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50
R-965
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Statement for the Press
For release in morning newspapers of
Monday, March 9, 1942
March 7, 1942
As a further step in restraining the expansion of instalment
credit at this time, the Board of Governors of the Federal Reserve System has adopted Amendment No. 3 to Regulation W, effective March 23,
19L~.
The principal changes made by the amendment are as follows:
The standard maturity is reduced from 18 tQ 15 months for all
credits subject to the Regulation, except credits for residential
modernization, plumbing, furnaces, water heaters, water pumps, and pianos,
all of which may still be for 18 months.
The down payments are increased from 20 per cent to 33-1/3 per
cent on refrigerators, washing machines, ironers, vacuum cleaners, electric
dishwashers, room unit air conditioners, sewing machines, radios and phonographs, and musical instruments. On home air conditioning systems and attic
ventilating fans, the down payments are increased from 15 per ce~t to 33-1/3
per cent, and on furnaces, water heaters, water pumps and plumbing, from 15
per cent to 20 per cent.
The following articles are added to the list, with 33-1/3 per cent
down paJr;ment required: bicycles, lawn mowers, silverware and photographic
equipment. The following are added to the list, with 20 per cent down payment required: clocks, watches and floor coverings.
Any lender or vendo·r whq becomes subject to the Regulation because of the addition of articles is given until June 1 to regis~er with the
Federal Reserve Bank in his district on forms obtainabl~ ut any Federal Reserve Bank or branch. These new registrants are granted a general license
between March 23 and June 1.
After April 1 the cred~t value of a used automobile, instead of
being based solely upon the purchase price, is to b~ based either upon the
purchase price -or upon the average retail value as stated in such automobile
appraisal guides as may be desigpated by the Board, whichever is lower~
Attached
i~
a copy of Amendment No. 3.
AMENDMENT NO. 3 TO REGULATION W
ISSUED BY THE BOARD OF GOVEBNORS OF THE FEDERAL RESERVE SYSTEM
Regulation W is hereby amended in the following respects, and
these changes shall become effective March 23, 1942, except that the
change in Part 3 (b) of the Supplement shall not become effective
until April 1, 1942.
1. Section 3(b) is amended to read as follows:
(b) General License.-Whene\·er thi~ regulation is amended so that any
person who was not formerly subject to section 3(a) becomes subject thereto,
such person is hereby granted a general license; but such general license shall
terminate at the end of the second full calendar month after the month in
which the amendment becomes effective unless such person has registered,
in the manner provided in section 3(c). before such termination. Any person
whose license is not suspended may become licensed by registering in the
manner provided in section 3( c).
2. Section 4(f) is amended by adding the following new paragraph
at the end thereof:
The Registrant may disregard the requirements of this section 4(f) in
the case of any article listed in Group A. B. C or D on which the down payment required by section 4(a) would be $2.00 or less, or in the case of any
article included in Group E of which the boiia fide cash purchase price, as
defined in the Supplement, does not exceed $20.00.
3. Section 5 (d) is amended by changing the words "On and after
January 1, 1942, no Registrant" at the beginning of the section to "No
Registrant", and by striking out the next to last sentence of the section.
4. Section 6 (e) is amended so that clause (1) thereof will read as
follows:
(1) to finance the purchase of aircraft for use in any actidt~· in rPspect
of which a preference rating of A-10 or higher is in force for deli\·eries of
ci vii aircraft;
5. Section 6 (j) is stricken out and the following new provision 1s
substituted therefor:
(j) Any extension of instalment loan credit made by the Disaster Loan
Corporation.
6. The first sentence of section 6(k) is amended to read as follows,
and the number (2) in the second sentence of the section is changed
to (3):
Any extension of instalment loan credit whieh is made to a person engaged
in agriculture, or to a cooperative association of such persons, prm·ided that
the extension of instalment loan credit (1) is made by the Land Bank Commissioner on behalf of the Federal Farm Mortgage C~rporation and is found,
pursuant to regulations issued by the Commissioner. to be necessary to maintain or increase production of essential ajl:ricultuml commodities, or (2) is
approved by the Farm Security Administrator. or his authorizPd ajl:ent, as
being necessary for the rehabilitation of a needr farm family, or (3) is for
j~:eneral agricultural purposes and is not for the purpose of purchasing any
listed article and not secured by any listed article purchased within 45 days
before the extension of credit.
