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241(74 Feaerai the Minutes of actions taken by the Board of Governors of the Reserve System on Friday, August 13, 1948. The Board met R°ard. Room at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman pro tem. Szymczak Draper Evans Vardaman Clayton Carpenter, Secretary Sherman, Assistant Secretary Hammond, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Vest, General Counsel Leonard, Director of the Division of Examinations Mr. Young, Associate Director of the Division of Research and Statistics Mr. Brown, Assistant Director of the Division of Research and Statistics Mr. Solomon, Assistant General Counsel Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Upon motion by Mr. Clayton, it was voted unanimously to elect Mr. Eccles to :Zi ' ve as Chairman pro tem, during future Zsences of the Chairman and Vice Chair:711, and to elect the senior member of 'Ile Board present to serve as Chairman poro.tem. during future absences of the 1141rman, Vice Chairman, and Mr. Eccles. There Was presented a telegram to Mr. Johns, Secretary of recierea Reserve Bank of Kansas City, reading as follows: glIst 1 1:etel August 12, Board approves effective Auer a a(z, 1948, rates of 1-1/2 per cent on discounts lilice;wances under Sections 13 and 13a except ad- t0 individuals, partnerships and corporations 7'5 -2other than member banks under last paragraph of Secio 13; 2 per cent on advances under Section 10(b); , ac-nimum buying rate of 1-1/2 per cent on bankers P ances. Otherwise Board approves establishment w4;,' ialliout change of the rates of discount and purchase teur existing schedule, advice of which was conah,„ne in Your telegram dated August 12. Board will ourice change at 4 p.m. EDT today." Approved unanimously. the It appeared most probable at the time of this meeting that e8idezt would sign the bill passed by the special session of thNigress to authorize the Board of Governors to regulate concredit. '711'4 Regillation w 1°4 the list of '14rEttion, It was stated in that connection that lapsed on November 1, 1947, consumer credit was subjects assigned to Mr. Evans for primary con- but that it was dropped from his assignment in subse- Et'eti°11s Of the oa .rd because of the termination of the Board's 411t11()IsitY in that field BY unanimous vote, the subject of conmer instalment credit was added to Mr. ans t assignmeniowith the understanding that Mr. Clayton, Mr. Evans' alternate on tils other assignments, would be his alternate on this assignment also. g E vans stated that he had been meeting with the informal er °1113 to kb, Which he had referred at the meeting of the Board on 10, , 11%.rci 1948) to formulate recommendations to be made to the thiS meeting with respect to the provisions to be included Etrt i26 8/13/48 -3the liew Regulation W to be issued by the Board. He presented the reconametidations as agreed upon by the group as follows: "The regulation should be published at the earPossible date to be effective September 20, thoch is Monday. In reaching this conclusion it was re Ught desirable if possible to defer releasing the 441111 ! tion until printed copies were available here e• the Federal Reserve Banks which might make the bierse date Thursday or Friday of next week. Mr. (lEtt 8 w°111d be given authority to make the release 4111 : : ne week later if unforeseen circumstances should is desirable. 1.at, "The dollar limit on credits subject to the regu-Lon would be fixed at $4,000. all til:The regulation should grant a general license to ' stib i se subject to the regulation and require the a ZIIT°11 by each person subject to the regulation of cal14--Lfied statement (which might or might not be the a registration statement) within 60 days after slib.-'rective date or 6o days after the person becomes Je't to the regulation. al Provisions with respect to the use of appraise'softs On used automobiles should be made effective trie effective date of the regulation. show:Inclusion of disposal units in the regulation Pair i be Postponed until a decision is reached on reshowun'. modernization loans but mechanical driers - be 0 included. n17, change should be made in the $50 exemption containcti De y.m J-n. the minimum monthly ent of $5.old regulation or in the ii elLiaendRePair and modernization loans should not be inthe re e.t this time but the press release announcing -2111ation should include a statement to the effect ' - 0a/isb-callse of the technical difficulties involved such t1 b not being covered by the regulation at this idt eldia'it_a„e ue 44' t tlT.prdblem is being studied and they may ) ! change in the provisions with respect to the i-It.i, 141.114" that 11;:J of contracts covered by the regulation is 1 ; ellcled at this time because of the problems - change would raise. 