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1180 A meeting of the Board of Governors of the Federal Reserve 8Ystem was held in Washington on Tuesday, August 10, 1943, at 11:00 PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak Draper Evans Mr. Mr. Mr. Mr. after Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinreferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Federa]. Re serve System held on August 9, 1943, were approved unanimously. Memorandum dated August 7, 1943, from Mr. Goldenweiser, Director the D ivision of Research and Statistics, recommending that Harold Seligman be appointed as a junior economist in that Division, with basic s(14,17Y at the rate of $2,600 per annum, effective as of the date upon Nhich he enters upon the performance of his duties after having passed Of 411-sfactorily the usual physical examination, with the understanding that the a ppointment would be subject to his being released from his em131%lent by the Treasury and that if anything derogatory should develop ill the inves tigation of his references his services might be terminated Iked iately. Approved unanimously. Memorandum dated July 30, 1943, from Mr. Dreibelbis, General 1181 8/10/43 At-torn eY, recommending (1) that the title of Wilson L. Hooff be changed frelil law clerk to Attorney, and (2) that the following increases in basic annUal salaries of employees in the Legal Division be approved: Name Designation Wilson L. Hooff Alfred K. Cherry Hrs. Frances C. Cashell Salary Increase To From $3,600 $4,000 Attorney 6,200 6.400 Attorney 2,200 Secretary to Mr. Dreibelbis 2,000 lt red unanimously, effective August 16, Memorandum dated August 6, 1943, from Mr. Vest, Assistant Gen— eN.Attorne_, recommending, with the concurrence of Mr. Dreibelbis, Go Attorney, that the basic salary of Jerome W. Shay, Attorney, be Incre ased from $3,800 to 14,200 per annum. 16, Thornas Approved unanimously, effective August MeMorandum dated August 6, 1943, from Messrs. Goldenweiser and 3 Director and Assistant Director, respectively, of the Division of Rese arch and Statistics, reading as follows: the "We are endeavorin7 to assemble a staff of people for gar work of assembling an organized body of information re— co ding the financial position of European and certain other Thtlentries, being done at the request of the State Department. ca project is one which requires high—grade research people ble of helping us to formulate the questions that might beP ! to 710eoted to come up, to gather the information, and finally prolnterpret the data and to present conclusions as to the Policies to be pursued. The subject is one of vital interest co to the Board as well as to the State Department and th. rs within the proper scope of the research activities of Dlvision. tat. for oranization organization of the work are at present ten— of ge and will necessarily be adapted to the qualifications catede,Pereons we can get to help on the project. As indi-Ln a previous memorandum to the Board, Mr. Thomas will 1182 8/10/43 -3- "be in charge of the project and devote most of his time to it. Mr. Gardner and members of his section will give such assistance as they can spare from other activities. We hope to obtain three or four persons of outstanding ia:!!ilitY to help plan the work and interpret the results; 4Ve expected salaries of these persons will range from ,° to $10,000 per annum. In addition we shall need 77 ,!°° slblY one r two others with salaries of 40,000 to and two or three research assistants at somewhat ,:g1:.__Some assistance -- research, clerical, and ;Z:61 1 will be provided out of existing staff, l iincluding persons now working on the Military Government ,andbook who may be transferred to this project as that le*.ssp:0Z3leted. We may also be able to obtain help on some of the work from the New York Reserve Bank. 13,, "Recommendation has already been submitted to the oiarcl for the appointment of Professor Gottfried Haberler Harvard at a basic salary of $9,600 per "We have also been in touch with Professor Howard 4tlas of the University of California, who is an outstandg American scholar in this field, has studied abroad, and written extensively on monetary matters, including an eVloritative book on foreign exchange controls. He is now . 