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687 A meeting of the Board of Governors of the Federal Reserve 3rsterti waS held in Washington on Friday, April 10, 1942, at 11:30 4.14. PRESENT: Mr. Eccles, Chairman Mr. Mr. Mr. Mr. Ransom, Vice Chairman McKee Draper Evans Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters herein— ktter ' -1-erred to was taken by the Board: The minutes of the meeting of the Board of Governors of the N-Reserve System held on April 9, 1942, were approved unani41Y. The minutes of the meeting of the Board of Governors of the Niera 1 Reserve System held with the executive committee of the Fed— erq Aci vls°rY Council on April 9, 1942, were approved unanimously. Telegrams to Mr. Treiber, Assistant Secretary of the Federal e Bank of New York, Mr. Leach, President of the Federal Reserve 13`41k ot t, Fecier -Lehmond, Messrs. Dillard and Stewart, Secretaries of the " al Reserve Banks of Chicago and St. Louis, respectively, Mr. leke r3 Vice President of the Federal Reserve Bank of Minneapolis, ber.1.3 President of the Federal Reserve Bank of Dallas, and Mr. 688 4/10/42 s ecretary of the Federal Reserve Bank of San Francisco, stating that the Board approves the establishment without change by the Federal Reserv e Bank 'IA. of San Francisco on April 7 and by the Federal Reserve Banks of New York, Richmond, Chicago, St. Louis, Minneapolis, and on April 9, 1942, of the rates of discount and purchase in their existing schedules. Approved unanimously. tiemorandum dated April 8, 1942, from Mr. Carpenter to the 130ard's Personnel Committee, referring to the procedure previously kthorized by the Board with respect to the selection of officers '9411 employees of the Board of Governors and the Federal Reserve Banks to attend the Graduate School of Banking at Rutgers University, and l'ee°4tliending that Mr. Horbett, Assistant Chief of the Division of iknit Operations, be selected to attend the 1942 resident session of tha Graduate School of Banking, with the understanding that he will be allowed the necessary leave with pay in addition to regular annual leave and be reimbursed for his transportation expenses from Washington, 0 return, and for his registratiort t° New Brunswick, New Jersey, and b44 nd resident and extension tuition fees. The recommendation had app roved by the Personnel Committee. The memorandum also stated thq RaYm , -11 ' 4 J. Collier, junior economist who began the Graduate School 689 4/10/42 -3c°11rae last year, would not attend this year because of an impending call to active military service but that he had expressed the hope that the B °ard would permit him to complete the course of study when he retutted. Approved unanimously. Iteraorandurn dated April 8, 1942, from Mr. Nelson, Assistant Secret 173 recommending that James D. Crawford, a guard in the Scoreice, be granted leave of absence without pay beginning April ' 1' 5 1942, 80 that he might enter active duty with the United States C°rPe Reserve, and that he be granted the benefits provided in '[1e Pol.; -cY adopted by the Board on November 14, 1940, and amended t 201 1941, for all employees entering military service. Approved unanimously. Letter to Mr. Clark, Vice President of the Federal Reserve Or Atlanta, reading as follows: 1 "Receipt is acknowledged of your letter of April 2, 9)2 pa :4, / with further reference to the reappointment of R. Wilson as an assistant examiner for your bank. "In view of the circumstances involved and the recent prZ discussions with President McLarin, the Board apes the appointment of Mr. 'Wilson as a regularasdate t examiner. Please advise us of the effective Approved unanimously. 40 Letter to the Federal Deposit Insurance Corporation, reading ol 690 4/10/42 -4"Pursuant to the provisions of section 12B of the ,,:dFral Reserve Act, as amended, the Board of Governors vl the Federal Reserve System hereby certifies that The State Bank of Marathon City, Marathon, Wisconsin, became a, n ex,nber of the Federal Reserve System on April 9, 1942, s now a member of the System. The Board of Governors of the hereby certifies that, Federal Reserve System further : t? in connection with the admission of such bank to alnIu wei:ship in the Federal Reserve System, consideration tis given to the following factors enumerated in subsec011 (g) of section 12B of the Federal Reserve Act: 1. The financial history and condition of the bank, 2. The adequacy of its capital structure, 3. Its future earnings prospects, 4. The general character of its management, 5. The convenience and needs of the community to be served by the bank, and 6. Whether or not its corporate powers are consistent with