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F ederal

r e s e r v e

Ban k

OF DALLAS

Dallas, Texas, March 7,1942

IMPORTANT CHANGES IN REGULATION W

To the Addressee:
There is enclosed a copy of Amendment No. 3 to Regulation W issued by the Board
of Governors of the Federal Reserve System. This amendment, which becomes effective
March 23, 1942, changes several provisions of the original regulation which became effec­
tive September 1, 1941, and also affects amendments No. 1 and No. 2.
Primarily, the amendment changes the Supplement to the regulation in the following
respects: first, it increases the required down payments and shortens the maximum
maturities specified for many articles already subject to the regulation; and second, it
adds to the number of listed articles. Thus, some dealers who have not been subject to the
regulation heretofore are now affected by i t ; other dealers who are already subject to the
provisions of the regulation with respect to certain articles handled by them may be
further affected as a result of the additions to the “ listed articles” ; and practically all
dealers in “ listed articles” will be affected by the increases in required down payments
and the shortening of maximum maturities. Cash lenders are also affected.
The standard maturity is reduced from 18 to 15 months for all credits subject to the
regulation, except credits for building modernization, plumbing, furnaces, water heaters,
water pumps, and pianos, all of which may be for 18 months as heretofore.
The down payments are increased from 20 per cent to 33 % per cent on refrigerators,
washing machines, ironers, vacuum cleaners, electric dishwashers, room-unit air con­
ditioners, 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 cent to 33/3 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 3 3 / per cent down payment required:
Bicycles
Lawn mowers

Silverware
Photographic equipment

The following are added to the list, with 20 per cent down payment required:
Clocks

Watches
Floor coverings

On and after April 1, the credit value of a used automobile, instead of being based
solely upon the purchase price, is to be based upon the purchase price or the average
retail value as stated in such automobile appraisal guides as may be designated by the
Board of Governors, whichever is lower. Automobile dealers and financing institutions will
be informed prior to April 1 as to the appraisal guide or guides designated for use in
this district.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

The maximum maturity of any extension of instalment loan credit of $1,500 or less
subject to section 5(b) of the regulation is reduced from 18 to 15 months.
Persons who become subject to the regulation on and after March 23 because of the
addition of articles to the list are given until June 1 to register. Prior to June 1 they are
granted a general license. Registration is accomplished by filling out Form F. R. 563-a
and filing it with the Federal Reserve Bank (head office or branch) of the district in which
the Registrant is located. Present holders of registration certificates are not required
to register again.
A copy of the original regulation, together with previous amendments and registration
statement forms, is being furnished all addressees who have not heretofore filed registra­
tion statements with this bank. It is contemplated that the entire regulation will be
reprinted in the near future so as to eliminate those provisions that have been superseded
and to incorporate current additions. When this has been done, each Registrant will be
furnished a copy of the revised regulation.
Member banks of the Federal Reserve System are requested to insert this amend­
ment in their ring binders.
Yours very truly,
R. R. GILBERT
President

AMENDMENT NO. 3 TO REGULATION W
IS S U E D B Y T H E B O A R D OF G O V E R N O R S OF T H E F E D E R A L R E S E R V E S Y STE M

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.— Whenever this 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 pay­
ment 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 b o n a fid e 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 activity in respect
of which a preference rating of A-10 or higher is in force for deliveries of
civil aircraft;

5. Section 6 (j ) is stricken out and the following new provision is
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 which is made to a person engaged
in agriculture, or to a cooperative association of such persons, provided that
the extension of instalment loan credit (1) is made by the Land Bank Com­
missioner on behalf of the Federal Farm Mortgage Corporation and is found,
pursuant to regulations issued by the Commissioner, to be necessary to main­
tain or increase production of essential agricultural commodities, or (2) is
approved by the Farm Security Administrator, or his authorized agent, as
being necessary for the rehabilitation of a needy farm family, or (3) is for
general 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

AM ENDM ENT NO. 3 TO REGULATION W

7. The following footnote is added to section 8(a), and the footnote
reference4 is inserted after the word “ credit” immediately before the
proviso of the section:
4 If there should be any arrearage which does not arise out of any prear­
rangement or plan to evade this regulation, the arrearage may be divided
equally among and added to the remaining payments scheduled for the liqui­
dation 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 1. 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: P r o v id e d , That, in order to
schedule payments at approximately equal intervals, the consolidated obliga­
tion 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 shall 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 effective September 20, 1941; Amendment N o. 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 1. Listed Articles, Maxim um Maturities, and M axim um Credit
Values.— For the purposes of the regulation the following maximum maturi­
ties and maximum credit values shall apply to the following list of articles:

A r tic le s o f C o n su m ers’ D u r a b le G o o d s
( W h e t h e r N e w o r U sed )
G rou p A

M a x im u m
M a tu r ity
in M o n th s

1. Automobiles (passenger cars designed for
the purpose of transporting less than 10
passengers, including taxicabs).......................
2. Motorcycles (two or three-wheel motor
vehicles, including motor bicycles)........

