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663 A meeting of the Board of Governors of the Federal Reserve 87steatwas held in Washington on Thursday, April 9, 1942, at 10:30 Et.ra. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman 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- atter l'eferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Ner 41 Reserve System held on April 8, 1942, were approved unani10484. Melloranduni dated April 6, 1942, from Mr. Goldenweiser, Direc- tOr. - tale Nrican 4 sion, --Lvision of Research and Statistics, recommending that H olthausen be appointed as a junior economist in that Divi- th salary at the rate of $3,600 per annum, effective as of 4 'e date halri,ne upon which he enters upon the performance of his duties after Passed satisfactorily the usual physical examination. Approved unanimously. 4'reta. Cook, Memorandum dated April 4, 1942, from Mr. Nelson, Assistant c:Ir, re commending that Woodley Boothe, laborer, and Thomas G. Ealltrellr, be promoted to the position of guard in the Secretary's Ot tice t ' 131 an indefinite period, and that the salary of each be 664 V9/42 -2- creased to $1,380 per annum from $1,320 and t1,200 per annum, respectively, effective April 16, 1942. Approved unanimously. Letter to Mr. Day, President of the Federal Reserve Bank of San CO, reading as follows: "In view of the circumstances set forth in your let: e 1* of April 2, 1942, the Board of Governors approves, ifective May 1, 1942, the payment of salaries in excess f uj . the annual salaries provided in the personnel „411?eification plan of your Bank for the positions ocuPled as follows: Annual Name salary fosition Angeles Los 14 b. $4,500 Durran Chief Clerk Salt Lake City 4,000n Simms Accountant Approved unanimously. Or Letter to Mr. Evans, Vice President of the Federal Reserve Bank ballas, reading as follows: vitt, "Reference is made to your letter of March 12, 1942, ,r" which you enclosed form F. R. 105b for Del Rio Bank afjust Company, Del Rio, Texas,and form F. R. 220 for its , Te 4-liate, Val Verde Wool & Mohair Company, Inc., Del Rio, '48? compiled as of December 31, 1941. It appears that until the examination as of January 21 : co '1Y42, the bank was of the impression that, as was in; lreetlY stated in the report of examination as of May 7, 191 the relationship had been terminated by 'torea • affiliate It, sing the number of directors of the bank from 5 to 7. tii„--Lsc appears from your letter that the affiliate has ill"ce repaid to the bank its indebtedness of $8,000 reported ti,the latest report of examination as a violation of sec1 23A of the Federal Reserve Act. In the circumstances, t11:',1, zoard will not insist upon the publication of the 665 4/9/42 -3. affiliate reports as of past call dates. "On the basis of the available information, it is assumed that the affiliate relationship exists because .rectors of the member bank constitute a majority of the i .rectors of Val Verde Wool & Mohair Company. However, lstead of so stating, the report of examination as of tanuarY 21, 1942,states: 'Affiliated by reason of the _act that the bank directors Boothe, Drisdale, and Miers i the entire capital stock of the concern.' The fact hat this inaccurate explanation of the affiliation was 22 -gej ated, in substance, in the bank's report on form F. R. c Indicates that the bank is not yet correctly informed °fleerning the pertinent statutory provisions. p 'When forms are sent to the bank for submitting reas of the next call date, it may be advisable to 44-71'ect its attention to the definition of the term 'affill li t,' quoted on form F. R. 220b, and to the waiver proprinted thereon setting forth the circumstances si which the Board waives the requirement for the submis°n of reports of affiliates." i Z Approved unanimously. the Letter to The Honorable James V. Forrestal, Under Secretary of Navy. , reading as follows: 8 1 "Please accept our thanks for your letter of April k;rt4 ' 942, advising that Regulation V, the maximum rate of tej rest and guarantee fees, as set forth in Chairman ' letter of April 6, 1942, are satisfactory to the ' Nm e8 'ITY Department. sith "We note your statement that it is understood that be "er the rate of interest or the schedule of fees may fitm ified from time to time as may appear desirable to casecaanged conditions or the exigencies of a particular we l3, subject to the prior approval of the Navy Department. itletielieve this matter is