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FEDERAL RESERVE BANK
OF DALLAS
Dallas, Texas, August 26,1941
CONSUMER CREDIT
To all Banking Institutions in the
Eleventh Federal Reserve District:
There are enclosed a few copies of Regulation W of the Board of Governors of the Federal
Reserve System pertaining to consumer credit, which, except for certain provisions, becomes effective
September 1, 1941. The Regulation has been issued under the authority of the President’s Executive
Order No. 8843, dated August 9, 1941, referred to in our circular letter of August 19.
The Regulation prescribes instalment credit terms applicable to a list of twenty-four types of
consumers’ durable goods and to certain instalment loans. It permits an eighteen months period for
repayment and provides for minimum down payments on listed articles.
Inasmuch as the Regulation will affect most banks and many of their customers, it is desired
to make it available at all banks for the convenience of their customers. If additional copies are
needed, they will be gladly furnished upon request. A supply of the registration forms referred to
in the Regulation will be forwarded to your bank as soon as they are available.
Any information your bank may desire with respect to the Regulation will be furnished as
promptly as possible. If your bank is located in the territory served by our head office, inquiries
should be addressed to this office; otherwise, inquiries should be addressed to the branch office
serving the territory in which your bank is located.
Member banks of the Federal Reserve System are requested to insert a copy of the Regulation
in their ring binders.
Yours very truly,
R. R. GILBERT
President
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
INQUIRIES REGARDING THIS REGULATION
Any inquiry relating to this regulation should be addressed
to the Federal Reserve Bank or Federal
Reserve branch bank o f the district
in which the inquiry arises^
FOREWORD
(Not a part of the regulation)
R egu lation W has been adopted b y the B oa rd o f G overnors in order
to carry out the P residen t’s E xecutive Order o f A ugust 9, 1941, which
sets forth the necessity fo r and purpose o f regulation o f consum er credit,
as fo llo w s:
1. A large volu m e o f credit is being d evoted to financing and re
financing purchases o f consum ers’ goods and services through exten
sions o f credit that u su ally are m ade to individuals and to a large
extent are on an instalm ent p a ym en t basis.
2. T h e conditions under w hich such credit is available h ave an
im portan t influence upon the volu m e and tim in g o f dem and, n ot on ly
fo r the particular goods and services purchased on credit but also for
goods and services in general.
3. L iberal term s for such credit tend to stim ulate dem and fo r co n
sum ers’ durable goods the p rodu ction o f w hich requires m aterials,
skills, and equipm ent needed for national defense.
4. T h e extension o f such credit in excessive volu m e tends to generate
inflationary developm ents o f increasing consequence as the lim its of
p rod u ctiv e ca p a city are approached in m ore and m ore fields and to
hinder the accum ulation o f savings available fo r financing the defense
program .
5. T h e p u blic interest requires con trol o f the use o f instalm ent credit
fo r financing and refinancing purchases o f consum ers’ durable goods
the p rodu ction o f w hich absorbs resources needed for national defense,
in order (a ) to facilita te the transfer o f prod u ctive resources to d e
fense industries, (b ) to assist in curbing unw arranted price advances
and profiteering which tend to result when the supply o f such goods
is curtailed w ithout corresponding curtailm ent o f dem and, (c ) to
assist in restraining general inflationary tendencies, to support or
supplem ent taxation im posed to restrain such tendencies, and to p ro
m ote the accum ulation o f savings available for financing the defense
program , (d ) to aid in creating a b a ck lo g o f dem and for consum ers’
durable goods, and (e ) to restrain the developm en t o f a consum er debt
structure that w ould repress effective dem and for goods and services
in the post-defense period.
6. In order to prevent evasion or a void a n ce o f this order and such
regulations as m ay be prescribed to effectuate its purposes, means
should also be available for regulating the use o f other instalm ent credit
and other form s o f credit usually extended to consum ers or on con
sum ers’ durable goods.
7. It is appropriate that such cred it be controlled and regulated
through an existing governm ental a gen cy w hich has prim ary respon
sibilities with respect to the determ ination and adm inistration o f na
tional credit policies.
R egu lation W is issued in the light o f the foregoing considerations
and as a step supplem enting m ore fundam ental governm ental measures
designed to co m b a t inflationary developm ents.
T h e re w ill he changes from tim e to tim e in this regulation, p a rticu
la rly in the list o f consum ers’ durable goods covered b y the regulation,
in the size of-th e m inim um dow n paym ents required, and in the m a xi
m um length perm itted for instalm ent contracts.
A n y in q u iry relatin g to this regu lation sh ou ld he addressed to the
F ed era l R eserve B ank o r th e F ed era l R eserve b ra n ch b a n k o f the
d istrict in w h ich the in q u iry arises.
REGULATION
W
C O N S U M E R C R E D IT
CONTENTS
Sec .
Sec .
1. S cope
of
R egulation ..................................................................................
Page
5
2. D efinitions .....................................................................................................
(a) Person.................................................................................................
(b) Extension of credit...........................................................................
(c) Extension of instalment credit.......................................................
(d) Extension of instalment sale credit...............................................
(e) Extension of instalment loan credit..............................................
Sec . 3. R egistration and G eneral R equirements ........................................
(a) General requirements.......................................................................
(b) General license...................................................................................
(c) Registration.......................................................................................
(d) Suspension of license........................................................................
Sec . 4. I nstalment Sale C redit ............................................................................
(a) Maximum amount of credit...........................................................
(b) Maximum maturity..........................................................................
(c) Amounts of payments......................................................................
(d) Intervals of payments......................................................................
(e) Minimum monthly payment..........................................................
(/) Statement of transaction............................................................■•
(g)
Credit of which a part arises out of sale of a listed article.. . .
Sec . 5. I nstalment L oan C r e d it ..........................................................................
(a) Loans secured by listed article......................................................
(b) Miscellaneous loans of $1,000 or less...........................................
(c) General requirements......................................................................
(d) Determining when listed article purchased.................................
Sec . 6. C ertain E xceptions ....................................................................................
Sec . 7. E nforceability of C ontracts .................................................................
Sec . 8. R enewals , R evisions , and A dditions ...................................................
(a) Renewals or revisions......................................................................
(b) Additions to outstanding credit....................................................
(c) Credit to retire obligations held elsewhere.................................
(d) Statement of necessity to prevent undue hardship...................
(e) Obligations outstanding on September 1, 1941...........................
(/) Side loan to make down-payment on listed article...................
( g ) Evasive side agreements..................................................................
Sec . 9. M iscellaneous P rovisions ........................................................................
(a) Clerical errors....................................................................................
(b) Calculating maximum maturity of contract...............................
(c) “ Lay-away” plans............................................................................
(d) Outstanding contracts.....................................................................
(e) Payments arising out of loans on instalment obligations.........
(/) Determining security for instalment loan credit.......................
(g) Records and reports.........................................................................
(h) Production of records.......................................................................
(i) Transactions outside UnitedStates...............................................
(j ) Right of registrant to impose stricter requirements..................
Sec . 10. E ffective D ate of R egulation .............................................................
Supplement ......................................................................................................................
Part 1. Listed articles, maximum maturities, and maximum credit values.
Part 2. Basis price of listed articles other than automobiles........................
Part 3. Maximum credit value of automobiles................................................
