The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1218 A meeting of the Board of Governors of the Federal Reserve System Was held in Washington on Friday, August 20, 1943, at 11:00 PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak 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 herein8,t'iT referred to was taken by the Board: Pecierai The minutes of the meeting of the Board of Governors of the Reserve System held on August 19, 1943, were approved unani- 1401181y. Tel-egr 'atik of to Mr. Paddock, President of the Federal Reserve Boston, Messrs. Treiber and McCreedy, Secretaries of the Fed- el:LReserve Banks of New York and Philadelphia, respectively, Mr. Pl'azer 'Secretary pro tem of the Federal Reserve Bank of Atlanta, Mr. 4114rd, Vice President of the Federal Reserve Bank of Chicago, Mr. Stewar, , 'Secretary of the Federal Reserve Bank of St. Louis, Mr. glItert, President of the Federal Reserve Bank of Dallas, and Mr. 441e 'Secretary of the Federal Reserve Bank of San Francisco, stating Board approves :::e::: establishment without change by the FedLouis and San Francisco on August 17, by 1219 8/20/43 -2the Federal Reserve Bank of Atlanta on August 18, by the Federal Reserve Banks of New York, Philadelphia, Chicago, Dallas, and San Franc; -se° on August 19, 1943, and by the Federal Reserve Bank of 80ston of the rates of discount and purchase in their existing schechaes. Approved unanimously. M emorandum dated August 18, 1943, from Mr. Paulger, Chief of the Dion of Examinations, recommending that, effective as of the date upon which he enters upon the performance of his duties, Elmer W. Lyster be appointed as an Assistant Federal Reserve Examiner on a terl1P°ParY basis for an indefinite period, with basic salary at the l'ate °f 1231.1.00 per annum, and with official headquarters at PhilaclelPhia, Pennsylvania. By unanimous vote, Mr. Elmer W. Lyster was appointed on a tempol-ary basis for an indefinite period as an examiner to examine Federal Reserve Banks, member banks of the Federal Reserve System, and corporations operating under the provisions of sections 25 and 25(a) of the Federal Reserve Act, for all purposes of the Federal Reserve Act and of all other acts of Congress Pertaining to examinations made by, for, or under the direction of the Board of Governors of the Federal Reserve System, and was designated as an Assistant Federal Reserve Examiner, with official headquarters at Philadelphia, Pennsylvania, and with basic salary at the rate of .?,2,400 per annum, all effective as of the date upon which he enters upon the performance of his duties. 8/20/43 -3- Memoranda dated August 16, 1943, from Mr. Goldenweiser, Di/sector of the Division of Research and Statistics, recommending that the following increases in basic annual salaries of employees in that Division be approved, effective September 1, 1943= Name Salary Increase Designation To From Wilellyn, Morelle Kathryn S. Faulkner Economic Assistant Clerk $1,800 1,620 $2,000 1,740 Approved unanimously. M emorandum of this date from Mr. Morrill, submitting the resignation of Mrs. Betty Lou Buchanan as a junior file clerk in the Secretaryt s Office, to become effective as of the close of business on August 26, 1943, and recommending that the resignation be accepted as Of that date. The resignation was accepted. Of Letter to Mr. A. D. Burford, Deputy Commissioner of the Bureau Inte rnal Revenue, reading as follows: de, "The Board of Governors is prepared to approve, unto',,the certification procedure, an increase from $10,000 ' 11,000 in the annual salary of Mr. Chalfont, Manager of the Detroit Branch of the Federal Reserve Bank of Chienr, provided approval of the increase would be consistthe policy under the salary stabilization reguca 1°ns. Because of some rather unique features in this wa : ' e Mr. Needham of your office with whom this matter 013, lieoussed informally, suggested that your views be ,'alned before the Board acts formally upon the request 'ceiried from the Federal Reserve Bank of Chicago. to j Briefly, the situation is this. For two years prior anuarY 1, 1943, Mr. Chalfont was Managing Director 1221 8/20/43 -4the Detroit Branch, at a salary of ',10,000. The Ilrst of this year, in connection with a program for exthe functions of the Branch, a vice