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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