1271 8/13/48 "The following calendar is suggested: PUblish the regulation as soon as possible. u. Simultaneously with the publication of the regulation a letter should be sent to the Federal Reserve Banks advising them in general terms what the Board expects in the way of additions to the staff at the Federal Reserve Banks and enforcement of the regulation. C. The regulation would be discussed at the next Presidents Conference during the first week of October. d, A conference would be held in Washington somewhere around the middle of October of the Officers at the Federal Reserve Banks who Will have immediate charge of the administration of the regulation. ”mif ci Evans would be authorized to change this schedule rcumstances should make it desirable. hem,"Mr i Evans would hold a series of conferences with the Of the he FDIC and other agencies who in the past had lated4.° 4.0ked to to enforce the regulation insofar as it re° the organizations over which the agencies had jurieci•c; . He would point out that the regulation is now 1344 a statute enacted by the Congress, that the Board Nqs 130ard. e't the regulation should be enforced, that the regta ; °1-11d look to the respective agencies to enforce the as it had done heretofore, that since the Board Ilad a definite responsibility and must know that the regucies wEts being enforced without favoritism, if the agenCould as th assure the Board that that could be done so far thez,eY Were concerned, the Board would be glad to look to .„,1-1,_ t that otherwise the Board would have to take in, ciel)e4db o Steps for enforcement. These conferences would 0wed by a letter confirming the understanding so that ; 1, ;; vould be made a matter of record. It was thought -Ler 0. ;"er the conferences with the FDIC and the Comptrolnlittee the Currency, the chairman of the executive comcoks t °f the State Bank Supervisors might be invited to l'espe4 Washington for the same kind of conference with „ily tc, nonmember noninsured banks. o ei regulation should require a down payment of 3/3 -m°011es and 20 per cent on other listed articles. 1278 8/13/48 -5This would mean no change in the down payment for ir)mobiles, furniture and floor coverings but would 4 reduction from 1/2 to 20 per cent for such items stres, refrigerators, etc. za0104 There was agreement that the maturity on autooil 'les should be 18 months except that the maturity re Prewar cars might be 15 months. There was a chiitrence of opinion as to whether the maturity on other erns should be 15 or 18 months." With N za respect to provisions in the new regulation regard- tilities of loans, Mr. Evans stated that the group had agreea t° recommend a maximum maturity of 18 months on automobiles agee Dtthat the maturity on prewar cars might be 15 months, but that there Was a difference of opinion as to whether the maturity otl her items would be 15 or 18 months. There WdU bs : t "e ill the LLre a discussion of the recommendation that no change Provision in the old regulation to the effect that of contracts covered by the regulation to comply with prOyisions would not affect the validity of such contracts. Mr to ka.ke IT • v ardaman felt strongly that this provision be changed slIch c ontracts unenforceable. *6 Solomon Division, outlined the reasons why, in the opinion of this would be an undesirable change at this diZ' he and Kr. Vest joined in the view that it would be un11 .141e t include such a Provision in the regulation without DlAblishing notice and affording interested persons an opt° he heard in accordance with the provisions in the 1279 -6kiraiziistrative Procedure Act and the regulations issued by the /3c4111 thereafter. D1 it QUesti-on was raised whether it would be desirable to cornthe teePeCt Provisions of the Administrative Procedure Act with to -w nOtiCe and opportunity for hearing before any regula4041i as issued by the Board under the authority that would be 111tecil, .Y the new legislation. It was agreed, however, that, beNIse ot :othe e mergency circumstances under which the law was passed ngress at a special session, the Board would be complying T, 11411 the vr°visions of the Administrative Procedure Act if it k(k) , ptea „ he re gulation to become effective within a reasonable loetio,1 saY 30 days, after it was issued. There was a discussion of the reasons Which might be advanced for and against an 841ended provision in the regulation which uld render unenforceable contracts which not comply with the terms of the regui tic)n) and at the suggestion of Mr. Evans Was agreed unanimously that the decision 011 this question should be deferred until .11e meeting of the Board on Tuesday, August '7, 1948, and that in the meantime the Federal Reserve Banks should be asked by wire lor their views on the problem. r Reference was then made to the recommendation of Mr. Evans kti the start. group that the dollar limit on credits subject to the Nille.tie4 be fixed at $4,000. Following a discussion of this point t5,000. 