president of the Aae Federal Reserve Bank of Chicago with a salary of 15,000, was appointed to devote his full time to the ntroit area and to be in charge of the Detroit Branch, the Position of Managing Director was discontinued, and f Chalfont was made Manager of the Branch, a new posi::1°n, at the salary of t10,000. As Managing Director, i Chalfont was the officer in charge of the Branch. v.lth the appointment of the Vice President, Mr. Chalfont 1 138 TICW second in charge of the greatly expanded Branch alit continues to be the chief operating officer as well es the officer in charge of loans and credits. In this operlc!ction, it might be mentioned that as chief credit --er of the bank, Mr. Chalfont has been responsible for the processing, under Regulation V, of over -1u0,000,000 in loans to industry for war production rP°ses Roardi, since the procedure was established under the regulation in April 1942. The management of the ae cjrve Bank feels that with the expansion of the branch ar lvities, Mr. Chalfont's responsibilities as Manager . ,e greater than they had been as Managing Director when ft" Branch was 'e smaller. . "The circumstances which led to this change in organlzation are as follows. Poli "During the past year, in accordance with the Board's cY of increasing the powers and functions of the more a4ortant branches, the activities of the Detroit Branch hav„the responsibilities of its officers and directors in greatly increased. The Detroit Branch led the way t„, 'his respect and is now the largest branch in the Sysf:,- The principal changes in functions were the transfiscalfrom the Head Office to the Branch of certain large fi agency operations and the delegation to the ofbilir qenodirectors of the Branch of greater responsiative of the increase in activities is the 1942In the number of employees from 261 in January growtic ha 't° 753 in July 1943, and the fact that the bank had to purchase the quarters adjoining the branch ng and to lease additional space elsewhere. The position of Manager of the Branch calls for the -0mbination of a senior operating officer and a V I I 22,2 8/20/43 _50 Senior of the loaning officer. The Vice President in charge Detroit Branch advises that rates paid for comerabls services in three large banks in Detroit are , 1431660, n-4,370, and *14,490. From the point of view Ole internal organization, the management of the Reserve Bank feels that the proposed salary of .1,000 ”. is keePing with the responsibilities of the position and 1S c onsistent with the pattern of the salaries of senior officers at the Head Office. e.re"Salaries of officers of the Federal Reserve Banks fixed annually by the Directors subject to approval the Board of Governors. Before requesting any change I sn the salary of Mr. Chalfont, the Directors of the Reea B nk wished to see how the new arrangement was workg last May voted to increase the salary of Mr. j -4-40nt from q0,000 to 1:11,000 per annum, effective 1, 1943. Action by the Board on this matter has been en deferred pending clarification of the certification ip3oocedure under the 'Hold-the-Line' order and also oprertunitY to review the situation on the spot. As a B,sult Of such review following visits to the Detroit er 4 rch and the Head Office at Chicago, the Board of Gov°re is prepared to approve the recommendation of the °.lrectors in "It will be appreciated if you will advise us whether, conlil-ew of the circumstances cited, an increase would be 421clered consistent with the salary stabilization reguof6lt?n" If you should so desire, Mr. Leonard, Director b ne Board's Division of Personnel Administration, will e glad to discuss the matter with you further at your conv enience." l 4 Approved unanimously. Letter 1rle as to the Presidents of all the Federal Reserve Banks, read- follows: "The Board has received several inquiries involving the out aPplication of section 7(c) of Regulation W. At the thaZet, it should be observed that such section provides exco .,,single-payment loan 'may not be renewed or extended ezci" as provided therein, the provisions of which are usive- In addition, arrangements deviating from such 1223 " 1V43 -6- Provisions, necessarily must be tested under section The inquiries in question and the Board's disposition thereof are as follows: .