View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.


Dallas, Texas, May 5,1942

To all Banking Institutions in the
Eleventh Federal Reserve District:
There is enclosed a press statement issued by the Board
of Governors of the Federal Reserve System pertaining to
Regulation W, which has been revised effective May 6, 1942.
The press statement gives a brief digest of the revision which,
as will be observed, includes several fundamental changes.
The entire regulation is being reprinted so as to include
all amendments, and a copy will be mailed to your institution
on May 7.

Yours very truly,

'B O N D S

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

F ederal





For release in morning newspapers of Wednesday, May 6, 1942
“In conformity with the President’s special message to Congress of April 27 and
under authority of Executive Order No. 8843 of August 9, 1941, the Board of Governors
of the Federal Reserve System has adopted, effective May 6, 1942, Amendment No. 4 of
Regulation W relating to consumer credit.
“As amended, the regulation is extended to cover a comprehensive list of durable
and semi-durable goods for civilian consumption, and contemplates that the volume of
outstanding consumer credit, already substantially diminished, will be further contracted
in keeping with the Government’s purpose to prevent the rapid bidding up of prices. The
purpose of this revision is to help make effective the last point in the 7-point program
which the President set forth in his special message to Congress of April 27, 1942, as
“ ‘To keep the cost of living from spiraling upward, we must discourage
credit and instalment buying, and encourage the paying off of debts, mortgages,
and other obligations; for this promotes savings, retards excessive buying and
adds to the amount available to the creditors for the purchase of war bonds.’
“The principal changes made in the regulation are:
1. The list of consumers’ goods to which the regulation applies has been broad­
ened to include automobile batteries and accessories, tires and tubes; bedding;
draperies; binoculars; household electric appliances not hitherto listed; used furni­
ture; jewelry; luggage; athletic equipment; table and kitchenware; pottery, glass­
ware; yard goods; and non-military clothing and furs, including shoes, hats and
other haberdashery. The full list is attached with the additions indicated by an
2. The maximum permissible m aturity of instalment sales has been reduced
to 12 months, and the required down payment for all listed articles has been increased
to SSi/f) per cent. Exceptions to this rule include instalment sales of automobiles, for
which the down payment of one-third and the maximum m aturity of 15 months are
retained, and furniture and pianos, for which the required down payment, formerly
10 per cent, becomes 20 per cent, the maximum maturity being 12 months.
3. The scope of the regulation has been broadened to make it cover, in addition
to instalment sales and instalment loans, charge-account sales of listed articles and
single-payment consumer loans. The regulation provides with respect to charge
accounts th at unless payment is made by the tenth day of the second calendar month
following the purchase, no further credit may be extended to purchase any listed
article until the items in default have been paid for in full or have been placed on
an instalment basis for payment within 6 months. No down payments are required
on purchases in charge accounts.

4. Single-payment loans of $1,500 or less are limited to a m aturity of 90 days,
and where such a loan is to purchase a listed article costing $15.00 or more, a down
payment is also required. If not paid in 90 days, the loan must be placed on an instal­
ment basis.
5. The revised regulation provides th at instalment payments shall not be less
than $5.00 per month or $1.25 per week.
“The exemption from down payment requirements of instalment sales maturing
within 3 months has been repealed.
“Provisions covering seasonal adjustments and so-called farmer plans are retained
in the regulation, together with various additional exceptions, such as real estate loans;
security loans subject to Regulations T and U ; educational, hospital, medical, dental, and
funeral expenses; aircraft; defense housing; credit to dealers; fire and casualty insur­
ance premiums; agricultural production loans; business loans; insurance policy loans;
and extensions of credit to the Federal Government, to local governments, or to any
hospital, school, college, or other educational or charitable institution.
“Copies of the regulation are being printed at each of the Federal Reserve banks
and will be distributed by them throughout the country within a few days. Any inquiries
with respect to the regulation should be addressed to the Federal Reserve bank of the
district in which the inquiry originates.”


Group A—One-third down and twelve months’ maximum maturity:


Air conditioners, room unit
Air conditioning systems, home
Aircraft (including gliders)
Attic ventilating fans

* 5. Automobile batteries and accessories
* 6. Automobile tires and inner tubes, for passenger automobiles
* 7. Bedding, blankets, curtains, draperies, and household linens and
8. Bicycles
* 9. Binoculars, field glasses, opera glasses, and hand telescopes
10. Boats, and inboard and outboard motors designed for use there­
with, other than boats or motors designed specifically for com­
mercial use
11. Clocks, electric or other, designed for household or personal use
12. Cooking stoves and ranges, designed for household use
13. Dishwashers, electric, designed for household use
*14. Electric appliances, not elsewhere listed, designed for household
or personal use
15. Floor coverings (including fabric and linoleum type rugs, carpets,
mats, and other floor covering materials, whether or not designed
to be affixed to the floor)
16. Furnaces and heating units for furnaces, household (including oil
burners, gas conversion burners, and stokers)
17. Heating stoves and space heaters, designed for household use
18. Ironers designed for household use
*19. Jewelry (including precious stones and costume jewelry)
20. Lamps designed for household use
21. Lawn mowers, edgers, and trimmers (whether or not powerdriven)
*22. Lighting fixtures designed for household use
*23. Luggage, purses, handbags, toilet cases, and umbrellas
24. Motion picture cameras, projectors, and lenses, designed for film
gauges less than 35 mm.; still cameras, projectors, lenses and
shutters, and enlargers
25. Musical instruments not elsewhere listed
*Added effective May 6, 1942.

26. Household electric organs
27. Plumbing and sanitary fixtures designed for household use
*28. Portable lights, and portable or stationary flood-lighting equip­
ment, designed for household use
29. Radio receiving sets, phonographs, or combinations
30. Refrigerators, mechanical, of less than 12 cubic feet rated capacity
31. Sewing machines designed for household use
32. Silverware (including flatware and hollow ware, whether solid
or plated)
*33. Sports’, athletic, outing, and games’ equipment
34. Suction cleaners and mechanical carpet sweepers, designed for
household use
*35. Tableware and kitchen ware, equipment, and utensils, designed for
household use (including pottery, porcelain, chinaware, glassware,
and cutlery)
36. Washing machines designed for household use
37. Watches
38. W ater heaters designed for household use
39. W ater pumps designed for household use
*40. Wearing apparel and furs, non-military (including footwear, head­
wear, and haberdashery)
*41. Yard goods designed for making garments or for making articles
of household use
Group B—20 per cent down and 12 months’ maximum m aturity:
1. Furniture, household (including ice refrigerators, bed springs,
and mattresses)
2. Pianos
Group C—12 months’ maximum m aturity:
1. Materials and services (other than articles, whether or not
designed for household use, which are of kinds elsewhere listed)
in connection with repairs, 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 non-residential use), provided the deferred balance does not
exceed $1,500
Group D—Maximum maturity 15 months; for down payment requirement
see section 13(c):
1. Automobiles (passenger cars designed for the purpose of trans­
porting less than 10 passengers, including taxi-cabs)
2. Motorcycles (two or three-wheel motor vehicles, including motor
*Added effective May 6, 1942.

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