1€1'eed that the amount described in the regulation should be 1280 8/i3/b8 -7The question of maturities was considered at length in the 14tht 'Cr he Possible effect of various maturity requirements on of 1 consumer instalment credit outstanding and on the de- thel. consumer goods covered by the regulation. Mr. Evans teci that the d_own payments and maturities which had been dis- c118seci by the t4b4 staff group would be somewhat more liberal than ec)rutained in the old Regulation W when it lapsed on November that a down payment of 33-1/3 per cent on automobiles kat 13er cent on all other items covered by the regulation and 4 les Of18 months on postwar cars and 15 months on all other volad. be ettect. more restrictive than the terms now generally in . The advantages from an administrative standpoint of a uniform maturity for all instalment sales credits and Unc lassified credits covered by the re lation were discussed, at the conclusion of which there was agreement on the following points: . 1. That substantially the recomMendations submitted by Mr. Evans should be incorporated in the new l'egulation except that the maximum credit covered by the regulation Should be $5,000. , 2. The regulation should provide for a maximum maturity of 18 months On first-sale automobiles and a maxi'f.l1, 1,fli maturity of 15 months on all other items covered by the regulation and on Unclassified loans. 281 -8At this point Messrs. Riefler, Vest, Leonard, Young, Brown, 811(1,801,, "111°11 withdrew and the action stated with respect to each of the 1114tt ers hereinafter set forth was taken by the Board: nutes of actions taken by the Board of Governors of the Nerea ZOrtriei Reserve System on August 12, 1948, were approved unanimously. Mein orandum dated August 11, 1948, from the Division of Per- inistration submitting recommendations from the respective 4741°11 heads that increases in the basic annual salaries of the r°11°1.1111 elkoloyees in the indicated divisions be approved, effect4e Allgust 22, 198: Naze Salary Increase To From Designation 11 A: 11' 'tq.Na Chase X. Cherry A1440t1 ola tlert_ • C Assistant Counsel Assistant Counsel "8,389.80 46k 8,389.80 $8,808.75 8,808.75 S TATISTICS Cheadle Miller .111e Lichtenberg Economist Economist Research Assistant 4,479.60 3,852.60 2,974.80 4,730.40 4,103.40 3,225.60 Approved unanimously. ivierrh)ranclunl dated August 9, 1948, from Mr. Vest, General rec°11rilending (1) that effective August 13, 1948, Frederic .cPzoil, Azz.tz.„ Assistant Counsel in the Legal Division, be promoted to 'axlt General t4 413 counsel, that he be in charge of the office in sezlee of the General Counsel and the Associate General Counsel, 1282 8/13/48 -9t 1,4 a - -"-Ls salary be increased from $9,706.50 to $10,330 per anifective August 22, 1948; (2) that effective August 13, 1948, 011110, J13 allillann, Assistant Counsel in the Legal Division, be proOte t ° Assistant General Counsel, that he be in charge of the qfite . 14 the absence of the General Counsel, the Associate General Ocrksel e.ty 'and the other Assistant General Counsel, and that his salincreased from $9,108 to $10,000 per annum, effective Aul9. and. (3) that Mr. Vest be authorized over the next klith or two to attempt to find a relatively young lawyer who glIalified for employment in the office and to recommend his ' 1111:11037m,, ' - 1)Y the Board at a salary not to exceed $4,103.40 -11' alla11114. Approved unanimously. Cr th,, Mellic)ranclum dated August 9, 1948, from Mr. Smead, Director of kr:tillisi0n of Bank Operations, recommending the appointment tit . Maria Jo Peterson as a clerk-typist in that Division, on 19.48till.e'r3r basis for a period continuing through December 31, ' tii bas,_ .L.e. salary at the rate of $2,284 per annum, effective Etz or (11,1ti tile date Upon which she enters upon the performance of her 4fter havin€ rakottiril, passed the usual physical examination. The Petts elso stated that it was not contemplated that Mrs. syst lli°4 /"I(puld become a member of the Federal Reserve retirement cllarilig the period of her temporary employment. Approved unanimously. 