(1) May a Registrant make a second single-payment loan " in approximately the same amount as the first single12aIment loan to the same borrower immediately or shortly after the borrower pays in full, at maturity, the first sIngle-Payment loan? "In practice, a case would seldom arise where a bor::wer would pay a loan in full and, immediately thereafter, ti-1 an entirely independent transaction, borrow approximately the same amount from the same Registrant. On the contrary, e. would seem more than likely that in such cases the second loan was made pursuant to an agreement or underbetween the parties. Therefore, the Board's mes s,that, in the usual case, a second loan made imcja1 or shortly after the payment of a preceding ‘'an must be regarded as a renewal transaction not perthe Regulation. 'What is or is not 'immediately Or snortly after', of course, is not susceptible of pre';:se definition, and each case must be decided upon the Ptrrticular facts involved. However, the fact that a Regishas frequently made a second loan to a borrower in the at ci rcumstances presented by the above inquiry would be nor°ng evidence that such transactions, in effect, were ne°rgorming renewals calculated to evade the Regulation. f,_ k2) May a Registrant make a single-payment loan the Purpose of enabling the borrower to meet the first outtrlY curtail required under section 7(c)(2) on an oth8 -11ding single-payment loan held by the same or some er Registrant? pa_,_ "Section 7(c)(2) requires an actual reduction in or it"ial retirement of the borrower's indebtedness; but, 1.-„ s the Board's view that the arrangement contemplated m; eZhe second inquiry, as a matter of substance, does not ad.a. such requirement since it would extend to the borrower ka ortional time for payment merely by changing the manner reml:!cording the indebtedness, the amount of which would th7p the same. In view of section 7(f), of course, pavm : 1 sgoing is applicable whether the second singlefi:"1,7: 4" 1 loan would be made by the Registrant who made the loan or by another Registrant. mati,,4P) May a borrower pay the required curtail at the ty of a single-payment loan but then borrow from the 1224 8/20/43 -7:Registrant twice the amount of such curtail and execute new consolidated single-payment note in a principal 8U 211 eqUal to the first single-payment note plus the amount 04. the curtail? "Here again the Board's view is that such an arrangenot permitted by the Regulation since, in effect, there is not only an extension of time for repayment of indebtedness ihithout the required curtail, but e original the amount of such indebtedness is actually increased. here"In connection with questions of the kind considered lo in, it must be noted, of course, that a single-payment noZnwith an original maturity of less than 90 days may be renewed or extended under section 7(c)(2) without required curtail, even if the renewal does not extend the '"e maturity original , of the indebtedness beyond 90 days from the making of the loan." Approved unanimously. Letter to Mr. Young, President of the Federal Reserve Bank of Chico go, reading as follows: Auoi, "This will acknowledge receipt of your letter of ke::?t 12, 1943, with respect to the holding in safe-Y1-g of Treasury bills for others than banks. Since this is a matter of policy which affects 'cl'-.Pederal Reserve Banks we have referred it to Mr. Day, th:t17811 of the Conference of Presidents, with the request place it on the agenda for consideration at the a;cu Presidents' Conference. If, in the meantime, there inel,c.?ses in which, in your opinion, you would be justified b„,-(34-ding Treasury bills in safekeeping for others than re '-sy the Board would interpose no objection to your nclering such service." Approved unanimously. Memorandum dated August 19, 1943, from Mr. Wingfield, Assist44t Gene ral Attorney, recommending that there be published in the 1225 e/20/43 -8- September issue of the Federal Reserve Bulletin statements in the Orrr a,,_ kit-ached to the memorandum with respect to the following sub- JectEn Amendment to Regulation T Foreign Funds Control Treasury Department Releases Report of Property in Foreign Countries Approved unanimously. Thereupon the meeting adjourned. 6C2c."1, Apt) 41,414../A Chairman. 04)k ) -Cli? Secretary.
@FedFRASER