1
2
AMENDMENT NO. 3 TO REGULATION W
7. The following footnote is added t-o section 8 (a), and the footnote
reference 4 is inserted after the word "credit" immediately before the
proviso of the section:
• If there should be any arrearage which does not arise out of any 'prearrangement or plan to evade this regulation, the arrearage may be divided
equally among and added to the remaining payments scheduled for the liquidation of the credit to which such arrearage relates. This applies to any
renewaL revision or consolidation effected in accordance with any provision
of Section 8.
8. Option 1 in section 8 (b) is amended to read as follows:
Option }. The terms of the consolidated obligation shall be such as
would have been necessary to meet the requirements of this regulation if the
several obligations had not been consolidated: Provided, That, in order to
schedule payments at approximately equal intervals, the consolidated obligation may combine payments that would otherwise have fallen due at different
times within any monthly period, but the first of such combined payments
shall fall due within one month after such consolidation; or-
9. Section 8 (d) is amended by striking out the last sentence thereof.
10. Section 9(d) is amended by adding the following new paragraph
at the end thereof:
Whenever this regulation is amended to add any article to the listed
articles specified in the Supplement, the amendment shall not apply with
respect to the carrying out of any valid contract made prior to the effective
date of the amendment; but any renewal, revision or consolidation of any
such obligation shall be subject to the requirements of section 8, and for the
purposes of section 8(a) the terms of repayment "permitted in the first
instance" for such an obligation f'hall be deemed to be those applicable to
such an extension of credit under such amendment.
11. The part of section 10 after the heading is amended to read as
follows:
This regulation became effective in its original form September 1, 1941;
Amendment No. 1 became effecti,·e September 20, 1941; .Amendment No. 2
became effective December 1. 1941; and Amendment No. 3 shall become
effective March 23, 1942. except that the change made in Part 3 of the
Supplement by Amendment No. 3 shall not become effective until April
1, 1942.
12. The Supplement is amended to read as follows:
SUPPLEMENT TO REGULATION W
Part I.
Listed Articles, Maximum Maturities, aud Maximum Credit
Values.-For the purposes of the regulation the following maximum maturities and maximum credit nlues shall apply to the following list of articles:
Maximum
Maturity
Articles of Consumers' Durable Goods
(Whether New or Used)
in Months
firoup A
I. Automobiles (passenger cars designed for
the purpose of transporting less than 10
15
passengers, including taxicabs) ..
2. Motorcycles (two or three-wheel motor
15
vehicles, including motor bicycles) ..
Maximum Credit
Value in per cent
of Basis Price
(See Part 3 of this
Supplement)
AMENDMENT NO. 3 TO REGULATION W
3
i\Iaximum
Maturity
in Munth.s
M axirnum Credit
r alue in per cent
of Ba.sis Price
Art£cles of Consumer.~' Durable Good.~
(Whether New or l'.~ed)
Group B
1. Aircraft (including ~~:liders).
. ..... .
2. Power driven boats, and motors dPsi~~:ned
for usc therein. other than boats or
motors designed specifically for commercial use
.................. .
3. Outboard boat motors ............. .
*4. Bicycles ........................... .
Group C
1. Mechanical refrigerator~ of less than 12
cubic feet rated capacity .............. .
2. Washing machines designed for household
use . . . . . . . . . . . . . . . . .
. .....
3. Ironers dPsigned for household use
4. Suction cleaners designed for household use
5. Cooking stoves and ranges designed for
household usc
6. Heating stoves and space heaters designed
for household use .................... .
7. Electric dishwashers dcsi~tned for household use . . . . . . .
. ......... .
8. Room-unit air conditioners
.... .
9. Sewing machines designed for household
use
............
. ......... ..
10. Radio recei\·ing sets. phonographs, or combinations
11. Musical instruments composed principally
of metals
.
·*12. Lawn mowers. mower-type edgers and trimmers (whether or not power-driven).
*13. Silverware (flatware and hollow ware,
whether solid or plated) ............. .