1...ged in research on post-war international exchange probi;mZ- Professor Ellis has indicated that he is interested simt,Project, provided it is of sufficient importance and irtio e; justify giving up the important work that on: 1:z:pc at the University of California. He has At ed that $8,000 is the minimum salary he will accept. ter e clear withce the Board's Personnel Committee we Proceeding to negotiate with him at this level. IgroitiWoreisre looking for suitable persons to fill the other It is expected that the senior members of the menit1P employed may have suggestions. Most of the appointperi s will be made on a temporary basis, probably for a leafd of one year. Since some of the people will be on tai;etr absence from universities and will wish to maineir status in other retirement systems, it is sugo tthose employed on a temporary basis for this r ii:acintd do not wish to participate in the retirement :be not required to join. dat4 If these plans are agreeable to the Board, recommenwiarn,s for other appointments along the lines indicated founa° submitted for approval as available people can be ge Approved unanimously. Letter Or chi to Mr. Meyer, Assistant Cashier of the Federal Reserve cago, reading as follows: 1[1 8:' 8/10/43 -4- "The Board of Governors has approved the establishment, under the personnel classification plan, effective °f August 1, 1943, of the position of Secretary to resident, with a maximum annual salary of $3,000, as requested in your letter of July 30, 1943." Approved unanimously, together with the following letter to the Joint Committee on Salaries and Wages: "Under the procedure established by General Order No. 19) of the War Labor Board and the authority granted by the n -°111missioner of Internal Revenue, transmitted herewith ns the original and four copies of Certificate No. 2 of e e Federal Reserve Bank of Chicago with respect to the s ?t!tblishmLent of a new position under the personnel claslfleation plan of Secretary to President. "The establishment of this new position is handled n;usr the certification procedure inasmuch as the creation iti the new position will result in an increase in the maxi:,annual salary for the individual who has been acting that capacity since March 1941. pro The establishment of the new position has been aps—Yed by the Board of Governors of the Federal Reserve sytem effective August 1, 1943." j L Letter to Mr. Swanson, Vice President of the Federal Reserve or mina, saPolis, reading as follows: in "Reference is made to your letter of July 26, 1943, ac regY to Mr. Paulgerts of July 6, regarding the recent .i ,!ePtance by The Gwinn State Savings Bank, Gwinn, of a small guardianship in violation of condition of pu7ershiP numbered 1 to which the institution is subject. re'auant to the condition of membership, the bank is now p:esting Permission to broaden the scope of the corporate rs powers grant exercised by it to include the limited trust in,ed bY the State authorities in 1929, and you say that ' 1°11r opinion the request should receive favorable con8*lderation. to x"It appears that the reason the bank wants permission ereise trust powers is in order to be able to handle an a -ecasional account which might be offered, and not to do 1,41nel:ea trust business. It is said that only 8 accounts, sineudlng the one recently accepted, have been accepted coll4: t ru,st powers were obtained in 1929, and the new acto : m the only one handled since the bank was admitted --muership in July 1941, and also that the bank is not 1184 8/1°/43 -5- .desirous or anxious to accept this type of business and not even sure that any more accounts will be accepted. The ns ititution is located in a town of only 1,300 popu.. °n, its total resources are less than 500,000, and iZt, only one active officer; consequently, it could 4-.N.17 be expected to acquire sufficient trust business the establishment of a trust department and 0thjustify se equip itself to handle trust business generally. "In view of the circumstances, the Board does not feel that c at it would be justified in prescribing the three trust ,°nditions and thus grant the bank unrestricted permission 2 1 exercise its trust powers. However, since the bank is reported to be in a good asset condition and under capable ;: lrlegEment the Board will not object to the bank's conting to administer the one account it now holds or to its . 7,te ePtance of an occasional similar account, with the un'17standing that it will not expand its fiduciary activany material extent without first obtaining the Permiest° -ssion of the Board. Please advise the bank accordingly. Approved unanimously. Reserve Letter to Mr. Phelan, Assistant Vice President of the Federal Bank of New York, reading as follows: 4 "This refers to your letter of August 5, 1943, regard'ng to the authority of the Federal Reserve Banks to consent anc:tftns of maturities of guaranteed loans in accord19 " he War Department's memorandum of January 13, "As indicated in your letter, section 11 of the revised form ti,, f guarantee agreement of April 6, 1943, provides that . o n°lder Of the obligation, unless prior objection is made 1 ( Ziting by the other party, may extend the 'term of the paZ ) but, without the prior written consent of the other eo''Y, not more than once and for not more than 60 days. In aer of the early drafts of the revised form of guarantee stesrent this provision referred to the 'obligation' in° f to the 'term of the loan'. The objection was raised that ant such a Provision would require the consent of the GuarvoicT to each renewal of short-term notes issued under a