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1279 A meeting of the Board of Governors of the Federal Reserve SZteal Ilas held in Washington on Wednesday, August 12 1945, at 10:30 a,ra. NiESENT: Mr. Ransom, Vice Chairman Mr. Szymczak Mr. Evans Mr. Carpenter, Secretary Mr. Connell, General Assistant, Office of the Secretary Morrill, Special Adviser Mr. Thurston, Assistant to the Chairman The action stated with respect to each of the matters hereinafter ' e-Lerred to was taken by the Board: the Ilefil°rTndum dated July 30, ]9/15, from Mr. Thomas, Director of D-vistpn of Research and Statistics, recomr-ending that Miss Margaret ‘'APPlet°r1 Le appointed as a Research Assistant in that Division on tezporary basisfor En indefiniLe period, with basic salary at tlie t'ate t 6 320 per annum, plus supplemental compensation of 048 on the basis of a 44-hour Torlaeek, effective as of the date upon which '/1411 enters uPon the performance of her duties after having passed the 111 physical cxamination. The memorandum stated that Miss Appleton l'ec°111e a member of the Federal Reserve retirement system unless 1411"titic)n shows that she now has funds in the Civil Service Retire' Ssteti) in wbich case she would continue under the latter system. Approved unanimously. Men, —cTandlim dated July 31, 19452 from Yr. Bethea, Director of ' 41firsi 4.°11 or Adr.inistrptive Services, submitting the resignation ot 111,s tb 1°11-Y C. Wakefield, a cafeteria helper in that Division, 1280 8/1/45 errective as of the close of business July 31, 1945, and recommending that the resignation be accepted as of that date. I:le resignation was accepted as recommended Letter to Mr. Laning, Vice President and Cashier of the Federal Re8erv. Dank of Cleveland, reading as follows: " soThe Board of Governors approves the changes in the perel classification plan of the Federal Reserve Bank of Clevein involving the establishment and elimination of positions R' F. C. Custodian Department and the establishment of the posi " °n of Assistant Night Cleaning Foreman in the Provision of -e D epartment, as submitted with your letter of July 28, 1945." Z Approved unanimously. ot Letter to Mr. Sherman Assistant Cashier of the Federal Reserve Bank 8 CitY, reading as follows: or j "In accordance with the request contained in your letter or , , 11, .3-Y 25, 1945, the Board of Governors approves the payment jul-'.arY to Mr. L. S. Violet, Chief Electrician, effective ex15 r '1945, at the rate of $2,700 per annum, which is $300 ces of the maxiinu.ra annual salary established for this Posti n under the personnel classification plan." Approved unanimously. lelegrm, reading as follows, to Mr. Dillard in reply to his inquiry kethet. the Board had any objection to the publication of its letter of July t° 141‘• Willett, First Vice President of the Federal Reserve Bank of ! : )t(41) Which dealt with a suggestion that Regulation V; be amended so as to ,,oltide a general exemption for returned veterans: ae D1,7°11r wire July 30. Board has no objection to publication SA,-;;1°8ed of paragraphs quoted in letter July 12 to Willett. C01-1, however, that you advise publisher to leave name of ' 1‘eseman out Of any article that they publish." Approved unanimously. 1281 8/1/45 -3Letter to Yr. Lewis, Manager, Consumer Credit Department, Fed— era] . Reserve Bank of St. Louis, reading as follows: "This is with reference to your letter of July 17, 7.1r945, enclosing corresponden ce relative to a loan which Frawley of Little Rock, Arkansas, wished to Obtain4 from the Peoples Building and Loan Association be that city. It appears that this loan was to have en made in order to make repairs to certain property, tl,'”umably residential property, and was to be for $800 : r ,21. a maturity of 18 months. This would have involved "LhlY is said Payments of approximately $47 per month which . meet. to be too great an amount for the borrower to th "Inasmuch as it is not likely that the terms of 1163.1regulation with respect to repairs and improvements yo be changed at an early date, we would suggest that 1, 14write to the Peoples Building and Loan Association 11., te" -ng the reasons for the regulation so that they may ma Passed on by the Association to Mrs. Frawley. You Y wish to use the following paragraphs in your letter: 'In consequence of the war, as you know, here a general shortage of materials and Or r or making repairs to residential prop— as well as for producing other forms of con— goods. The demand, in short, is far in xcess of the supply with the consequence that here is strong upward pressure on the price level „ .c)l' such goods. Price control can work only if the 7 ; LIIessure for higher prices is kept within bounds. fi important purpose of the regulation is to re— r;Ice that pressure and thereby help to protect he country against the dangers of inflation. i 4 °11 will agree, we think, that runaway prices ,or building materials, as of other things, would J-11 the long run be a very bad thing for everybody. 