The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
637 A meeting of the Board of Governors of the Federal Reserve %tem Was held in Washington on Thursday, April 29, 1943, at 3:45 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak McKee Draper Evans Mr. Mr. Mr. Mr. Morrill, Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Dreibelbis, General Attorney Before this meeting Mr. Byrnes Director of Economic Stabili- 4tion, had conferred Kith Chairman Eccles and had suggested the de8irability of vesting in the Board the authority to regulate the use °f credit for Purchasing, carrying, or trading in commodities, real "tate, OX securities and that an executive order conferring such 13(4retb8 on the Board be prepared for consideration. In accordance with thi8 ellggeStio, Mr. Dreibelbis, in consultation with Mr. Cohen, Counsel fcr the Office of Economic Stabilization, had prepared a draft of order the following form, copies of which had been sent to the Board of :'\'ernors for study prior to consideration at this meeting: N7HEREAS the effective conduct of the present war and the /nain el of the national stabilization program authorized aald ter disilarce re ted by the Congress in the Act of October 21 1942, rerm4_ air-re that means be available readily to control the extenac 4.0r use of credit for or incidental to buying or otherwise moMIng control of, carrying, holding, or trading in cornes, real estate, or securities in order to assist (a) prolpventing hoarding and harmful speculation, (b) in curbing adv Iteering and unwarranted, speculative, and abnormal price .78, (c) in protecting and promoting the sound and conztrnc lye interests of commerce, agriculture, and industry, 638 4/29/43 -2- H and of consumers, home owners, and investors, and (d) in suPPlementing and supporting other governmental measures to restrain inflationary tendencies: "NOW, THEREFORE, by virtue of the authority vested in me I., iv section 5(b) of the Act of October 6, 1917, as amended ii°111 time to time including the amendment made in the 'First :ar Powers Act, 1941', and by virtue of all other authority 'tested in me, and in order, during the time of the war and the 0, Period of the national emergency declared by me on May -f, 1941, to promote the effective conduct of the war and Protect the national economy, it is hereby ordered as follows: the "Section 1. To carry out the purposes of this order Board of Governors of the Federal Reserve System (hereI 'llafter called the Board) is hereby designated as the agency r°ugh which there shall be investigated, regulated, or Ijiohibited transfers of credit or payments between, by, aj s°ugh, or to any banking institution, which constitute or c;4-se directly or indirectly out of any extension or use of edit for or incidental to buying or otherwise acquiring of, carrying, holding, or trading in commodities, real prl estate, or securities for immediate or future delivery. inr , euch Purposes the Board shall have the powers set forth ar Paragraph (1) of subdivision (b) of section 5 of the f.Zesaid Act of October 6, 1917, and it may take any lawWithin its powers to carry out such purposes, ining any other and further measures not inconsistent with Th; 8 order or with the aforesaid Act of October 6, 1917. coa 13°ard is authorized to prescribe definitions not inter : istent with the purposes of this order for any and all r_ s used in this order or in any directives, orders, or gulation less e which may be issued by it: PROVIDED, That, un'dile Board gives more restricted meanings; (1) 'extenuse of credit' includes but is not limited to loans dem'i8count transactions and agreements, contracts, options, Irds, liens, and similar claims against, or for the im4mer'(-1. _?te or ,11g instit future delivery of, money or property; (2) 'bankut'r ion means any bank or trust company or other Pe so holain, whether incorporated or not, engaged in receiving, agen or making payments of deposits, and any person or cide'Y of the Government engaged, either primarily or inmaki, ritallY, as principal, agent, broker, or otherwise in or c? or holding extensions of credit or making, holding, 'ring Payments for or incidental to buying or otherWise" cornmoacquiring control of, carrying, holding, or trading in riaturdities, real estate, or securities, for immediate or issue !delivery, with respect to which the Board shall have g directives, orders, or regulations. 639 4/29/43 —3"Section 2. In effectuating the purposes of this order the Board shall consider and make due provision for the legitimate and bona fide credit needs of comerce, agriculture, ! Ind industry and of consumers, home owners, and investors to the extent that the extension or use of such credit is con:Tent with the national stabilization program; and any reulon of the Board shall not affect credit outstanding on the e ffective dates of its directives, orders, or regulations except to the extent that the Board may deem it necessary to g° so in effectuating the purposes of this order. "Section 3. In administering this order, the Board may Utilize the services of the Federal Reserve Banks and any Other agencies, Federal or State, which are available and apProPriate. It may, in its discretion, delegate to such banks O : Al agencies all or such part of the administration of its :4-rectives, orders, or regulations as it determines will promaote simple or effective administration; and any such bank or ut r cY, to which such administration has been delegated, may enilize all other powers vested in it not inconsistent with aforesaid Act of October 6, 1917, to carry out any runes so delegated. The Board shall, so far as practicable, :the information of and consult with other Federal de1:tmts and agencies which have activities or functions re*:'ed to the national stabilization program and, in discharg; 1 its 4 responsibilities, shall take into account any recomdation which any such department or agency may make on matt re„ers of general policy. In exercising the powers coner;scl bY this order, the Board shall be governed by the gency directives of the Economic Stabilization Director." 