covered by section 6 of the Regsarirn, which provides that rates and fees will be preby Jed from time to time, either specifically or otherwise, bea":_Board of Governors after consultation with the War INI7tj'ent, Navy Department or Maritime Commission and Federal Reserve Banks. tion In the schedule entitled 'Guarantee Charges on ForLoan Guaranteed' as set forth in the letter of 66G 4/9/42 —4— "41 '11 6, 1942, under the heading 'Percentage of Loan Guareixiteed' , here were the following items: '91 - 100%'; 75 - 90%'; and 'Up to 75%'. Mr. Clayton, of the Board 1°)f Governors, has discussed with Mr. Kenney of the Navy it ePartment, the desirability of a slight change in these t emsin order to eliminate any possible uncertainty and o maintain the regularity of the various steps in the °o/ledule. It is understood that these changes are ac?eptable to the Navy Department and accordingly the items a,cpestion will be changed to read: 1 91 - 100%'; '76 7V•4Q and 'Up to 75% (inclusive)'." Approved unanimously, together with a letter to Rear Admiral Emory S. Land, Chairman of the United States Maritime Commission, in the following form: vi "Please accept our thanks for your prompt letter adof83:11g that and the maximum rat? 4 Interest the proposed regulation and the guarantee fees, as set forth in Chairman cleel letter of April 6, 1942, are satisfactory. ti "In the schedule entitled 'Guarantee Charges on PorAn°r.1 of Loan Guaranteed' as set forth in the letter of . ), 1942, under the heading 'Percentage of Loan Guaraa6 1 75'w, there were the following items: '91 - 100%'; %'; and 'Up to 75%'. Mr. Clayton, of the Board or a: 90 ernors, has discussed with Mr. Anderson of the Mari,, tirti„--v 'Jommission, the desirability of a slight change in ' ancise items in order to eliminate any possible uncertainty sch, t4° maintain the regularity of the various steps in the e. It is understood that these changes are acceptable to e Maritime Commission and accordingly the items in gile8 will be changed to read: '91 - 100%'; '76 - 90%'; and 13 to 75% (inclusive)'." 'u° Letter to Mr. Hale, Vice President of the Federal Reserve Bank San pr 44°1800, reading as follows: rega 7,:lleoeipt is acknowledged of your letter of March 27 ,ng 1 the applicability of Regulation W to a loan evidenj' briee : b7 two separate notes under conditions which may be 'V described as follows: elas A dealer took an application for a 1,345 Title I 8 I loan which was approved by a bank for a term of or..4 0if)tr 4/9/42 —5-“36 months, with the further understanding that a reason- able increase in the amount of the loan would be allowed necessary to complete the contemplated work. After the part of the work was finished and the amount of the toarl disbursed to the dealer, the borrower applied for 5°0 more to pay for additional improvements. Inasmuch H8 the original loan had already been reported for Federal 4°;181-ng Administration insurance, the dealer desires to 17-e the borrower's unsecured note for the additional ad : whether this asks iance on a 36 months' term, but the bank S permissible. "The Board agrees with your view that if the loan :?cord establishes beyond doubt that the original and supttemental advances are part of the same transaction, the iransaction will not violate the Regulation even though it 08 represented by two notes so long as both are held by ; le lender, although it would be desirable that, wherever easIble, the obligation be consolidated into one note. ti "In this case you say that the need for the addide°11al advance arises out of work undertaken with the unforstanding that the loan would be increased to provide thr such expenditures, and therefore it would seem that a e transaction will not violate the Regulation. However, paT3te for less than (1,000 covering alterations or re4 would obviously not be exempt merely because the ha,gcr's l total indebtedness for alterations or repairs a vPened to exceed :1,000. In the present case 500 seems 01 11er large amount merely to complete a job that was ra;g111ally planned at )1.,345, and further question is fols” bY the fact that this '''500 is described as being 1' additional improvements'. "Eachcase necessarily must depend upon all the reletj involved, but it is hoped that these views of Board will be of assistance to you in such cases." loan Approved unanimously. Letter Ilsedca to Mr. G. A. Leukhart, General Manager of the National 4arket Report, Inc., Chicago, Illinois, reading as follows: re„ "This is in reply to your letter of March 25 with to,7ect to the designation of automobile appraisal guides 'Purposes of Regulation W. 668 4/9/42 -6- , "The Board has now included Blue Book National Used lr Market Report - Executives Edition among the automotie appraisal guides designated for purposes of Regulation , lr:1 the following territories in addition to the territories set forth in the Board's letter of March 21: .