reported to you, please furnish
also a list of such banks.
Consideration is being given to the desirability
of shifting tho reporting of debits from a weakly to a monthly
basis, since it appears that the significance of the figures
might actually be increased thereby, and the cost of compiling
the reports would be considerably reduced.- I should be glad
to know whethar or not you think this proposal has merit and
should possibly be adopted.
Very truly yours,
e
^
E« L» Smead# Chief,
Division of Bank Operations.
Enclosures 2
TO TFE PRESIDENTS CP ALL FEDERAL RESERVE BANKS
Bf1266a
y
*
F«R» District No.
SURVEY OF BANKS IN CENTERS INCLUDED IN THE BO/PD'S BANK DEBITS STATEMENTS, DECEMBER 19Ul
(Deposits as of June $0, 19Ul# in thousands of dollars)
1/
Name of centerJL'
Manner Total commercial
Population
banks
of re-a"
(19U0) porting
Number j Peposits
3/
Member bank&i'
Number I Deposits
Insured
, ,
Noninsured
bank s3/
nonmember b- nk&2/
Number Deposit s Number ^Deposits
"T"
t
Xf Three lines of figures should be shown for each "reporting center" (those included in the Foard's bank debitsstatements ) in which one or more banks are not included in the Board's compilations? One for "reporting banks",
one for "nonreporting banks", and one for the total.
2 / Use symbol "B" if by each bank directly, symbol n CH" if by clearing house, and symbol "0" if other.
B-1266b
3 / Exclusive of mutus1 savings banks.
£
LIST OF BANKS IN REPORTING CENTERS WHOSE DEBITS ARE INCLUDED AND
NOT INCLUDED, RESPECTIVELY# IN BOARD'S BANK DEBITS STATEMENTS
January I9I42
Class
of
bank
Name of bank
-
Total deposits^/
(in thousands
of dollars) .
(Nane and population of center)
l/ The deposit figures should be as of June 30# 19Ul and should exclude, so far as
"" practicable, deposits of branches or offices not located in the r iven center
(provided the debits reports do not cover any such tranches or offices; if
they do, please so indicate)*. If the only available deposit figures include
deposits of branches outside the given center, that fact should be indicated#
T>e information as to deposits and insurance status of nonmember banks may be
taken, so far as available, from a bank directory, •
Note—List first the banks included in the Board's compilations, followed by
those in reporting centers that are not so included,
B*»1266c
B-126?
BOARD O F G O V E R N O R S
of t h e
FEDERAL RESERVE SYSTEM
4>|ti
(On o f f i c e 4
copies only)
X 0
washington
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 29, 19Ul»
Dear Sir:
Upon receipt of inquiries from a number
of Federal Reserve Banks regarding the procedure to
be followed in requesting reimbursement for "Supplemental compensation11 paid fiscal agency employees,
we discussed the matter informally with representatives of the Treasury Department and have been advised
that the procedure outlined in the attached forms will
be satisfactory to that Department, life have also been
advised informally that it will be satisfactory to the
General Accounting Office.
Very truly yours,
E. L. Smead, Chief,
Division of Bank Operations.
Enclosures 10
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
419
BOARD O F G O V E R N O R S
DF THE
FEDERAL RESERVE SYSTEM (On
I
washington
B-1268
office copies
Only)
xy
V
V
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 26, 1941
Dear Sir t
It has been decided to revise the form of the
Par List as of January 1, 191+2, by (l) eliminating the
lists of State bank members and nonmember clearing banks,
and (2) listing only the cities served by one Federal
Reserve office in States where all banks are on the Par
List but are served by two Federal Reserve offices. In
the latter case it will be clearly indicated that the
remaining cities are served by another (specified) Federal Reserve Bank or Branch.
The revisions have been indicated on a copy of
the July 1, 1941, issue of the Par List, which has also
been brought up to date as of December 1 on the basis of
the last monthly supplement. A photostat copy of your
district's portion of this copy of the Par List is enclosed.
It will be observed that some minor changes in phraseology
of headnotes have been made in the interest of consistent
presentation.
It will be appreciated if you will advise the
Board by telegram on January 2, if practicable, of any
changes necessary to bring your district's portion of the
Par List up to date as of January 1, 1942, also whether
the changes in the form of the Par List indicated on the
enclosed, copy are satisfactory.
Very truly yourg^—,
S. R, Carpente:
Assistant Secretary.
Enclosure
TO
THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
@FedFRASER