'It would appear from the letter in question that ba. someone representing the Association may an ve discussed with Mrs. Frawley, but with dis41341:Trail the possibility of borrowing as much 4,500 in order to bring the loan outside the Cope of Regulation V4 and consequently permit it mo written for a longer term, with smaller Q1.174.̀hlY payments running over a longer period. th 'e aside from the reasons which might make e6e larger loan inadvisable in the particular tes.!' it is to be noted that if many people were L'ake that course the anti—inflationary purpose Z 1282 8/1/45 -4- "'of the rule would be defeated. The regulation has made a distinction between loans below and above $1,500 simply in the interest of making it easier for loans to be handled. Few loans above 91,500 are contrary to the objectives of the reg— ulation since almost all loans above that amount are obtained to facilitate the supplying of goods and services, and the more goods and services are available the smaller the danger of inflation. If, however, much resort was made to large loans or consumer purposes, the regulation would have uo be changed to take that development into ac— count. t A purpose of the regulation is to influence People to limit their use of credit, not to in— crease it, and to do this by postponing purchases which can be deferred or, in case they cannot be 3,,?etPoned, making them as small as possible. In ,feee circumstances, we believe that many people contemplate a loan so large that it cannot be t rePaid within the time permitted will try 4° figure out some way by which, if they find Z;Lat they must borrow, they will borrow less than ,'",aeY had contemplated. This is a course which 14rs. Frawley may wish to consider. The time is sure to come when supplies of ode, including building materials, will be much ,arger than they are at present, when prices may 1!°e lower, and when it will no longer be necessary the public interest to limit home—improvement t (!ans to a maturity as short as 18 months. People 710 shape their own policies on the basis of these N)sctations will often be serving their own best :., 1:?rests and will many event be making a contri— ' 4L'lj3r1 to the Government's anti—inflation campaign.'" 1 r I Approved unanimously. Tele gram to the Presidents of all the Federal Reserve Banks te4d1.11 e 48 f011ows: Referring our wire July 12 and Acting Secretary e11, depo - ? letter of July 25 regarding method of reporting ta.nk8lts in Treasury transcript and on books of Reserve to and reserves to be carried thereon, Board expects send You a wire on subject within next day or so.“ Approved unanimously. 1283 8/1/45 -5Letter to Senator George D. Aiken reading as follows: f "This relates to your note of July 20, referring to us , or comment a copy of a letter of July 14 from Mr. M. M. :'°unsele, 44 Spring Street, St. Johnsbury, Vermont. The -!.etter was prompted by the Board's recent action in increasthe margin requirements for purchasing listed stocks, per cent iltizg. short sales, from the 50 per cent to the 75 the S"This action was taken pursuant to the provisions of ecurities Exchange Act of 1934 which, as you know, had rOZ''nof its important purposes the prevention of excessive speculation in stocks on credit. At a time like the Present8s when the danger of general price inflation is still ,„'" )us and the amount of cash seeking investment is un.!).'jecedented, it would seem that high margin requirements are ;;I'Y much in order. They operate to restrain speculation on iner,dlt and should tend in course of time to have a stabilizfa ;Influence on stock prices and consequently to have a co2rable influence on the interest of investors and the ri of the national economy. its , The idea expressed by your correspondent that Congress ass?If should determine the margin requirements, instead of urialgning that function to an administrative agency acting es_er general legislative direction, would seem to us to be flo eentially impracticable. It would preclude the necessary acjibilitY in administration, particularly when prompt -on is required." Approved unanimously. Tel -ag .Loiaowe:egraM to Luigi Einaudi, Banca d'Italial Rome, Italy, reading Pre ."Goldenweiser Economic Adviser this Board, Knoke Vice tankslaent Federal Reserve Bank New York and Rozell also of prob re now in Zurich and arranging visit to your Bank intetly this week for discussion of problems of mutual " s exhl: Regret brief notice which representatives will -valr " W.11 1 appreciate your courtesies." Approved unanimously, together with a telegram to Mr. Goldenweiser, Economic Adviser in the Division of Research and Statistics, reading as follows: 1284 8/1/45 -6- "State Department is cabling Zurich Consul today refer, nee Italy, . We are cabling Einaudi. On arrival call Amriuala Embassy Rome for instructions regarding Moscow." Thereupon the meeting adjourned.
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