‘!tail sales values' for Zone Minnesota (except the 15 No. 4. counties for which 'Retail sales values' for Zone No. 5 are designated) Texas (except the 6 counties for which Zone No. 5 is designated) 'Retail sal Sales -s values' for Zone Colorado No. 5 Following 15 counties in Minnesota - Big Stone, Clay, Kittson, Lac qui Pane, Lincoln, Marshall, Norman, Pennington, Pipestone, Polk, Red Lake, Rock, Traverse, Eilkin, Yellowmedicine Montana New Mexico Following 6 counties in Texas Brewster, Culberson, El Paso, Hudspeth, Jeff Davis, Presidio Wyoming bell "It is not entirely clear from your letter whether you tdi-jve that the retail sales values quoted in your Executives ave 1°n for Zones 4 and 5 most nearly represent the current Prices of reconditioned used cars in the respective "_e 1 te1. ch"ories specified above or whether you have determined to rier"ge the zones specified in your publication in such a manThe s to secure this additional designation by the Board. Board has no desire to set forth the prices that the desides are to quote for used automobiles in any part"-ar territory, and if it is your opinion that some difwoia'erit basis of quoting prices or setting up your 'zones' saaed be productive of more accurate quotations of retail 110,2 values, it is earnestly requested that you give the 'I'dithe benefit of your opinions on the subject. gest.Turther consideration is being given to your sugIon that the Board include your Red Book and your r 669 4/9/42 —7— " zeoutives Edition among the appraisal guides designated for the Detroit area." Approved unanimously. Telegram to the Presidents of all Federal Reserve Banks, reading as follows. „ "Please instruct weekly reporting member banks to 'ceP01:t, beginning April 15, any holdings of 'Treasury dnlficates of indebtedness' as a separate item imme. w arlY preceding their holdings of Treasury bills in lY condition reports on form F.R. 416. Holdings euch certificates should also be listed separately wri Your transcripts of such reports sent to Board. Code tin='ME' will designate such securities in weekly Ba Zetr bank condition reports and statements. In your hZ4 s balance sheets, form 34, and in weekly statements, ' tom nge of such certificates, if any, should be reported p;:4-4-°11ing holdings of Treasury bills. In Board's weekly b:-eral Reserve 'COND' telegram, such certificates will Cid .2 .t d-sa.gnated by code word 'BE' Approved unanimously. Letter to Mr. Jack Corbett of the Board of Economic Operations, tent of State, reading as follows: of 4.,_"In accordance with your conversation with Mr. Knapp toire Board's staff, I have pleasure in giving you the and °wing confidential information concerning the terms c York onditions upon which the Federal Reserve Bank of New : g carries the accounts of foreign central banks and ce,,!rnments, and in particular the account of the Banco "ral de Bolivia. et, "Sections 14(e) and 14(g) of the Federal Reserve Act wi2tTI the Board of Governors certain supervisory duties respect to foreign accounts at the Federal Reserve ?eV, and pursuant to these sections, the Board authorizes forel:al Reserve Banks to open accounts in the names of a !.1-gn central banks and governments in accordance with pr;Landard form of agreement approved by the Board. In "'ice this agreement takes the form of an exchange of 670 V9/42 -8co rrespondence between the Federal Reserve Bank of New York and the foreign central bank or government in the 14,!Ile of which the account is to be held. On December 1, 737, the Federal Reserve Dank of New York addressed a eltter to the Banco Central de Bolivia corresponding to ti e form Which is enclosed for your confidential informal:T. The Banco Central, in a letter dated May 4, 1940, 07,6 , 11.rried to the New York Bank a carbon copy of its letter uecember 1, 1937, having appended an appropriate signed Z"cePtance of the terms and conditions set forth in the .Le tter." t Approved unanimously. Thereupon the meeting adjourned. 413Prove Chairman.
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