8/13/118 -10Batik or Letter to the board of directors of the "Security State "in, Basin, Wyoming, stating that, subject to condi- tiOri s Op. J- membership numbered 1 and 2 contained in the Board's ' Re ulatin„ the Board approves the bank's application for member8L, 4113 in the Federal Reserve System, and for the appropriate kourlt or stock in the Federal Reserve Bank of Kansas City. . Approved unanimously, for transthrough the Federal Reserve 'Dank of Kansas City. Letter to Mr. Diercks, Vice President of the Federal ReOf Chicago, reading as follows: 1948:Reference is made to your letter of August 9, EQ1013t submitting certified copies of resolutions Stet, ! e bY the Board of Directors of the Community tett.; ' ank, Grandville, Michigan, signifying its in°! , 1 to withdraw from membership in the Federal Reser7 : oystem and requesting waiver of the six months' nths'ce TUeUally required. Illetidatni-n view of the Reserve Bank's favorable recomreqlxi;'°11, the Board of Governors waives the usual corcliZent of six months' notice, as requested. AcUpon surrender of the Federal Reserve Bank 0 ' ssued to the Community State Bank, Grandville, Mich. the Federal Reserve Bank is authorized to 4- such stock and make appropriate refund thereon. of itiasl)auch as the bank has applied for continuance the dn-tinsurance with the FDIC, it has four months from letilioe, -":L e of this letter to accomplish termination of s (F.R.L.S. #3548). i lease advise the Board of Governors when cancellatic%' obtainea mena effective and refund is made. The Certificate , -. ;fshiP issued to the bank should also be bankproposed State '11R%;_ ule, and forwarded to the Board. The rit15 should be advised of the bank's effected:, awal from membership and when it has been Approved unanimously. 1284 8/13/48 -11Telegram to the Presidents of all Federal Reserve Banks atlagas follows: "It Will will be appreciated if you will consult with Y°Ur v.ve Co and others as you may think desirable and poss,,the Board the benefit of your views as early as 40 4: 1 s Monday morning regarding the following alteroil Retain section 8(c) of old Regulation W (based cc:?ti°n 2(d) of Executive Order), under which nonlieg4 -3-auce of contracts with the provisions of the twracts Eltion does not affect the right to enforce con11ev . Change section 8(c), or replace it with a tionvr°vision, so that noncompliance with the regulato -ci7 °r with certain provisions such as those relating tracnaYments and maximum maturities, would cause con- uo be unenforceable. : 3. Retain section 8(c) when the new regulation is but Publish in the Federal Register notice purerevti t° the Administrative Procedure Act that consid141q.j4 is being given to changing the provision and sectilng comments, with a view to possibly changing 8(c) after new Regulation W has become effec, tilte.°11 N111 i.ouch notice would be published when the new , 8-1°11 is issued, or very promptly thereafter.' Approved unanimously. Letter to Mr. Frank A. Southard, Jr., Director, Office of 1°11a1 Finance, Treasury Department, reading as follows: 44a 4lererence is made to your letter of July 9, 1948, reply dated July 15, concerning the participathe Federal Reserve System in the Brazilian ki "rin, ta4ke :"is is to confirm the Board's willingness to to se-lrailable the services of Mr. Arthur B. Hersey a as nlie ralsil' member of the technical staff of the -11 ' .in accordance with previous informal dis ellssio 1285 -12"The Board is also glad to note that in accord: With earlier discussions, arrangements have been ge7leted for Mr. H. V. Roelse, Vice President of the of e+.1 :_al Reserve Bank of New York, to serve as a member to' Ile mission and for Mr. P. J. Glaessner of that bank serve as a member of the technical staff." Approved unanimously. Letter to Mr. Gidney, President of the Federal Reserve Bank Clevei ez .1* d) reading as follows: 1948 "The Procedure outlined in your letter of June 3, buila',f°r determining the cost of the Cincinnati branch to ,-.-111g 11 and that portion of the cost to be allocated ding Proper, exclusive of the cost of the Qt5 seern:' Permanent equipment, furnishings, and fixtures' ---,t1reasonable and is acceptable to the Board. tnoted that you will send us a revised Form e O t j rill1 04L0 er ac .cord with the determinations set forth It is suggested that the expenditure tiola (L'1311-.25, incurred in connection with the redempshol , the bonds, be charged to profit and loss and seParately in the Profit and Loss statement rist appropriate captions." Approved unanimously. 44rove: Secretary. Chairman pro tem.
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