15
15

M a x im u m C red it
V a lu e in p e r c e n t
o f B asis P r ic e

(See Part 3 of this
Supplement)

3

A M ENDM ENT NO. 3 TO REGULATION \V

A r tic le s o f C o n su m ers' D u r a b le G o o d s
( W h e t h e r N e w o r U sed )

M a x im u m
M at writ y
in M o n th s

M a x im u m C red it
V a lu e in p e r cen t
o j B asis P rice

G rou p B

1. Aircraft (including gliders).............................
2. Power driven boats, and motors designed
for use therein, other than boats or
motors designed specifically for commer­
cial use ...............................................................
3. Outboard boat motors......................................
*4. Bicycles .................................................................

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
80
80

18
15
15

80
66-2/3
66-2/3

15
18

90
90

15

80

G rou p C

1. Mechanical refrigerators of less than 12
cubic feet rated capacity.............................
2. Washing machines designed for household
use .......................................................................
3. Ironers designed for household use ............
4. Suction cleaners designed for household use
5. Cooking stoves and ranges designed for
household use ................................................
6. Heating stoves and space heaters designed
for household use............................................
7. Electric dishwashers designed for house­
hold use .............................................................
8. Room-unit air conditioners.........................
9. Sewing machines designed for household
use .......................................................................
10. Radio receiving sets, phonographs, or com­
binations ...........................................................
11. Musical instruments composed principally
of metals ...........................................................
*12. Lawn mowers, mower-type edgers and trim­
mers (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 m m .; still cameras, projectors, lenses
and shutters, and enlargers.........................
G rou p D

1. Household furnaces and heating units for
furnaces (including oil burners, gas con­
version 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 re­
frigerators, bed springs, and mattresses
but excluding floor coverings, wall cover­
ings. draperies, and bed coverings)1........
8. Pianos and household electric organs..........
*9. Floor coverings (including fabric and lino­
leum type rugs, carpets, mats, and other
floor covering materials, whether or not
designed to be affixed to the floor)..........
1 An article is not new if it lias been used by a consumer.
* Added by Amendment No. 3, effective March 23, 1942.

4

A M ENDM ENT NO. 3 TO REGULATION W

A r tic le s o f C o n s u m e r s ’ D u r a b le G o o d s
{Mrh e th e r N e w o r U sed )
G rou p E

1. Materials and services (other than mate­
rials. whether or not designed for house­
hold use, which are of the kinds listed in
Group C or D ) in connection with re­
pairs, alterations, or improvements upon
urban, suburban or rural real property in
connection with existing structures (other
than a structure, or a distinct part
thereof, which, as so repaired, altered or
improved, is designed exclusively for n o n resid en tia l use), provided the deferred
balance does not exceed $1,000...................

M a x im u m
M a tu r ity
in M o n th s

18

M a x im u m C red it
V a lu e in p e r c e n t
o f B asis P r ic e

No limitation

Part 2. Basis Price o f Listed Articles Other Than Those in Group A.—
The basis price of any listed article, other than an automobile or other article
listed in Group A. shall be the b on a fid e cash purchase price of the article and ac­
cessories purchased m in us 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 have bought from the purchaser at or about the
time of the purchase of the listed article).
Part 3 . M axim um Credit Value o f Automobiles and Motorcycles.— For
the purpose of the regulation:
(a) The maximum credit value of a new automobile or a new or used motor­
cycle shall be 66% per cent of the b on a fid e cash purchase price.
( b ) t The maximum credit value of a used automobile shall be 66% per cent
of whichever is the lower of the following two figures:

(1) the b o n a fide cash purchase price; or
(2) the “appraisal guide value” plus any applicable sales taxes.
“ Appraisal guide value” means the estimated 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 automo­
bile is sold. Information as to the guide or guides designated for any given
territory may be obtained from any Federal Reserve Bank or branch.
Part 4 .

Cash Purchase Price.— For the purposes of the Supplement:

(a) The b on a fide cash purchase price of an article includes that of any acces­
sories. and it also includes any applicable sales taxes and any b on a fid e delivery
and installation charges; and
( b ) In the case of any article or accessory for which the Federal price authori­
ties have prescribed a maximum retail price, the maximum credit value shall in
no event exceed that resulting from a b o n a fid e cash purchase price equal to
the total of such maximum retail price and any applicable sales taxes not in­
cluded therein.
Part 5. Instalment Loan Credit Subject to Section 5 ( b ) o f the Regulation.
— The maximum maturity of any extension of instalment loan credit of $1,500
or less subject to section 5(b) of the Regulation shall be 15 months.
v This provision is effective on and after April 1. 1942. Prior to that date the maximum
credit value of a used automobile shall he 66% per cent o f the bona fid e cash purchase price.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102