the purposes of section 12B of the Federal Reserve Act." Approved unanimously. tTelegram trie a8 to the Presidents of all the Federal Reserve Banks, read- ant "Yie are advised that form of War Department's guarhas. agreement for operations under Executive Order 9112 een approved but official approval is not yet in our hand ' Hope to be able to wire text of form to you later today or A ?r early Saturday. Referring to Board's telegram ‘ 1 1-1 9, 1942, following is text of press release just iss1,13, -e`4 for publication in morning newspapers of April 11: 'The Board of Governors of the Federal Reserve System announced today adoption of Reg; ir lation V to carry out the President's Executive Order No. 9112 of March 26, 1942, for the purpose of facilitating and expediting the financing of war production. The Regulation was adopted after consultation with the War Department, the l';',avY Department, and the United States Maritime ''ommission following conferences in which representatives of the War Production Board participated. 69 4/10/42 -5"The objective, as set forth in Regulation V, is to facilitate and expedite production for war purposes by arranging for the financing of contractors, subcontractors and others engaged in businesses or operations deemed by the armed services and the Maritime Commission to be necessary for the prosecution of the war. 'The War Department has sent initial instructions to the Federal Reserve Banks covering the authority and procedure to be followed by them in acting for the War Department under the Board's Regulation. The program embraces financial aid for contractors and subcontractors, both large and small, and contemplates the maximum participation of small business enterprises in war production. 'Regulation V prescribes general rules and Policies to govern the operations of the twelve Federal Reserve Banks, which will act as fiscal agents of the armed services and the Maritime Commission in carrying out the President's Executive Order. The utilization of the facilities Of the twelve Federal Reserve Banks and their twenty-four branches throughout the United States makes it possible to decentralize the war financing program to a large extent. The program looks to the fullest possible participation by the banks of the United States, whether members or nonmembers of the Federal Reserve System, in the financing contemplated under the authority of the President's Executive Order. 'Under the Executive Order the three military procurement agencies are authorized to guarantee commercial banks, Federal Reserve Banks, the Reconstruction Finance Corporation, or other financial institutions against loss on loans made to concerns to finance the performance of war orders. The primary aim is to expand and expedite war production. Accordingly, peacetime credit rules or standards, as the President stated at the time of signing the Executive Order, must not be permitted to hold up production of war supplies needed by the armed forces. 'The Board's Regulation authorizes the Federal Reserve Banks, acting in accordance with the 692 4110/42 -6provisions of the President's Executive Order and the instructions of the three military procurement agencies, to arrange loans and guarantees thereof wherever it is believed that they will contribute to the obtaining of maximum war production expeditiously. 'To assist in carrying out the provisions of the President's Executive Order and to aid in decentralizing operations under it as fully as possible, the War Department plans to have a liaison officer stationed at each Federal Reserve Bank. Generally speaking, the liaison officer will certify to the Reserve Bank that an applicant for financing is qualified from the technical or production standpoint to carry out a contract, subcontract or order for war supplies or equipment. 'It is expected that any applicant will first take up his credit needs with his commercial bank or other financing institution. When the necessary credit cannot be arranged by the financing institution without the assistance of the War Department, the financing institution will apply to the Federal Reserve Bank for a guarantee of a part or all of the proposed financing. After certification by the liaison officer, it will be the Reserve Bank's function to analyze the financial aspects of the application including the integrity of the management, and determine the type of financing best suited to meet the situation. 'Under the initial instructions of the War Department, and upon appointment of liaison officers, guarantees or loans up to a prescribed maximum to be determined by the War Department will be made at the Federal Reserve Bank without reference to Washington. 