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647 A meeting of the Board of Governors of the Federal Reserve Systern Was held in Washington on Friday, April 30, 1943, at 2:00 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak McKee Draper Evans Mr. Mr. Mr. Mr. The action Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman stated with respect to each of the matters herein- referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Federa]. It eserve System held on April 29, 1943, were approved unanimously. Tele, brams to Mr. Paddock, President of the Federal Reserve Bank or 13"t°11 'Messrs. Treiber and McCreedy, Secretaries of the Federal ReOf New York and Philadelphia, respectively, Mr. Frazer, SeePro tern of the Federal Reserve Bank of Atlanta, and Messrs. Dillard, 4ellalt) end Hale, Secretaries of the Federal Reserve Banks of Chicago, St, touts, ' l r°\res the and San Francisco, respectively, stating that the Board apest ablishment without change by the Federal Reserve Banks of s and San Francisco on April 27, by the Federal Reserve Bank of : 4, 1 Ala 'a u, I APril 28, by the Federal Reserve Banks of New York, Philadeld Chicago on April 29, 1943, and by the Federal Reserve Bank of sc!b: : atIlat . 4Y, of the rates of discount and purchase in their existing Approved unanimously. 648 4130/43 -2Memorandum dated April 28, 1943, from Mr. Morrill, recommending that Sall 'Reed be appointed as a laborer in the Secretary's Office on a telliP°I'arY basis for an indefinite period, with basic salary at the rate c)f 41,200 per um, effective as of the date upon which he enters upon tIlePert°rmance of his duties after having passed satisfactorily the 4sIlea Physical examination. Approved unanimously. Letter to Mr. Young, ?resident of the Federal Reserve Bank of Chicago ) reading as follows: with "This is to advise you that the Board of Governors notes as 0;ut objection the salaries paid to employees of your Bank the 110 jailWarY 1, 1943, which were submitted in accordance with 'tarot's letter dated December 28, 1942 (5-604). with This action is taken in the light of the explanation vr,esdect, to salaries paid James R. Condon, HeadPrinter, Aprillto Sisto, Dishwasher, given in Mr. Meyer's letter of - 27) 1943. the - seParate letter is being sent to Mr. Leland regarding AgellOYMent of salaries to Carl Schellingl, Assistant Federal serv 6nd Charles J. Scanlon, Alternate itssistant Federal Rereferred to in Mr. Meyer's letter dated Aoril 26, Approved unanimously, together with the following letter to Mr. Leland, Federal Reserve Agent at the Federal Reserve Bank of Chicago: 190 "Reference is made to Mr. Meyer's letter of April 26, sch-elll!ith regard to increases in the salary of Mr. Carl J. se.,2g, Assistant Federal Reserve Agent, and Mr. Charles Head (3 -1-°n, Alternate Assistant Federal Reserve Agent at the been ce for which, inadvertently, prior approval had not "The Board of Governors approves the increase in the fro,r4( 0 of Carl Schelling, Assistant Federal Reserve Agent ereas . 42300 to $4,500 on December 1, 1942, and the inin the salary of Charles J. Scanlon, Alternate 649 4/30/43 —3— "Assistant il'ederal Reserve Agent, from 63,200 to .?,.3,400 on _ December 1, 1942, and from $3,400 to 63,600 on April 1, 1943." Letter to the Presidents of all the Federal Reserve Banks, as follows: Dbp, "In reviewing with officers of the Military Government to" „ -sion the results of the Board's telegram of February 23 th Zne Presidents of all Federal Reserve Banks, it appears n4: in some cases names have been submitted of men who did n„ 9°88ess the necessary qualifications. In most cases, ii"es have been forwarded without evaluation by the Reserve Ztof the qualifications of the applicant and apparently niatCe aseumPtion that the applicant's own desires in the rel 7 justify the submission of his name. AIthough it is recognized by the Army that there are grpthatively few men who qualify under the terms of our tele— referred to, they advise that they do not have a suf— fislnIt number of qualified applicants in the banking and field. Therefore, it will be appreciated if you a6ain canvass the field in your District and submit the, arkee of any additional qualified men. 41,14 4- might add that the recent changes in the Selective Taaliep? regulations may serve to stimulate the interest of 1111. 1ed men who have not heretofore desired this kind of Of .,.'arY service. Furthermore, the more imminent prospect 1- 'tathe 4.4 Lai., r occupations may likewise stimulate more interest l'arY Government service." t Approved unanimously. Letter to the board of directors of "The Andover Bank", Andover, '8tating that, subject to conditions of membership numbered 1 to 3 e rt ecl in the Board's Regulation H, the Board approves the bank's ap&cation p or membership in the Federal Reserve System and for the appro11-ate 841°Iirt of stock in the Federal Reserve Bank of Cleveland. Approved unanimously, for transmission through the Federal Reserve Bank of Cleveland. ebv, Let4uer tO Mr. Carstarphen, General Counsel of the Federal Re— Louis, reading as follows: 650 4/30/43 -41_, "For your information there is enclosed a copy of a c"ter April 9 addressed to Mr. D. J. Needham, General tic) suri ,sel, American Bankers Association, by MT. Charles Herman, ih ! lstant Counsel, Mississippi Valley Trust Company, regardion raised in the examination of that company relan investment purchased for a common trust fund. Le,„1 111 ,he question had already been considered by the Board's mar , l sion, and a copy of Mr. Baumann's memorandum of is also enclosed for your information. the Mr. mr. Needham has been advised orally that we agree with als examiner's opinion, and Mr. Needham replied that he did Herr?: ,Mr. Needham has also been advised that a copy of Ur. wis;:aa's letter is being sent to you in case Mr. Herman should discuss the matter with you directly. It seemed posIgvisJciettothe might have some further facts to offer with requestion whether the 'interest' of the director 11( 'Ll-triciently great to make the prohibition in section ‘aq aPPlicable." Approved unanimously. 