Part 4. Instalment loan credit subject to section 5(b) of the regulation...
A ppendix
Executive Order
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REGULATION
W
CONSUMER CREDIT
SECTION 1. SCOPE OF REGULATION
T h is regulation is issued b y the B oard o f G overnors o f the F ederal
R eserve System (hereinafter called the “ B o a r d ” ) under authority o f
section 5 (b ) o f the A c t o f O ctober 6, 1917, as am ended, and E xecutive
Order N o. 8843, dated A ugust 9, 1941 (hereinafter called the “ E xecu
tive O rder” ).1
T h e regulation applies, in general, to an y person who is engaged
in the business o f m aking extensions o f instalm ent credit, or o f dis
counting or purchasing obligations arising out o f extensions o f in stal
m ent credit.
It applies whether the person so engaged is acting as
p rin cipal, agent, broker or otherwise, and w hether the person is a
bank, loan com p an y, or finance com p a n y, or a person who is so engaged
in connection with an y other business, such as b y m aking such exten
sions o f credit as a dealer, retailer, or other person in con nection with
the selling o f consum ers’ durable goods.2
SECTION 2. DEFINITIONS
F or the purposes o f this regulation, unless the context otherwise
requires:
(a ) “ P erson ”
m eans
an
individual,
partnership,
association,
or
corporation.
( b ) “ E xtension o f C redit” means any loan or m ortga ge; an y in
stalm ent purchase contract, any con ditional sales contract, or any
sale or con tract o f sale under which part or all o f the price is p a ya b le
subsequent to the m aking o f such sale or co n tra ct; any rental-purchase
con tract, or an y con tra ct for the bailm ent or leasing o f p rop erty under
w hich the bailee or lessee either has the option o f bocom ing the owner
th ereof or obligates him self to p a y as com pensation a sum substantially
equivalent to or in excess o f the valu e th e r e o f; an y con tract creating
an y lien or sim ilar claim on p rop erty to be discharged b y the p a y
m ent o f m o n e y ; an y purchase, discount, or other acquisition o f, or
an y extension o f credit upon the security o f, any obligation or claim
arising out o f any o f the foreg oin g ; and any transaction or series o f
transactions having a sim ilar purpose or effect.
1 The Executive Order is printed in the Appendix. However, it has been the purpose to couch
this regulation in such terms as will eliminate the need ofxcross reference to the Order.
2The Supplement to this regulation lists the consumers’ durable goods within the scope of the
regulation.
5
6
REGULATION W
(c ) “ Extension o f Instalment Credit” m eans an extension o f credit
w hich the oblig or undertakes to repay in tw o o r more scheduled p a y
ments or as to which the obligor undertakes to m ake tw o or m ore
scheduled paym ents or deposits usable to liquidate the credit, or which
has a sim ilar purpose or effect.
{d) “ Extension o f Instalment Sale Credit” m eans an extension
o f instalm ent credit which is m ade, as principal, agent or broker, b y
an y seller o f any consum ers’ durable good specified in the Supplem ent
to this regulation (hereinafter called a “ listed a rticle” ) and arises
out o f the sale o f such listed article. F or the purposes o f this section
2 (d ) a lease or bailm ent which is sim ilar in purpose or effect to a sale
shall be deem ed to be a sale.
(e) “ Extension o f Instalment Loan Credit” means an extension
o f instalm ent credit, other than instalm ent sale credit, which is a
loan (as distinguished from other typ es o f extensions o f cred it) and
which (1) is in a principal am ount o f $1,000 or less, or (2 ) regardless
o f am ount, is w h olly or partly secured, or a ccordin g to any oral or
written agreem ent o f the parties is to becom e so secured, b y any
listed article which has been purchased within 45 days prior to, or
is to be purchased at any tim e after, such extension o f instalm ent
cred it; but the definition does not include any loan upon the s e
cu rity o f any obligation or claim which arises out o f any extension
(A ) o f instalm ent sale credit or (B ) o f instalm ent loan credit as d e
fined above in this section 2 ( e ) .
SECTION 3. REGISTRATION AND GENERAL REQUIREMENTS
(a ) General Requirements. — N o person engaged in the business
o f m aking extensions o f instalm ent sale c r e d it 3 or instalm ent loan
credit, or engaged in the business o f lending on the security o f or dis
counting or purchasing obligations or claim s arising out o f such ex
tensions o f credit, shall m ake any p a ym en t or receive an y paym en t
w hich constitutes or arises d irectly or in directly ou t o f any such exten
sion o f credit m ade b y such person or ou t o f any such obligation or
claim lent on or discounted or purchased b y such person, except
on the follow in g con ditions:
(1) Such person shall be licensed pursuant to this section (a n y
person so licensed being hereinafter called a “ R egistran t” ) ; and
(2 ) T he R egistrant shall not m ake an y such paym en t or re
ceive any such paym en t (A ) if, when the R egistrant m ade the
extension o f instalm ent credit, the R egistrant knew or had reason
3 It is to he noted that the term “ instalment sale credit” includes only credit connected with
the sale of listed articles.
REGULATION W
7
to k n ow an y fact b y reason o f which such extension o f instalm ent
credit failed to co m p ly with any o f the requirements o f this regu
lation applicable thereto, or (B ) if, when the R egistrant purchased
or discounted the obligation or claim or accepted the obligation
or claim as collateral, the obligation or claim showed on its face
som e failure to co m p ly with such requirem ents, or the R egistrant
knew any fa ct b y reason o f which the extension o f instalm ent
credit giving rise to the obligation or claim failed to com p ly with
such requirem ents, or (C ) if, when the R egistrant renewed, re
vised, or con solidated the obligation or claim arising out o f an
extension o f instalm ent credit, the R egistrant knew or had reason
to know any fa ct b y reason o f w hich such renewal, revision or
con solidation resulted in a failure to com p ly with such require
ments.
( b ) G en eral L icen se.— A general license is h ereby granted to all
persons engaged on or before D ecem ber 31, 1941 in the typ e o f business
described in section 3 (a ) ; P rovid ed , h ow ever, T hat such general license
term inates at the close o f D ecem ber 31, 1941 for every person who
has not registered on or before that date in the manner provid ed in
section 3 ( c ) . A fter D ecem ber 31, 1941, any person, w hose license
is not suspended, m a y becom e licensed b y registering in the m anner
provid ed in section 3 ( c ) .
(c ) R egistration.— R egistration as required b y this section 3 m a y
be accom plished b y filing, with the F ederal Reserve B ank o f the
district in w hich the main office o f the R egistrant is located, a regis
tration statem ent on form s obtainable
from
an y Federal Reserve
B an k or branch.
(d ) Suspension o f L icen se— T h e license o f any R egistran t m ay,
after reasonable notice and op p ortu n ity fo r hearing, be suspended b y
the B oard, either in its entirety or as to particular activities or p a r
ticu lar offices or for specified periods, on any o f the follow in g grounds:
(1) A n y m aterial m isstatem ent or om ission w illfu lly or negli
gently m ade in the registration statem ent;
(2) A n y w illful or negligent failure to com p ly with any provision
o f this regulation or any requirem ent o f the B oa rd pursuant thereto.
A license -which is suspended fo r a specified period will again becom e
effective upon the expiration o f such period.