'Attached is a copy of Regulation V.'" Approved unanimously. takk Of Telegram to Mr. Hays, Vice President of the Federal Reserve Cleveland, reading as follows: "Your wire March 31. Finance company may purchase 693 4110/42 -7- unless it shows on its face some noncompliance °r unless at the time of purchase the finance company 'nows any fact by reason of which contract failed to cornP,13r with regulation. Accordingly section 3(a)(2)(B) (of gulation 1” does not require finance company to verify cealer's calculation of credit value by obtaining and onsulting appropriate appraisal guide." r Approved unanimously. Letter to Mr. M E. Peters, President and Editor of The Official G . tilde/ Los Angeles, California, reading as follows: . "This is in reply to your letter of March 30, and al ' 41 in further reply to your letter of March 24. G . "You state that previous issues of your Official 1.144e, including the March-April issue, have quoted retail r P ees about 10 per cent below the actual market, and have 4?quired as to the Board's attitude toward your proposal change, in your May-June issue, to a higher basis of otations which, in your opinion, would reflect the ac] current market. co "If your estimates of average retail values of rej nditioned used cars in average condition during May and higher than the figures shown in your March-April book, book, the Board would not object to the quotation of such pe2: fide higher figures. This is because the Board ext re'2's each designated appraisal guide to quote the average to values of used cars in its territory, as estimated the best of the publisher's ability. At the same time, he Board feels obliged to say that it has difficulty in c nciling the proposal to change your basis of quotations wtj An,:4',the following statement in the Foreword to your Marchissue: 'The retail sales values are average quotati-L-4ons on reconditioned automobiles'. tow "You also inquire concerning the Board's attitude th:ards a proposal that you bring out a new issue during au;early part of April -- presumably your May-June is,- which the Board would include among the guides ap'-anated for the remainder _o.f the moRth_of April. This ars to the Board to be essentially the same proposal asP ! L.he()Ile on which the Board has already expressed its s4PProval in its letter of March 27. r 694 4110/42 -8- "The Board is pleased to note your statement of the I.rlicY that you have followed in connection with the dislbution of your guide. As you suggest, the Board feels the use of designations under Regulation Tin a pro41°!'lonal way to advance the interests of a particular book is distinctly undesirable. The Board hopes that at.publishers will refrain from such practices because i , wishes to avoid the necessity of specifying in detail the language „e and methods that publishers may use if they "4-ah to retain their designations." Approved unanimously. Letter to Mr. S. F. D. Meffley, Special Representative of the Recorclin g & Statistical Corporation, Chicago, Illinois, reading as fol- 7. is in reply to your letters of April 6 and April"This Bo "You are correct in your understanding that the roard's designation of certain automobile appraisal guides PlIrposes of Regulation 71 does not indicate any findprF bY the Board as to the accuracy or correctness of the s pilee shown in such guides or of their methods of comuseation, that the Board does not require or recommend the any particular service exclusively, and that the brdesignation of the Official Automobile Guide published relY°ur corporation does not reflect in any way upon the hav4tive accuracy of this and other publications. You exte indicated that the Official Automobile Guide is used wrinIsively by insurance companies and others for under011 -rig, adjustment, and other insurance purposes, as to 'llaguished from purposes of Regulation IV which relates , c?nsumer credit, and the Board sees no reason why the no ' 12,11 4-nc1usion of this guide among those designated for of Regulation W should in any manner prevent the ?8es etlidlnsurance companies from continuing the use of this e for underwriting and adjustment purposes. at "You indicate in your letter of April 7 that you may tio8cMe later time desire to have the Board give consideraani ti to the inclusion of your Official Automobile Guide 11,",the Publications designated for purposes of Regulation -nu You may be assured that the Board will be glad to 695 4/10/42 -9ye consideration to this matter if you should so de- Approved unanimously. Thereupon the meeting adjourned. Chairman.
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