reang credit agreement. Such was not the intent of the and, accordingly, the provision was changed to read as intnow ow in force in order to make it clear that the maturity theTed is not the maturity of an obligation issued under arreni=1:agement, but the maturity of the financing ary AS stated in the War Department's memorandum of Janu-L31 1943, the prior consent of the Guarantor was not 1.18 v10/43 -6- -equired to extensions of the maturity of guaranteed loans Ifxler the May 14, 1942 form of guarantee agreement. However, anY case in which a Financing Institution should request consent to such an extension of maturity, that memorandum authorized the Federal Reserve Banks to give such consent Pdrovided the aggregate of the extensions did not exceed 60 : ,!s from the original maturity date specified in the guaree agreement. The maturity date there intended, as under revised form of guarantee agreement, was the maturity of tLe credit agreement or financing arrangement rather than "e maturity of obligations issued thereunder. ,Accordingly, it is our view that the word 'loan', as used in section 11 of the revised form of guarantee agreeiti l en nInof seApril ix.01 ] .; 6, 1943, should be given the meaning assigned 1(C) of the agreement; and that, therefore, a nartarL eing Institution may extend the maturity of the fitai ! 1- -"g arrangement for not more than 60 days without obe.17"-Lng the Guarantor's consent. If in any such case, howexe t/.e1C,Financing ' Institution should request consent to such ' suoi-1-s n, the Federal Reserve Banks are authorized to give nsent on behalf of the Services. ePhWe have informally consulted the War Department by -L teone with respect to the intent of the War Department's 4213randum of January 13, 1943, and they have confirmed the *Zerpretation indicated above; but we have not otherwise warer , 1 the matter up with the Services. We are sending the Liepartment a copy of your letter and of our reply." r tj,, Approved unanimously. Tel egram to the Presidents of all the Federal Reserve Banks, g as follows: t'eactiti "Co Pr se,;vpo nsideration is being given to a revised draft of the ri ii.mendment No. 10 to Regulation W. The text of re, -ralt is given below. The Federal Reserve Banks are chgested to Slake comments and suggestions on the proposed gra ges, and it would be appreciated if these were tele, Phed to the Board before the end of this week. Since we be,. -1-leve that you have previously discussed all of the ini:'ges with the trade, at least informally, it is not biltended that they be submitted to the trade for comment, for .t,r() , l u are at liberty to consult with anyone in the trade the clue PurPose of developing your own comment. Neither publ,raft: language language nor the substance is authorized for b1: "Amendment No. 10 to fitgulation W olo 'Legulation W is hereby amended in the following rets, effective 1* BY striking out the figure $5.00 in section 5(f) Spec v10/43 -7- 4'entitled "Authorization" of Small Items' and inserting -al lieu thereof the figure 310.00. By 2 . , adding to section 5 entitled 'Charge Accounts' the f ollowing new subsection (i): Itl ga s in Posting. — In case the Registrant, not— ths(t his having used due diligence in posting to 1.1?-s records received on or before the 10th day of payments the month, has been unable to complete such posting and is sequently unable to determine from such records on the int1:3LI1, 12th, or 13th whether or not an account which was not sfault on the 10th went into default at the end of that ,3r, he shall not be deemed to have violated section 5(b) he makes a charge sale of a listed article in that ac— 4 °11nt on the 11th, 12th, or 13th, even though such account discovered in due course to have been in default at the are of such sale, provided the Registrant, promptly upon c°verY and in any event within 15 days of the date of th : sale, makes a request of the customer that he either ' ' - 11rn the article or else pay for it in full immediately. cepti3 0. 1 By adding at the end of section 8 entitled 'Exns the following new subsection (p): c,_ (P) 2.14Lga Account Credit to Business Enterprises.— Any 11:rge sale of a listed article to a business enterprise for e:cclusively in the operation of its business. 4. By adding at the end of the first paragraph of section 12( m) entitled 'Cycle Billing' the following sentence: 1 h Provisions shall be applicable also to any Registrant " c shall have established such a system after having re— oitl: Federal Reserve Bank of his district a at z er /Tr On which is still in force stating that the Fed— nerve Bank is satisfied (1) that the system is in— man ed to effectuate operating economies with respect to not for or office machinery and (2) that its adoption is Ior the purpose of circumventing this regulation." Ir 211_c Approved unanimously. Thereupon the meeting adjourned. APProve Chairman. 1186
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