A license which is sus
pended indefinitely m ay be restored b y the B oard, in its discretion, if
the B oard is satisfied that its restoration w ould not lead to further
violation s o f this regulation and w ould n ot be otherwise in com patible
w ith the public interest.
8
REGULATION W
SECTION 4.
INSTALMENT SALE CREDIT
E xcept as otherwise perm itted b y section 6, any extension o f instal
m ent sale credit shall com p ly with the follow in g requirem ents:
(a ) M axim um
A m ount
of
C redit.— T he
deferred
balance
shall
n ot exceed the m axim um credit valu e o f the listed article specified in
th e Supplem ent to this regulation
m en t” ) ;
( b ) M axim u m
M aturity.— T h e
(hereinafter called the “ Supple
m aturity
shall
n ot
exceed
that
specified for the listed article in the Supplem ent;
(c ) A m ou nts o f Paym ents.— E xcept as perm itted b y section 4 ( d ) ,
the instalm ents in which the tim e balan ce is repayable shall be su b
stan tially equal in am ount or be so arranged that no instalm ent is
substantially greater in am ount than an y preceding instalm ent;
( d ) Intervals
of
P aym ents.— T h e
instalm ents
shall
be
p a ya b le
at approxim ately equal intervals not exceeding one m onth,, except
th at, when appropriate for the purpose o f fa cilita tin g repaym ent in
accordan ce with the seasonal nature o f the o b lig o r’s m ain source o f
in com e or to encourage off-seasonal purchases o f seasonal goods, the
p aym en t schedule m a y reduce or om it paym ents ov er an y period
or periods totalin g n ot m ore than 4 m onths during the life o f such
extension o f instalm ent sale credit if the schedule increases the sched
uled paym ents in such manner as to m eet all the other requirem ents o f
this section 4 ;
* (e) M in im u m M on th ly P aym en t.— -Except as perm itted b y sec
tion 4 ( d ) , the schedule o f paym ents shall call for instalments aggregat
ing not less than $5.00 per m on th ;
* * ( / ) Statem ent o f T ransaction .— T h e extension o f instalm ent sale
credit shall be evidenced b y a written instrum ent or record, and there
shall be incorporated therein or attached thereto a written statem ent,
o f which a co p y shall be given to the ob lig or as p rom p tly as circu m
stances will perm it, and which shall set forth (in an y order) the fo llo w
ing in form ation :
(1) A brief description id en tify in g the article pu rchased;
(2) T h e bona fide cash purchase price o f the article and acces
sories purchased (including any sales taxes thereon) and o f any
services (excluding any interest or finance charge and the cost o f
any insurance) rendered in connection with the acquisition thereof,
item ized ;
(3) ; T h e am ount o f the purchaser’s dow n paym en t (A ) in
cash and (B ) in goods accepted in trade, together with a brief *
* Effective January 1, 1942.
** Effective October 1-, 1941.
9
REGULATION W
description id en tify in g such goods and stating the m on etary valueassigned thereto in good fa ith ;
(4) T h e deferred balance, w hich
is the
difference betw een
items (2) and ( 3 ) ;
(5 ) T he am ount o f any insurance prem ium fo r which credit
is extended and o f any finance charges or interest b y w a y of
discount included in the prin cipal am ount o f the obligation , or
the sum o f these am ounts;
(6) T he tim e balan ce ow ed b y the purchaser, w hich is the sum
tota l o f items (4 ) and ( 5 ) ; and
(7) T h e terms o f paym ent.
(p ) C redit o f W h ic h a Part A rises Out o f Sale o f a L isted A rticle .—
In case an extension o f instalm ent sale credit arises p a rtly ou t o f a
sale o f an article listed in the Supplem ent and partly out o f another
sale, the am ount and the term s o f such extension o f credit shall be such
as w ou ld result if the credit were divided into tw o parts, the part relat
ing to the listed article being treated in accordan ce with the provisions
o f this regulation relating to such article and the rem ainder being
treated in the manner in which the R egistrant w ou ld in good faith treat
a sim ilar extension o f credit if standing alone.
SECTION 5.
INSTALMENT LOAN CREDIT
E xcep t as otherwise perm itted b y section 6, an y extension o f in
stalm ent loan credit shall com p ly with the follow in g requirem ents:
(a )
L oans S ecured b y Listed A rticle .— I f the extension o f instal
m ent loan credit is w h olly or partly secured, or a ccordin g to any oral or
w ritten agreem ent o f the parties is to becom e so secured, b y an y
listed article which has been purchased w ithin 45 days prior to, or is
to be purchased at an y tim e after, such extension o f instalm ent loan
cred it:
(1 ) T h e prin cipal am ount lent to the obligor (excluding any
interest or finance charges, and the cost o f an y insurance) shall
n ot exceed the m axim um credit valu e o f the listed article speci
fied in the Supplem ent; and, in determ ining such m axim um credit
value, the R egistrant m a y accep t in good faith a written state
m ent signed b y the obligor setting forth the bona fide cash pu r
chase price o f the article and o f any accessories and o f an y serv
ices, except insurance, rendered in connection with the acquisition
thereof, w hich statem ent so accepted shall, for purposes o f this
regulation, be deem ed to be co rre ct; and
(2 ) T h e m aturity shall not exceed that specified for the listed
article in the Supplem ent, and such m axim um m aturity shall
10
REGULATION W
b e calculated from the date o f purchase o f such listed article
or from the date o f such extension o f instalm ent loan credit,
w hichever is earlier.
( b ) M iscellan eou s Loans o f $1,000 o r Less.— I f the extension o f
instalm ent loan credit is not su b ject to section 5 (a ) but is in a p rin
cipal am ount o f $1,000 or less, the m axim um m aturity shall not exceed
th at specified in the Supplem ent fo r extensions o f instalm ent loan
credit su bject to this section 5 ( b ) .
(c) G en eral R equirem en ts.— W hether su b ject to section 5 (a ) or
section 5 ( b ) , the extension o f instalm ent loan credit shall com p ly with
the follow in g additional requirem ents:
* (1 ) T h e extension o f instalm ent loan credit shall be evidenced
b y a written instrument or record, and there shall be incorporated
therein or attached thereto a written statem ent, of which a co p y
shall be given to the ob lig or as prom p tly as circum stances will
perm it, and which shall set forth the term s o f paym en t and, if
the loan is su b ject to section 5 ( a ) , the bona fide cash purchase
price used for determ ining the m axim um credit value o f the
listed article in v o lv e d ;
(2) E xcept as perm itted b y section 5 ( c ) ( 3 ) , the total o f the
principal and an y interest or finance charges shall be p a ya b le in
instalments which shall be su bstan tially equal in am ount or be
so arranged that no instalm ent is substantially greater in am ount
than an y preceding instalm ent;
(3) Instalm ents shall be p a y a b le at a p proxim ately equal in
tervals not exceeding one m onth, except that, when appropriate
in order to facilitate repaym ent in accordan ce with the seasonal
nature o f the o b lig o r’s m ain source o f incom e or to encourage
off-scason al purchases o f seasonal goods, the paym ent schedule
m ay reduce or om it paym ents over any period or periods totalin g
not m ore than 4 m onths during the life o f such extension o f
credit if the schedule increases the scheduled paym ents in such
manner as to m eet the other requirem ents o f this section 5 ; and
*® (4) E xcept as perm itted b y section 5 ( c ) ( 3 ) , the schedule o f
paym ents shall call for instalm ents aggregating not less than
$5.00 per month.