1/ ac Letter to Mr. Kennel, Assistant Uounsel of the Federal Reserve '40ston, reading as follows: Of A encl. "Iteceipt is acknowledged of your letter of April 23 refp; ) ,8ing a letter from the State Street Trust Company with 8ect-ence to the question whether under the provisions of loarll°n 7 of Regulation W a nate evidencing a single-payment n maY have a maturity of 3 months as distinguished from 7(e) "As You point out, sections 7(a), 7(b), 7(c)(2) and itatj,efer to a maturity of '90 days'. However, this limslibs711 is to be read in connection with the requirements of lcan- Zi°n 7(c)(2) which provides for the renewal of the or of'Y a series Of obligations each of which has a maturity ,4 in excess of 90 days if the last of such obligations matill-: Ma4;8 n°t later than the date on which an instalment loan whiec?r a similar purpose would have matured'. The footnote the 1 4:s aPpended to subsections 7(c)(1) and 7(c)(2) gives ing Ilia'uritY as either 'twelve months' or 'six months' depend(T the circumstances. scriblit is apparent therefore that the two methods of deevide'llg the period are used interchangeably and that a note loan may have a maturity of 3 ingle-payment 41°'Ithneing a a or 90 s days." 4/30/43 -5Approved unanimously, with the understanding that a copy of the above letter would be sent to the Presidents of all the Federal Reserve Banks. Letter to Mr. Dillard, Vice President of the Federal Reserve ofP1,4 go, reading as follows: . 1geegla 1 :ts lideration has been given to the applicability of W to advances made by insurance companies and ters to their agents and salesmen in the light of 14:11/n711 of April 3 and the subsequent conference which 13r18011 and Mr. Hendricks had in the Board's offices. anY of these advances are exempted from the RegulaQY section 8(j), which provides that the regulation enan°t apply to a loan for business purposes to a business list rIse which is not for the Durpose of purchasing a clud-,, article. Loans exempted by this provision would in!ons made by the company to a general agent to enable 14n14 P&Y office rent, salaries and other office expenses. ' din ero a loan to a salesman to enable him to day his orarY living expenses would not be exempted by this probece use it would not be 'for business purposes'. to view of the fact that the Regulation does not apply busir -i- n unless made by a person who is 'engaged in the tio4 esst of making such extensions of credit, the Regulaa ld not be applicable to advances made by companies or inst-4-es which do not make such advances except in isolated icy fes. However, some companies and agencies have a polity-I; making advances to salesmen to pay some or all of their orsi 4Z:es during the first few months of their associacompany or agency when their earnings are small. A ch cases the company usually should be regarded as engagell vel, " in Vthe business' of making such loans. The question is achiimilar to that discussed in VI-61. Whether or not such cit t?es are mere isolated transactions is, of course, a a rn to be decided on the facts of the particular, case, d4r ,e ro_fact that the company may have an established procexicit"e be e() 4- handling such advances would be one of the facts to idered. 11.1L4Lin'llthough advances of this kind are usually 'loans' meaning meaning of the Regulation there may be cases where the ,?-kticaT.i new salesman or agent does not undertake either apeby implication to repay the money, (2) no interest '448isaw7%'' ana (3) the arrangement is in effect a commission -'" a guaranteed minimum, and the payments are in espa -,''ents of compensation for engaging in the sale of Y Z 652 4/30/43 -6ti44tirance Which are paid, not as advances, but as compensa— th %for current work, until such time as the ezrnings in iform of commission have become greater than such periodic pa: /—ert's and have reimbursed the company or general agent for „pnents already made, Et which time the arrangement is ter— arid the salesman or agent is placed on a straight corn— basis, In cases where all these factors are present, 3.111a-y be said that as between the parties, the advance is not w2all but something equivalent to pa,yment of salary or ,e83 and that consequently the Regulation is not applicable. facit ever, in order that there may be no question as to the th, s, 8 in such cases, all the terms of the agreement between -11,-Les should be stEited in writing." 7 Approved unanimously. Thereupon the meeting adjourned. Chairman.
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