7 O thtea :hairman Eccles stated that in the discussions of the matter Mr. "ad said that if the Board were willing to assume the responsibility contemp lated by the order he would undertake to clear the order oth 14 t „ sr interested agencies of Government. In connection with the ntence of the order, Mr. Dreibelbis said that it had been added at the r, 4ric::estion of Mr. Cohen in order to facilitate such clearance. Chair, es expressed the opinion that it merely expressed a condition that 4 s3Q-sted under the authority originally conferred upon the Director or corl grIlle Stabilization by the President. 640 4/29/43 -4In the discussion of the order, Mr. McKee inquired whether the *fling of any action taken by the Board under the authority granted by the order would be a matter for decision by the Board. This point was disetissed, and Chairman Eccles said that a statement for the press 17°111c1 have to be prepared for release at the White House at the time (4 the 4 84.gning of the order giving the reasons for the order and making it clear that the powers were being given to the Board of Governors to be exe ,. -elsed only when necessary to meet specific situations and that the board would be expected to watch the whole field of credit and take action whenever called for. This would make it clear, Chairman Eccles 444, that -- itlqe. not anticipated that the Board necessarily would take irnmedi atie action under the order, as it was not the intention of Mr. 4rtles ' 11 suggesting that the Board be given the authority that it 81101134 take immediate action thereunder. Chairman Eccles explained that in his conversations with Mr. Byrnes it was made clear that the 8oard was not seeking the powers to be granted by the order and that Mr. was taking the responsibility for the initiative in the matter. They, -- Was also a discussion of the extent of the powers that be pr.„ -"L'ed by the order and the relation of these powers to the Pqwers kwer8 Of the Treasury in the field of foreign funds control and the e'r the Alien Property Custodian in the field of control of alien Aro , verties ) and of the additions to the Board's staff that might be necNarl, in exercising the new powers. Mr. McKee referred again to the - of the timing of any action that the Board might take and sugted that there should be a clear understanding with Mr. Byrnes that 641 4/29/43 _5_ the Boaros after decision as to timing would not be interfered with except careful consideration. The other members of the Board concurred in this auggestion, and Chairman Eccles said that the problem of timing of action would have to be determined in conference with Mr. BYrnes and other agencies of Government that might be affected by any contemplated action. At the conclusion of the discussion, Chairman Eccles said that it agreeable to the other members of the Board he would like to tell s that the Board was willing to accept the responsibility that Would be conferred by the order in substantially the form set Nth above, but that if any substantial changes were to be made in the order befOre it was signed the Board would want to consider the m atter again. Upon motion by Mr. Evens, there was unanimous agreement with Chairman Eccles' proposal and it was understood that he would advise Mr. Byrnes accordingly. Following the meeting on April 6, 1943, Mr. Szymczak's memorandum of April 5, 1943, relating to three questions which had arisen in connection with the revision of the statement of procedure with respect to foreign relationships with Federal Reserve Banks (X-9774) was circulated among the memIpers of the Board, and at this meeting unanimous approval was given to the submission Of the first two questions to the Presidents? Conference for consideration and discussion ith the Board, with the understanding that in the event objections concerning the changes proposed by the questions were raised during such discussion the matter would be presented to the Board of Governors again for final decision. 642 4/29/43 —6— At this point, Mr. Dreibelbis withdrew from the meeting, and the "lon stated with resnect to each of the matters hereinafter refer—, to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on ADril 28, 1943, were approved unani1401181y. 14emorandum dated April 24, 1943 from Mr. Morrill, recommendIng that the following increases in salaries of employees in the Secretarru Office be approved, effective May 1, 1943: Name Designation Secretarial and Administrati ltitchell Charlotte N. Secretary to Mr. Bethea Wolcott, Helen B. Clerk-stenographer Ice, Har Oddssonry E. Clerk Mary Louise Stenographer Sherrill, Vera M. Page Service Functions Fletcher, Wilson T. Operator (Duplicating Devices) Salary Increase To From $2,000 1,860 1,740 1,560 1,260 $2,200 1,980 1,860 1,680 1,380 1,660 1,740 Approved unanimously. Me morandum of this date from Mr. Morrill, submitting the resignation of Daniel Derrick as a guard in the Secretary's Office, to become eftectivs as of the close of business on April 27, 1943, and recommendtrig that the resignation be accepted as of that date with appropriate dedtiction made from his salary for five days and 48 minutes of unearned 41NA' leave. Approved unanimously. 