(d ) D eterm in in g W h e n L isted A rticle
P u rch ased .— In case the
R egistrant accepts in good faith a written statem ent signed b y the
oblig or that any listed article which secures an extension o f instal
m ent loan credit has not been purchased within 45 days p rior to *
* E ffective O cto b er 1, 1941.
** Effective January 1, 1942.
REGULATION IV
11
such extension o f credit such statem ent shall, for the purposes o f this
regulation, be deemed to be correct.
SECTION 6. CERTAIN EXCEPTIONS
N otw ith stan din g the prolusions o f sections 4 and 5, the requirem ents
o f such sections shall not apply to any o f the follow in g:
(n l A n y extension o f credit which is secured b y a bona fide first
lien on im proved real estate duly recorded.
(b ) A n y extension o f credit over $1,000 which is made for m aterials
and services in connection with repairs, alterations, or im provem ents
upon urban, suburban, or rural real property in connection with existing
structures, even though such m aterials include articles listed in
Cl roup C or D in the Supplem ent, provided the bona fide cash purchase
price o f such articles so listed does not exceed 50 per cent o f the total
over-all deferred balance.
(e l A n y extension o f instalment loan credit which is m ade to or for
a student for bona fide educational purposes.
(d )
A n y extension o f instalment loan credit if (11 the proceeds are
to be used for bona fide m edical, hospital, dental, or funeral expenses
and (21 the incom e o f the obligor available for the purpose is such that
he cou ld not reasonably meet the requirements o f this regulation oth er
wise ap plicable, and failure to obtain the extension o f credit would
cause undue hardship to h im ; P rovided. T hat if the Registrant accepts
in good faith a written statement signed by the obligor and setting
forth the facts relied upon to bring the loan within the exception o f
this section 6 (d l the facts set forth in such statement shall, for the
purposes o f this regulation, be deem ed to be correct.
(c l A n y extension o f credit (11 to finance the purchase o f aircraft
in order to facilitate participation in the C ivilian Pilot T ra in in g P ro
gram o f the C ivil A eronautics A u th o rity ; or (2) to remodel or rehabili
tate any dw elling or residence which the D efense H ousing C o o r d i
nator, or his authorized agent, shall designate as being for "defense
h ousin g” as defined b y the C oordinator. In form ation regarding the
procedure for obtaining such a designation m ay be obtained through
an y Federal R eserve Bank or branch.
(/I A n y extension o f instalment sale credit which is to be repaid
at approxim ately equal intervals and in approxim ately equal in stal
ments, the last o f which matures within three m onths after the first
(hiy o f the calendar month next follow in g such extension.
(i/l A ny extension o f credit to a dealer in any listed article, whether
a w holesaler or retailer, to finance' the purchase o f any such article
for resale.
(/(] A ny extension of credit which is to be repaid within not more
12
REGULATION W
than tw elve m onths and is m ade to a bona fide salesman o f a u tom o
biles in order to finance the purchase o f a new autom obile to be used
b y him prin cipally as a dem onstrator.
(i) A n y extension o f credit which is for the purpose o f financing a
prem ium in excess o f one y ea r on a fire or casualty insurance p o licy
if the proceeds are paid d irectly to the insurance agent, broker, or
com p an y issuing or underw riting the insurance and the extension o f
credit is fu lly secured b y the unearned portion o f the prem ium so
financed.
(j i A n y extension o f instalment sale credit made on or before
D ecem ber 31, 1941, which (11 does not bring above $50 the total of
the ob lig o r’s outstanding indebtedness to tbe R egistrant arising out
o f extensions o f instalm ent sale credit m ade on or after Septem ber 1,
1941, and ( 2 1 is to be repaid at approxim ately equal intervals and in
ap proxim ately equal instalm ents the last o f which m atures w ithin 9
m onths after the first d ay o f the calendar m onth next follow in g such
extension.
(7,1 A n y extension o f instalment loan credit which is m ade to a
person engaged in agriculture, or to a coop era tive association o f such
persons, provided that the extension o f instalm ent loan credit (11 is
ap p roved b y the Farm Security A dm inistrator, or his authorized
agent, as being necessary for the rehabilitation of a needy farm
fa m ily , or ( 2 1 is for general agricultural purposes and is not for the
purpose o f purchasing any listed article and not secured b y any listed
article' purchased within 45 days before the extension o f credit. In
determ ining whether a loan meets the description o f clause (2) above,
a R egistrant m a y accept in good faith a written statem ent signed b y
the obligor setting forth the facts relied upon to bring the loan within
the description, and the facts set forth in such statem ent shall, for the
purposes o f this regulation, be deemed to be correct.
SECTION 7. ENFORCEABILITY OF CONTRACTS
Pending an op p ortu n ity for the B oard to observe this regulation in
operation and except as m ay subsequently be otherwise provided, all
o f the provisions o f this regulation are designated, pursuant to section
2 (d ) o f the E xecutive Order, as being for adm inistrative purposes
within the meaning o f said section 2 (d ) which provides that non
com p lian ce with provisions o f the regulation so designated shall not
affect the right to en force contracts.
SECTION 8. RENEWALS, REVISIONS, AND ADDITIONS
*(«)
R enew als o r R evisions.— I f any obligation or claim evid en c
ing any extension o f instalment sale credit or instalment loan credit *
* EltVctiv,' Xovi-mlii-r 1, 1941.
BEGT’ L A T IO N
W
13
is renewed or revised b y a R egistrant, the extension o f instalment credit
does not com p ly with the requirements o f this regulation if such re
newal or revision has the effect o f changing the terms o f repaym ent
to terms which this regulation would not have perm itted in the first
instance for such cred it; P rovid ed , h ov'ever. T h a t this shall not p re
ven t the R egistrant from taking any such action if the R egistrant
accepts in good faith a statem ent o f necessity as provided in section
8 (d ) and the extension o f instalment credit provides for a schedule
o f repaym ent in con form ity with this regulation as though it were a
new extension o f instalment cred it; and P rovid ed further. T h a t nothing
in this regulation shall be construed to prevent any R egistrant from
m aking any renewal or revision, or taking any action that it shall
deem necessary in good faith, (1 ) with respect to any obligation o f
any mem ber o f the arm ed forces o f the U nited States incurred prior
to his induction into such service, or (2 ) for the R egistran t’s own p ro
tection in connection with any obligation which is in default and is
the su bject o f bona fide collection effort b y the Registrant.
<f(b ) A d d ition s to O utstanding C redit.— I f any R egistrant m akes
any extension o f instalm ent sale credit or instalment loan credit
and such extension o f instalment credit is consolidated with any o b li
gation held by the R egistrant evidencing any prior extension o f in
stalm ent sale credit or instalment loan credit to the same obligor,
neither extension of instalm ent credit com plies with the requirements
o f this regulation unless the terms o f the consolidated obligation are
such as w ould have been necessary to meet the requirements o f this
regulation if the tw o extensions had not been so con solidated ; P ro
vid ed , h ow ever, T h at if the R egistrant accepts in good faith a state
m ent o f necessity as p rovided in section 8 ( d ) , the com bined obligation
m a y provide for a schedule o f repaym ent in con form ity with this
regulation as though it were a new extension o f instalment credit.