*14. Clocks. electric or other. designed for
household or personal use. and watches
*15. Motion picture cameras. projectors, and
lenses. designed for film gauges less than
35 mm.; still cameras. projectors, lenses
and shutters, and enlargers ............ .
Group D
1. Household furnaces and heating units for
furnaces (including oil burners, gas conversion burners. and stokers) ..... .
2. Water heaters designed for household use.
3. Water pumps designed for household use ..
4. Plumbing and sanitary fixtures designed for
household use . . . . . . . . . . . . . . . . . . . . .. .
5. Home air conditioning systems .......... .
6. Attic ventilating fans. . . . . . .... .
7. New household furniture (including ice refrigerators, bed springs, and mattresses
but excluding floor coverings. wall coverings. draperies. and bed coverings) 1 . . . . .
8. Pianos and household electric organs.
*9. Floor coverings (including fabric and linoleum type ru~ts. carpets. mats. and other
floor coverin~t materials. whether or not
designed to be affixed to the floor) .
An article is not new if it has been used bv a consumer.
• Added by Amendment No. 3, effective Marrh 23, 1942.
1
15
66-2/3
15
15
15
66-2/3
66-2/3
66-2/3
15
66-2/3
15
15
15
66-2/3
66-2/3.
66-2/3
15
80
15
80
15
15
66-2/3
66-2/3
15
66-2/3
15
66-2/3
15
66-2/3
15
66-2/3
15
66-2/3
15
80
15
66-2/3
18
18
18
80
18
15
15
80
66-2/3
66-2/3
15
90
18
15
80
80
90
80
4
AMENDMENT NO. 3 TO REGULATION W
Maximum
Maturity
Articles of Con.sumers' Durable Good.s
(Whether New or Used)
in Months
GroupE
1. Materials and sen·ice~ (other than materials. whether or not designed for household use. which are of the kinds listed in
Group C or D) in connection with repairs. alterations. or improYements upon
urban. suburban or rmal real property in
connection with existing structures (other
than a structure, or a distinct part
thereof, which. as so repaired. altered or
improYed, is designed exclusiYely for nonresidential use). provided the deferred
balance does not exceed $1.000 ......... .
18
Maximum Credit
Value in per cent
of Basis Price
No limitation
Part 2. Basis Price of Listed Articles Other Than Those in Group A.The basis price of any li~t.ed article. other than an automobile or other article
listed in Group A. shall be the bona fide cash purchase price of the article and accessories purchased mittUN the amount of any allowance made by the seller for any
article traded in by the purchaser (including as such a trade-in anything which
the seller buys or arranges to han bought from the purchaser at or about the
time of the purchase of the listed article).
Part 3. Maximum Credit Value of Automobiles and Motorcycles.-For
the purpose of the regulation:
(a) The maximum credit value of a new automobile or a new or used motorcycle shall be 66% per cent of the bona fide cash purchase price.
(b) t The maximum credit Yalue of a used automobile shall be 66% per cent
of whichever is the lower of the following two figures:
(1) the bona fide cash purchase. price; or
(2) the "appraisal guide value" plus any applicable sales taxes.
"Appraisal guide Yalue" means the ('stimated average retail value as stated in
such edition of any regularly published automobile appraisal guide as the Board
may designate for this purpose for use in the territory in which such used automobile is sold. Information as to the guide or guides designated for any given
territory may be obtained from any Federal Reserye Bank or branch.
Part 4. Cash· Purchase Price.-For the purposes of the Supplement:
(a) The bona fide cash purchase price of an article includes that of any accessories. and it also includes any applicable sales taxes and any bona fide delivery
and installation charges; and
(b) In the caRe of any article or accessory for which the Federal price authorities have prescribed a maximum retail price, the maximum credit value shall in
no ennt exceed that resulting from !! bona fide cash purchase price equal to
the total of such maximum retail price and any applicable sales taxes not included therein.
Part 5. Instalment Loan Credit Subject to Section 5(b) of the Regulation.
-The maximum maturity of any extension of instalment loan credit of $1,500
or Jess subjeet to section S(b) of the Regulation shall be 15 months.
t Thi" provision is pffeetive on and aftpr April I, 1942. Prior to that date the maximum
credit value of a used automobile shall be 66% per cent of the bona /ide cash purchase price.
@FedFRASER