643 4k9/43 -7Letter to Mr. Hays, Vice President and Secretary of the Federal Reserwt Bank of Cleveland, reading as follows: "This refers to your letter of April 22, 1943, transmit' clng copies of bills submitted by Squire, Sanders & Dempsey ! ryl li nllurces in connection with Regulation V loans, J:Z "It is noted that payment of these bills has been apred by the Executive Committee of the Directors of your Z:l!c and that the amounts will be included in claims for re-fli.uursement to the Lar and Navy Departments. to "The Board of Governors approves the payment of $4,500 in Squire, Sanders & Dempsey for their services as specified your letter." n Approved unanimously. Bank Letter to Mr. Meyer, Assistant Cashier of the Federal Reserve of Chicago, reading as follows: so "The Board of Governors approves the changes in the perpot-Intel classification plan covering the establishment of new atZ ti°ns and the discontinuance of others as listed in the sheets. These changes are made in accordance with theached a requests contained in your letters of January 29, Febru' r 17 (as modified by your letter of April 22) and March 5. of m 4In accordance with the request contained in your letter arch 20, page 86 of the personnel classification plan has bee, canceled in view of the discontinuance of the position De raft Payer in the Bookkeeping and Federal Reserve Books Partment. pro_ "18ecause of the Executive Order of April 8, 1943, no apAcerl to increases in maximum annual salaries can be given. poseir;d1-.r_lglY, no action can be taken with respect to the proyour-,-Lucreases in maximum annual salaries submitted with ;Letters of March 20, March 27 and March 30. rsta 'The establishment of the proposed new position of secthe President with maximum annual salary of $3,000 °Ilomitted with your letter of March 20, would have reqUired wolad .k-ertification to the Joint Committee, inasmuch as it effect represent an increase in salary for the indihedual b who had been acting as Mr. Young's secretary ever since Mr.: came President. This matter was discussed informally-v.1th lounw Approved unanimously. 644 4/29/43 Letter to the board of directors of "The Farmers State Bank of 4171tern, Stryker, Ohio, stating that, subject to conditions of member814.1) numbered 1 to 3 contained in the Board's Regulation H, the Board al3.13ves the bank's application for membership in the Federal Reserve 81'steril and for the aporopriate amount of stock in the Federal Reserve 13allit of Cleveland. Approved unanimously, together with a letter to Mr. Fleming, President of the Federal Reserve Bank of Cleveland, reading as follows: , "The Board of Governors of the Federal Reserve System approves the application of 'The Farmers State Bank of Stryker', ,-2ker, Ohio, for membership in the Federal Reserve System, 5 wi'n l )ect to the conditions prescribed in the enclosed letter orl,c. You are requested to forward to the Board of Directors i Closed nstitution. Two conies of such letter are also enii , osed, one of which is for your files and the other of which y ' oll are requested to forward to the Superintendent of Banks the State of Ohio for his information. 1311 ? tilt is assumed that you will follow the matter of the s bringing into conformity with the provisions of law and ofej0ard's regulations the savings account shown on page 16 the report of examination for membership." liern°randa kvision dated April 27, 1943, from Mr. Smead, Chief of the attached of Bank Operations, recommending that the Board approve drafts to the memoranda of (1) Form F.R. 105 for use in obtaining rePcrta of call anci condition of State member banks on the forthcoming midyear 4.nd di . (2) Form P.R. 107b for use in obtaining semiannual earnings vIdends reoorts of State member banks for the first six months of eeh Year 141,. The memorandum relating to Form F.R. 105 stated that since SMea,lis memorandum of November 12, 1942, in which it was stated the information in the schedules eliminated from the end-of-year 645 19/43 -9- call report would be called for only on the June call, it had been inf°11714-1-Y agreed with representatives of the Comptroller's Office and the Federal Deposit Insurance Corporation, subject to the Board's apPre ' Val, that the information available in the abbreviated form would be e°nsidered as sufficient for the next call, and that the proposed 1311n would be the same as that used on December 31, 1942, with the fol1°1414 exceptions: 1. Item 2 of Schedule E, which heretofore had been "Deposits of United States Government", would appear as "Deposits of United States Government (including $ war loan account)fl. 2. A rIdditional columns would be inserted in Schedule Bin to show the aggregate par values of each class of united States Government obligations, direct and guarUnited anteed, held by the reporting bank. The memorandum relating to Form F.R. 107b referred to the question coneidered at the meeting of the Board on October 23, 1942, as to whethor this l'ePort should be placed on a calendar-year basis and stated that, Inasmuch as the Comptroller of the Currency had decided to contit-nie to require an earnings and dividends report from the more than 5)000 national banks, it seemed desirable to continue to require the repOrt from the 1,600 State member banks in order that the data for all mber ber of Port 1942 banks, which had been available on a semiannual basis for a num- years, R1-14-Tht continue to be available, and that the proposed reform Was the same as that anproved for use for the calendar year except for the Changes necessary to make it cover only the first halt Of the year* 646 4/29/43 -10Approved unanimously, Mr. McKee indicating that he approved the revised State member bank call renort with reluctance inasmuch as he had hoped that it would be possible to rearrange both the assets and the liabilities on the form, and that, since several attempts to Work out an agreement for such changes with Other Federal agencies had failed, there was nothing for the Board to do but to go along With the limited changes as now recommended in order to be Prepared for the next call date. Thereupon the meeting adjourned.
@FedFRASER