(c)
C redit to R etire O bligation s H eld E lsew here.— A n y exten
sion o f instalm ent credit, the proceeds o f which a R egistrant knows or
has reason to know will be used in w hole or in part to reduce or
retire any extension o f instalment sale credit or instalment loan credit
not held by such R egistrant, shall be subject to the requirements o f
section 8 (a ) or 8 ( b ) , including the provisos thereof, to the same
extent as if the obligation being reduced or retinal were held b y the
R egistrant. In determ ining whether the proceeds o f any extension
of instalm ent credit will be so used, if the R egistrant accepts in good
faith a written statement with respect thereto signed b y the obligor,
such statem ent shall, for the purposes o f this regulation, be deemed
to be correct.
Jil'fccl ive November 1, 1941.
14
" ( d)
REGULATION W
Statem ent o f N ecessity to P revent U ndue H a rd sh ip .— T h e re
quirem ents o f a statem ent of necessity, as provided for in sections
8 ( a ) , 8 ( b ) , and 8 ( c ) , will be com plied with on ly if the R egistrant
accepts in good faith a written statem ent on a form prescribed b y the
B oard and signed b y the obligor that the contem plated renewal,
revision, or other action is necessary in order to avoid undue h ard
ship upon the ob lig or resulting from contingencies which were un
foreseen by the obligor at the tim e o f obtaining the original exten
sion o f instalm ent credit or which were beyon d the con trol o f the
obligor, which statem ent also sets forth briefly the principal facts
and circum stances with respect to such contingencies and specifically
states that the renewal revision, or other action is not pursuant to
any preconceived plan, arrangement, or intention to evade or cir
cum vent any requirem ent o f this regulation.
(e)
O bligation s O utstanding on S ep tem b er 1, 1941.— T he require
ments o f sections 8 ( a ) , 8 ( b ) , and 8 ( c ) , do not ap p ly to any renewal
or revision o f any obligation arising out o f an y extension o f instal
ment sale credit or instalm ent loan credit made prior to Septem ber 1,
1941; but when any such outstanding obligation has been com bined
with any extension o f instalm ent sale credit or instalm ent loan credit
m ade on or after Septem ber 1, 1941, or has been the su bject o f any
renewal or revision m ade on or after such date, such extension o f
instalment credit shall thereafter be treated for the purposes o f this
regulation as having been made on or after such date.
( / ) Side Loan to M ake D ow n -P aym en t on Listed A rticle .— A n
extension o f instalm ent credit which is lim ited in am ount b y this regu
lation to the m axim um credit value o f any listed article, does not
com p ly with the requirements o f this regulation if the R egistrant
m aking such extension o f instalment credit know s or has reason to
kn ow that there is, or that there is to be, any other extension o f credit
in connection with the purchase o f the listed article which would
bring the total amount o f credit extended in connection with such
purchase beyon d the m axim um credit value o f such article as specified
in the Supplem ent; P rovided, That., if the R egistrant accepts in good
faith a written statement signed b y the obligor that no such other
extension exists or is to be m ade, such statem ent shall, for the purposes
o f this regulation, be deemed to be correct.
(</> Evasive Side A greem ents.— N o extension o f instalment credit
com plies with the requirements o f this regulation if at the tim e it is
m ade there is any agreement, arrangem ent, or understanding b y which
the obligor is to be enabled to m ake repaym ent on conditions in con
sistent with those required by this regulation, or which would other
" Kited ivc XovrniluT 1, 1941.
15
REGULATION W
wise evade or circum vent, or conceal any evasion or circum vention
o f, any requirem ent o f this regulation.
SECTION 9. MISCELLANEOUS PROVISIONS
(а ) C lerical E rrors.— A ny failure to com p ly with this regulation
resulting from a m istake in determ ining, calculating, or recording any
price, credit value, or extension o f credit, or other sim ilar m atter, shall
not be construed to be a viola tion o f this regulation if the R egistrant
establishes that such failure to co m p ly was the result o f excusable
error and was not occasion ed b y a regular course o f dealing.
(б ) C alculating M axim u m M atu rity o f C ontract.— In calcu latin g
the m axim um m aturity o f a con tra ct from the date on w hich any
listed article was purchased or any loan was m ade, depending upon
■which such date is required b y this regulation to be used fo r such
calcu lation , a R egistrant m ay, at his option, use as such date o f p u r
chase or loan any date n ot m ore than 15 days subsequent to the actual
date thereof.
(c ) “ L ay-aw ay” Plans.— W ith respect to any extension o f in stal
m ent sale credit in volvin g a bona fide “ la y -a w a y ” plan, or other
sim ilar plan b y which a purchaser makes one or m ore paym ents on
an article before receiving d elivery thereof, the R egistrant m a y , for
the purposes o f this regulation, treat the extension o f instalm ent sale
credit as not h aving been m ade until the date o f the d elivery o f the
article to the purchaser.
(d ) O utstanding C ontracts.— E xcept as p rovid ed in section 8 (e )
with respect to contracts m ade prior to Septem ber 1, 1941, w hich have
been, renewed, revised, or con solidated on or after such date, nothing
in this regulation shall apply with respect to any valid con tra ct m ade
prior to such date.
(e) Paym ents A risin g ou t o f L oans on Instalm ent O b lig a tion s.—
W ith respect to any loan on the secu rity o f an obligation or claim
w hich arises ou t o f an extension o f instalm ent credit, the prohibitions
o f this regulation shall be deem ed to ap p ly on ly to paym ents arising
ou t o f the oblig ation or claim rather than to paym ents arising ou t o f
the loan.
( / ) D eterm in in g S ecurity fo r
Instalm ent L oan
C redit.— In
de
term ining w hether an extension o f instalm ent loan credit is secured
b y any recently acquired listed article, as described in section 5 ( a ) , the
R egistrant acting in good faith m ay disregard any such listed article
w hich sp ecifically 'secu res some other extension o f credit and secures
the loan in question m erely b y reason o f an “ overlap agreem ent,”
“ spreader clause,” or other form o f general ov er-a ll lien.
16
REGULATION W
(g ) R ecord s and R eports.— E very R egistrant shall keep such rec
ords and m ake such reports as the B oard m a y from tim e to tim e
require as necessary or appropriate fo r enabling it to perform its
functions under the E xecutive Order.
(h ) Production o f Records.— E very R egistrant, as and when re
quired b y the B oard, shall furnish com plete in form ation relative to
an y transaction within the scope o f the E xecutive Order, including
th e p rodu ction o f any books o f accou nt, contracts, letters, or other
papers in connection therewith.
(i) T ransactions
O utside U n ited
States.— N othin g in this regu
lation shall ap p ly with respect to an y extension o f credit m ade in
A lask a, the P anam a C anal Zone, or any territory or possession outside
the continental U nited States.
{j ) R igh t o f R egistrant to Im p o se S tricter R equ irem en ts.— N othin g
in this regulation shall be construed to m o d ify the right o f any R egis
tran t to refuse to extend credit, or to extend less credit than the
am ount perm itted b y this regulation, or to require that repaym ent
be m ade within a shorter p eriod than the m axim um perm itted b y
this regulation.
