View original document

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

FED ERAL R E SER VE BANK
O F NEW YORK
rC ircular N o. 3 6 0 3 "1
October 13. 1950 J

L

C O N S U M E R C R E D IT
Am endm ent No. 1 to Regulation W o f the B oard o f Governors of the
Federal Reserve System, Effective O ctober 16, 1950
To all Persons Concerned with Regulation W
in the Second Federal Reserve D istrict:

The Board of Governors o f the Federal Reserve System has adopted Amendment No. 1
to Regulation W , effective October 16, 1950. Follow ing is the text o f the statement issued by
the Board o f Governors relating to the amendment:
F o r release in morning newspapers of
Saturday, October 14, 1950.

October 13, 1950.

The B oard o f Governors announced today Amendment No. 1 to Regulation W , effective Monday,
October 16, reducing the maximum m aturity on instalment credits from 21 to 15 months fo r auto­
mobiles and from 18 to 15 months fo r appliances and furniture.
The minimum down paym ent on automobiles remains at one-third; the dow n payments on
appliances are increased from 15 per cent to 25 per cent and on furniture from 10 per cent to 15
per cent. The maximum m aturity on home improvement credits remains at 30 months and the
minimum down payment at 10 per cent. Down payments will now be required on all articles costing
$50 or more instead o f $100 or more.
The terms which will be required under Regulation W are as follow s:
Down payments

Maturities

A u to m o b ile s ..............................................................3 3 ^ % down
Television sets, radios and
25% down
other m ajor d u r a b le s ................................
F u r n it u r e ..............................................................
15% down
Home im provem ents...........................................
10% down
Unclassified l o a n s ...............................................

15 months
15
15
30
15

months
months
months
months

In commenting on tod ay’s revision o f the regulation, Chairman McCabe said:
“ The B oard ’s action was based upon consideration o f reports from Federal Reserve Banks
and other sources in the field in all parts o f the country which reflect continued upward
pressures on prices in the five weeks since the reissuance o f the regulation was announced
on September 8, 1950. W hile the intensity o f these pressures on the market varies somewhat
from time to time the fact remains that the underlying inflationary forces are unabated and
have been augmented by the continuing growth o f bank credit as well as credit in specific
areas, including instalment credit. More vigorous application o f regulation o f instalment credit,
coincident with the imposition o f the real estate credit controls, is therefore in order so that
these and other credit measures may most effectively serve in the effort to hold the line until
further fiscal measures, as nearly as possible on a pay-as-you-go basis, and such additional
credit measures as may be necessary can be brought into play. This is in accordance with the
President’s mid-year economic report o f July 26 in which he stated that first reliance should
be placed upon fiscal and credit measures and that this would make less necessary resort to
direct controls. Likewise, the action is pursuant to the statement o f August 18 in which the
Reserve System declared its purpose to use all the means at its command to restrain further
expansion o f bank credit.
“ Prospective pressures on productive capacity, manpower supplies, and the price structure
arising out o f expanded defense and military aid programs will be increasingly heavy. T o d a y ’s
action was taken in the light o f the System’s statutory responsibilities, both under the Federal
Reserve A ct and under the Defense Production A ct, to reduce inflationary forces particularly in
various credit areas; to help maintain the purchasing power o f the dollar; and to assist other
agencies in assuring that the needs o f the defense program are adequately m et.”

A printed copy of Amendment No. 1 to Regulation W is enclosed; additional copies may
be obtained upon request.




A

llan

S

proul,

President.

AMENDMENT NO. 1 TO REGULATION W
ISSU E D B Y T H E B OARD O F 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 S T E M

Regulation W is hereby amended in the follow in g respects, effective
October 16, 1950:
1. B y changing “ $100” in Part 1 o f the Supplement to read
“ $50” .
2. B y changing “ 15 per ce n t” and “ 85 p er ce n t” in Part 1,
Group B o f the Supplement to read, respectively, “ 25 per cen t”
and “ 75 p er cen t” .
3. B y changing “ 10 p er c e n t” and “ 90 p er ce n t” in Part 1,
G roup C o f the Supplement to read, respectively, “ 15 p er c e n t”
and “ 85 p er cen t” .
4. B y changing the maximum m aturity stated in Part 2 o f the
Supplement fo r articles listed in Group A from “ 21 m onths” to
“ 15 m onths” .
5. B y changing the maximum m aturity stated in Part 2 o f the
Supplement fo r articles listed in Group B, Group C and fo r unclassi­
fied instalment loans, respectively, from “ 18 m onths” to “ 15
months” .
6. B y changing the figure “ 24 ”
Supplement.

to “ 18”

in P a rt 3 o f the

7. B y striking out that portion o f section 6 (a ) (1 ) between the
words “ flow o f incom e” and “ ; o r ” .




P R IN T E D IN N E W Y O R K

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