SECTION 10. EFFECTIVE DATE OF REGULATION
T his regulation shall becom e effective Septem ber 1, 1941, except
th at sections 4 ( f ) and 5 (c ) (1) shall not becom e effective until O ctober
1, 1941, sections 8 ( a ) , 8 ( b ) , 8 ( c ) , and 8 (d ) shall not becom e effective
until N ovem ber 1, 1941, and sections 4 (e ) and 5 ( c ) (4 ) shall not becom e
effective until January 1, 1942.
SUPPLEMENT TO REGULATION
W
Part 1. Listed Articles, Maximum Maturities, and Maximum Credit
Values.— F or the purposes o f the regulation the follow in g m axim um
m aturities and m axim um credit values shall ap p ly to the follow in g
list o f articles:
A r t ic le s o f C o n s u m e r s ' D u ra b le G ood s
( W h eth er n e w o r u s e d )
M a x im u m
M a tu rity
i n M o n th s
M a x i m u m C r ed it
V a lu e i n p e r cen t
o f B a sis P r ic e
G rou p A
1. Automobiles (passenger cars designed for
the purpose of transporting less than 10
passengers, including taxicabs)...............
18
(See Part 3 of this
Supplement,)
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 commercial use.
3. Outboard boat motors.................................
4. Motorcycles (two or three-wheel motor
vehicles, including motor bicycles).........
18
66-2/3
18
18
66-2/3
66-2/3
18
66-2/3
18
80
18
18
18
80
80
80
18
80
18
80
18
18
18
80
80
80
18
80
18
80
18
18
18
85
85
85
18
18
18
85
85
85
18
18
90
90
G roup 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 with less than
seven heating surfaces..............................
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....................................................
'■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.........
^An article is not new if it has been used by a consumer.
l
2
S U P PL E M E N T TO REGULATION W
A r t ic le s o f C o n s u m e r s ’ D u ra b le G ood s
( W h e th e r n e w o r u s e d )
G roup E
1. Materials and services (other than materials
listed in Group C or D) in connection
with repairs, alterations, or improvements
upon urban, suburban, or rural real prop
erty in connection with existing struc
tures, provided the deferred balance does
not exceed $1,000......................................
M a x im u m
M a t u r i ty
i n M o n th s
M a x i m u m C r ed it
V a lu e in -per cen t
o f B a sis P r ic e
18
No limitation
P art 2. Basis P rice o f L isted A rticles O ther T h a n A u to m o b ile s.—
T h e basis price o f any listed article other than an autom obile shall
be the bona fide cash purchase price o f the article and accessories p u r
chased, including an y sales taxes thereon and an y bona fide delivery
and installation charges, minus the am ount o f an y allow ance m ade b y
the seller for any article traded-in b y the purchaser (including as
such a trade-in anything which the seller bu ys or arranges to have
bou gh t from the purchaser at or abou t the tim e o f the purchase of
the listed a r tic le ).
P art 3. M axim um C redit V a lu e o f A u to m o b ile s.— F or the purposes
o f section 4 and section 5 (a ) o f the regu lation:
(а ) T he m axim um credit value o f a new autom obile shall be 6 6 %
per cent o f the bona fide cash purchase price o f the au tom obile and
accessories (including an y sales taxes thereon and any bona fide d e
livery charges) but in no event to exceed 6 6 % per cent o f the sum
o f the follow in g item s:
(1) T he advertised delivered price o f the autom obile (with
standard equipm ent) at the fa c to r y ;
(2) T ransportation charges established b y the m anufacturer
from fa ctory to point of d e liv e r y ;
(3) A n y Federal, State, or local taxes not included in the fo re
g oin g; and
(4) A n y bona fide charges fo r d elivery or accessories not in
cluded in the foregoing items.
In case the autom obile is sold for d elivery at the fa cto ry , b y a
dealer in a given place to a resident o f such place or its v icin ity
w h o actu ally intends to bring the au tom obile to such p lace or
v icin ity and use it there, an am ount equal to the freight from
the fa ctory to such place m ay be included.
(б ) F or any used autom obile the m axim um credit value, until other
wise provided, shall be 66%; per cent o f the bona fide cash purchase
price (including any sales taxes th ereon ).
Part 4. Instalm ent Loan C redit S u b ject to S ection 5 ( b ) o f the
R egu la tion .— T he m axim um m aturity o f any extension o f instalment
loan credit o f $1,000 or less su bject to section 5 (b ) o f the regulation
shall be 18 months.
AMENDMENT TO REGULATION W
ISSUED BY THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
Effective September 20,1941
Amendment No. 1 to Regulation W
Effective September 20, 1941, Part 3 (a ) o f the Supplement to Regu
lation W is hereby amended to read as follow s:
(a )
The maximum credit value o f a new automobile shall be 66% per
cent o f the bona fide cash purchase price o f the automobile and acces
sories (including any sales taxes thereon and any bona fide delivery
charges) but such maximum credit value shall in no event exceed 66%
per cent o f the sum o f the following items:
(1 ) The manufacturer’s retail quotation at factory or the equiv
alent o f such quotation. For the purposes o f this regulation, this
means the retail delivered price o f the automobile (with standard
equipment) at the factory, as advertised, or as suggested or recom
mended to dealers, by the manufacturer; or, in the case o f a 1942
model for which such a price has not been so advertised or sug
gested or recommended, it means the price last so advertised or
suggested or recommended for the corresponding 1941 model, in
creased or decreased by the percentage by which the manufacturer’ s
wholesale price o f the 1942 model is increased or decreased from
the manufacturer’s wholesale price o f such 1941 model;
( 2 ) Transportation charges from factory to point o f delivery as
suggested or recommended by the manufacturer for inclusion in the
retail delivered price at that point, or in the absence o f any such
suggestion or recommendation then an amount substantially equal
to the freight by rail from factory to that p oin t;
( 3 ) A ny Federal, State, or local taxes not included in the fore
going ; and
(4 ) A ny bona fide charges for delivery or accessories not in
cluded in the foregoing items.
In case the automobile is sold for delivery at the factory by a
dealer in a given place to a resident o f such place or its vicinity who
actually intends to bring the automobile to such place or vicinity
and use it there, an amount equal to the freight from the factory to
such place may be included.
APPENDIX TO REGULATION
W
E X E C U TIV E O R D E R
R E G U LATIO N OF CONSUMER CRED IT
DECLARATION OF NECESSITY AND PURPOSE
W hereas a large volume of credit is being devoted to financing and
refinancing purchases of consumers’ goods and services through exten
sions of credit that usually are made to individuals and to a large
extent are on an instalment payment basis; and
W hereas the conditions under which such credit is available have
an important influence upon the volume and timing of demand, not
only for the particular goods and services purchased on credit but
also for goods and services in general; and
W hereas liberal terms for such credit tend to stimulate demand
for consumers’ durable goods the production of which requires ma
terials, skills, and equipment needed for national defense; and
W hereas the extension of such credit in excessive volume tends to
generate inflationary developments of increasing consequence as the
limits of productive capacity are approached in more and more fields
and to hinder the accumulation of savings available for financing
the defense program; and
W hereas the public interest requires control of the use of instalment
credit for financing and refinancing purchases of consumers’ durable
goods the production of which absorbs resources needed for national
defense, in order (a) to facilitate the transfer of productive resources
to defense industries, (b) to assist in curbing unwarranted price
advances and profiteering which tend to result when the supply of
such goods is curtailed without corresponding curtailment of demand,
(c) to assist in restraining general inflationary tendencies, to support
or supplement taxation imposed to restrain such tendencies, and to
promote the accumulation of savings available for financing the defense
program, (d) to aid in creating a backlog of demand for consumers’
durable goods, and (e) to restrain the development of a consumer debt
structure that would repress effective demand for goods and services
in the post-defense period; and
W hereas in order to prevent evasion or avoidance of this order and
such regulations as may be prescribed to effectuate its purposes, means
should also be available for regulating the use of other instalment
credit and other forms of credit usually extended to consumers or on
consumers’ durable goods; and
W hereas it is appropriate that such credit be controlled and regu
lated through an existing governmental agency which has primary re
sponsibilities with respect to the determination and administration of
national credit policies:
N ow , T herefore, b y virtue o f the a u th ority vested in me b y s e c
tio n 5 (b ) of the act o f O ctober 6, 1917, as am ended, and b y virtue o f
1
2
A P PE N D IX TO REGULATION W
all other authority vested in me. and in order, in the national em ergency
declared by m e on M a y 27, 1941, to prom ote the national defense
and p rotect the national econ om y, it is hereby ordered as follow s:
ADMINISTRATION
Section 1. fa ) T he B oa rd o f G overn ors o f the Federal R eserve Sys
tem (hereinafter called the B o a rd ) is hereby designated as the agency
through which transfers o f credit between and paym ents b y or to
ban kin g institutions (as defined herein pursuant to section 5 (b ) o f the
aforesaid A ct I which constitute, or arise d irectly or in directly out o f,
an y extension o f credit o f a ty p e set out in section 2 (a ) o f this order
shall be investigated, regulated and prohibited.
(b ) T he B oard shall, whenever it deems such action to be neces
sary or appropriate, take any law ful steps herein authorized and such
oth er law ful steps as are within its pow er to carry out the purposes
o f this order, and m ay, in adm inistering this order, utilize the services
o f the Federal R eserve B anks and any other agencies, F ederal or
State, which are available and appropriate.
(c ) In order to facilitate the coordin ation o f the B o a r d ’s functions
under this order with other phases o f the program for national de
fense and for p rotectin g the national econ om y, there shall be a co m
m ittee consisting o f the S ecretary o f the T reasu ry, the F ederal L oan
A dm in istrator, and the A dm inistrator o f the Office o f Price A dm in istra
tion and C ivilian Supply, or such alternate as each shall designate,
and such other m em bers as the President shall subsequently appoint.
T h e B oard shall m aintain liaison with the com m ittee, and in form u la t
ing policies with respect to dow n -p aym en ts, m aturities, term s o f re
paym en t, and other such questions o f general p o licy shall consult with
the com m ittee and take into consideration any suggestions or recom
m endations it m a y make.
REGULATIONS
Section 2. (a) W h enever the B oa rd shall determ ine that such action
is necessary or appropriate fo r carryin g out the purposes o f this order,
the B oard shall prescribe regulations with respect to transfers and
p aym en ts which constitute, or arise d irectly or in directly ou t of,
an y extension o f instalm ent credit for the purpose o f purchasing or
carryin g any consum ers’ durable good except a residential building
in its en tirety ; and the B oard m ay in addition, to the extent deem ed
b y it to be desirable and feasible in order to prevent evasion o f such
regulations as m a y be so prescribed or in order to con trol form s of
credit the use o f w hich m ight defeat the purposes o f this order and
such regulations, prescribe regulations with respect to transfers and
paym en ts which constitute, or arise d irectly or in directly ou t of,
(1 ) any other extension o f instalm ent credit, or (2) any other extension
o f credit for the purpose o f purchasing or carrying any consum ers’
durable good, or (3 ) any other extension o f credit in the form o f a
loan other than a loan m ade for business purposes to a business enter
prise or for agricultural purposes to a person engaged in agriculture.
Such regulations m a y be prescribed b y the B oard at such tim es and
w ith such effective dates as the B oa rd shall deem to be in accordan ce
w ith the purposes o f this order.
A P P E N D IX TO REGULATION W
3
( b ) Such regulations m a y from tim e to tim e, originally or b y a m en d
m ent, regulate or p roh ib it such transfers and paym ents or exem pt them
from regulation or proh ibition and m a y cla ssify them accord in g to the
nature o f the transactions or goods or persons in volved or upon such
oth er basis as m ay reasonably differentiate such transfers and p a y
m ents for the purposes o f regulations under this order, and m a y be
m ade applicable to one or m ore o f the classes so establish ed; and,
w ith ou t lim iting the generality o f the foregoing, such regulations
m a y require transactions or persons or classes thereof to be registered
or licensed; m ay prescribe appropriate lim itations, term s, and con
ditions for such registrations or licenses; m ay p rovide for suspension
o f an y such registration or license for v iola tion o f any provision th ereof
or o f any regulation, rule, or order prescribed hereunder, m a y prescribe
appropriate requirem ents as to the keeping o f records and as to the
form , contents, or substantive provisions o f contracts, liens, or an y
relevan t d ocu m en ts; m a y p roh ibit solicitations b y banking institutions
w hich w ould encourage evasion or avoid an ce o f the requirem ents o f
an y regulation, license, or registration under this ord er; and m a y
from tim e to tim e m ake appropriate provisions with respect to —
(1) T he m axim um am ount o f credit which m ay be extended
on, or in connection with an y purchase o f, an y consum ers’ durable
good;
(2) T he m axim um m aturity, m inim um periodic paym ents,
and m axim um periods betw een paym ents, which m a y be stip u
lated in connection with extensions o f cred it;
(3) T he m ethods o f determ ining purchase prices or m arket
values or other bases fo r com pu ting perm issible extensions o f
credit or required d ow n -p a y m en ts; and
(4) Special or different term s, conditions, or exem ptions
w ith respect to new or used goods, m inim um original cash p a y
m ents, tem porary credits which are m erely incidental to cash
purchases, paym en t or deposits usable to liquidate credits, and
other adjustm ents o r special situations.
(c ) On and after the effective date o f an y regulation prescribed
b y the B oard with respect to any extension o f credit o f a typ e set ou t
in section 2 ( a ) , and notw ithstanding the provisions o f any other p r o c
lam ation , order, regulation, or license under the aforesaid A ct, all
transfers and paym ents which are in v iola tion o f such regulation shall
be and hereby are prohibited to the extent specified in such regulation.
(d ) N either this order nor any regulation issued thereunder shall
affect the right o f any person to en force any con tract, except that
after the effective date o f any such regulation every con tract which
is m ade in connection with any extension o f credit and which violates,
or the perform ance o f which w ould violate, any provision o f such
regulation (other than a provision designated therein as being for
adm inistrative p u rp oses), and every lien, pledge, seller’s interest in
a con ditional sale, or other p roperty interest, su b ject to the provisions
o f such con tract or created in con nection therewith, shall be unen
forceable by the person who extends such credit or b y an y person who
acquires any right o f such person in such co n tra ct; p rov id ed that such
4
A P PE N D IX TO REGULATION W
d isability shall not ap p ly to any person w ho extends such credit, o r
acquires such right fo r value, in good faith and w ithout know ing or
h avin g reason to kn ow the facts b y reason o f which the m aking or
perform an ce o f such con tract was or w ould be such a viola tion .
REPORTS
Section 3. R eports concerning the kinds, am ounts, and characteristics
o f an y extensions o f credit su bject to this order, concerning transfers
and paym ents which arise ou t o f any such extensions o f credit, or
concerning circum stances related to such extensions o f credit or such
transfers or paym ents or to the regulation thereof, shall be filed on such
form s, under oath or otherwise, at such times and from tim e to time,
and b y such persons, as the B oard m a y prescribe b y rule, regulation, or
order as necessary or appropriate for enabling the B oard to perform
its functions under this order. T he B oard m ay require any person to
furnish, under oath or otherwise, com plete in form ation relative to any
tran saction within the scope of this order, including the produ ction o f
an y books o f account, contracts, letters, or other papers, in connection
therew ith in the cu stod y or con trol o f such person.
DEFINITIONS
Section 4. F or the purposes o f this order, unless the context others
w ise requires, the follow in g term s shall have the follow in g m eanings,
p rovid ed th at the B oa rd m ay in its regulations give such term s m ore
restricted m eanings:
(a ) “ P erson ” has the meaning set forth in section 5 ( b ) o f the act
o f O ctober 6, 1917, as amended.
( b ) “ T ransfers and p aym en ts” means “ transfers o f credit betw een
and paym ents b y or to banking institutions” .
(c ) “ B anking in stitu tion ” means any person engaged as principal,
agent, broker, or otherwise, in the business o f m aking or holding extent
sions o f credit and includes, w ith ou t lim itation, any bank, any loan
com pan y, and finance com pan y, or any other person engaged in the
business o f m aking or holding extensions o f credit whether as a vendor
o f consum ers’ durable goods or otherwise.
(d ) “ C onsum ers’ durable g o o d ” includes any good, whether new
or used, which is durable or sem i-durable and is used or usable fo r
personal, fam ily or household purposes, and any service connected
with the acquisition o f any such good or o f any interest therein.
(e) “ Extension o f cre d it” means any loan or m ortgage; any instal
m ent purchase contract, any conditional sales contract, or any sale
or con tract o f sale under which part or all o f the price is p ayable
subsequent to the m aking o f such salq or con tra ct; any rental-purchase
con tract, or any con tract for the bailm ent or leasing o f p rop erty under
w hich the bailee or lessee either has the option o f becom ing the owner
th ereof or obligates him self to p ay as com pensation a sum substantially
equ ivalen t to or in excess o f the value th e r e o f; any con tract creating
any lien or sim ilar claim or p roperty to be discharged b y the paym ent
o f m on ey ; any purchase, discount, or other acquisition o f, or any
extension o f credit upon the security of, any obligation or claim arising
A P PE N D IX TO REGULATION W
5
out o f any o f the foregoin g; and any transaction or series o f tran sac
tions having a sim ilar purpose or effect.
( /) A n extension o f credit is an extension o f “ instalm ent cre d it” if
the obligor undertakes to repay the credit in tw o or m ore scheduled
paym ents or undertakes to m ake tw o or m ore scheduled paym ents or
deposits usable to liquidate the credit, or if the extension o f credit has
a sim ilar purpose or effect, or if it is fo r the purpose o f financing a
business enterprise which makes such extensions o f credit.
(g) A n extension o f credit is “ fo r the purpose o f purchasing or
carryin g an y consum ers’ durable g o o d ” if it is d irectly or in directly
fo r the purpose o f financing or refinancing the purchase o f any co n
sum ers’ durable good or is d irectly or in d irectly secured b y any con
sum ers’ durable good, or if the extension o f credit has a sim ilar purpose
or effect, or if it is fo r the purpose o f financing a business enterprise
w hich m akes such extensions o f credit.®
PENALTIES
Section 5. W h oev er w illfu lly violates or kn ow in gly participates in
the violation o f this order or o f any regulation prescribed hereunder,
shall be su bject to the penalties a pplicable with respect to violation s
o f section 5 ( b ) o f the said act o f O ctober 6, 1917, as am ended.
(Signed) F ranklin D . R oosevelt.
T h e W h ite H ouse,
A ugust 9, 1941.*
* The section reads in part: “ Whoever willfully violates any of the provisions of this sub
division 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 sucli violation may be punished by a like fine, imprisonment, or both.”
LIST OF FEDERAL RESERVE BANKS AND BRANCHES
F ed era l R e serv e B an k o f
A d d ress
BOSTON
30 Pearl Street, Boston, Massachusetts
NEW YORK
Buffalo Branch
33 Liberty Street, New York, New York
270-276 Main Street, Buffalo, New York
PHILADELPHIA
925 Chestnut Street, Philadelphia, Pennsylvania
CLEVELAND
Cincinnati Branch
Pittsburgh Branch
East Sixth Street and Superior Avenue, Cleveland,
Ohio
Fourth and Race Streets, Cincinnati, Ohio
Grant Street and Ogle Way, Pittsburgh, Pennsylvania
RICHMOND
Baltimore Branch
Charlotte Branch
9th and Franklin Streets, Richmond, Virginia
Lexington and Calvert Streets, Baltimore, Maryland
110 South Tryon Street, Charlotte, North Carolina
ATLANTA
Birmingham Branch
104 Marietta Street, Atlanta, Georgia
18th Street and 5th Avenue, North, Birmingham,
Alabama
Church and Hogan Streets, Jacksonville, Florida
228 3rd Avenue, North, Nashville, Tennessee
Corondelct Street and Common, New Orleans,
Louisiana
Jacksonville Branch
Nashville Branch
New Orleans
CHICAGO
Detroit Branch
230 South LaSalle Street, Chicago, Illinois
160 Fort Street, West, Detroit, Michigan
ST. LOUIS
Little Rock Branch
Louisville Branch
Memphis Branch
411
3rd
5th
3rd
MINNEAPOLIS
Helena Branch
73 South Fifth Street, Minneapolis, Minnesota
Park and Edwards Streets, Helena, Montana
KANSAS CITY
10th Street and Grand Avenue, Kansas City, Mis
souri
17th and Arapahoe, Denver, Colorado
226 West Third Street. Oklahoma City, Oklahoma
1701-5 Dodge Street, Omaha, Nebraska
Denver Branch
Oklahoma City Branch
Omaha Branch
Locust Street, St. Louis, Missouri
and Louisiana Streets, Little Rock, Arkansas
and Market Streets, Louisville, Kentucky '
and Jefferson Streets, Memphis, Tennessee
DALLAS
El Paso Branch
Houston Branch
San Antonio Branch
Wood and Akard Streets, Dallas, Texas
351 Myrtle Avenue, El Paso, Texas
Texas Avenue and Caroline Street, Houston, Texas
Jardin and Villita Streets, San Antonio, Texas
SAN FRANCISCO
Sansome and Sacramento Streets, San Francisco,
California
10t,h and Olive Streets. Los Angeles, California
6th and Oak Streets, Portland, Oregon
Comer South Temple and East State Streets, Salt;
Lake City, Utah
2nd Avenue and Spring Street, Seattle, Washington
Los Angeles Branch
Portland Branch
Salt Lake City Branch
Seattle Branch