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A meeting of the Board of Governors of the Federal Reserve 8 tem was held in Washington on Tuesday, December 1, 1942, at 10:35 PRESENT: Mr. Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Smead, Chief of the Division of Bank Operations Mr. Dreibelbis, General Attorney Mr. Vest, Assistant General Attorney Mr. Thomas, Assistant Director of the Division of Research and Statistics In connection with the discussion of the current Treasury fiN41cirl g campaign and System open market operations, Mr. McKee stated that it had come to his attention that some banks were unwilling to op a war loan deposit accounts for the reason that they did not want to m alrltain reserves against war loan deposits or to pay the Federal clePcIsit insurance assessments on such deposits. He felt that, unless Bottle a °titan were taken, the increase in war loan deposit accounts W0414 11°t be large enough to permit of the most efficient handling of QIN exit borrowing, and he stated that he had been discussing the 41mt with members of the Board and members of the Legal Division for 2247' 4/1/42 the -2- Purpose of ascertaining whether there was some way in which the Problem could be met. A discussion ensued of the question whether a procedure could bevin -1''ed out which would avoid the necessity of classifying the proceeds 4-rom the sale of Government securities, which under the present Prc)cedure are held in war loan deposit accounts, as deposits subject to serve requirements and the Federal Deposit Insurance Corporation 48e5snaent. It was understood that Mr. McKee would take the matter up with Under Secretary of the Treasury Bell with a view to having representatives of the legal divisions of the Treasury, the Board of Governors, and the Federal Deposit Insurance Corporation consider the matter for the purpose of exploring whether some solution of the problem could be found within the framework of the present law. Thurston stated that he had just received a call from Feraitfld Kuhn, Assistant to the Secretary of the Treasury, in which the 1 aatter stated that the Treasury had received a number of complaints trc)tq e th- press that discrimination had been shown in the placing in Palper's throughout the country of the full-page advertisements which 4PPerpea this week with respect to the forthcoming Treasury financing, that 413Parent4 the lack of information concerning the circumstances k4kier Which the advertisements were prepared and placed was resulting the Illisunderstanding, and that as a means of correcting such mist4prt7ding the Treasury would like the Board to send a telegram to eeldents of all the Federal Reserve Banks giving such information, 1211/42 it be,. -Lug understood that the Treasury would send a similar telegram to the vict ry ° Fund Committees and to the field offices of its war savings atarr. After a discussion, it was agreed unanimously that Mr. Thurston should call Mr. Kuhn and tell him that the Board would like him to prepare a draft of statement which might be sent to the Federal Reserve Banks as a statement coming from the Treasury and that when the statement had been received it would be given consideration by the Board. Thurston withdrew from the meeting for this purpose, and 11Pori his return read a draft of statement which had been telephoned to bY Mr. Kuhn• a410 It appeared that the draft would not be satisfactory corisiderable doubt was expressed as to whether there was any need tor sending a wire as proposed. It was understood that Mr. Thurston would endeavor to revise the draft of statement in the light of the discussion, and further consideration was deferred. Messrs. Goldenweiser and Thomas withdrew from the meeting at this Point. Mr. Szymezak referred to a letter received from Mr. McLarin, Pr4iderlt of the Federal Reserve Bank of Atlanta, under date of No25, 1942, outlining the need of the Bank for additional space, Iteterl'irig to the action taken at the meeting of the board of directors cthe Bank in November authorizing the executive committee to cont&IitLe negotiations and, subject to the approval of the Board of Govtioris, to offer up to $175,000 for the six-story brick building 2' 149 4w 12/1/42 -4the building now occupied by the Bank, and requesting authoritYfor the Bank to make an offer for the property within the discretion Of the board of directors. In connection with the consideration of Mr. kar. Ill's letter, Mr. Szymczak outlined briefly the conversation with 48Peet to the proposed purchase of this property which he had with Mr. Neel Chairman of the Atlanta Bank, when the latter was in Lashington last week. It was agreed unanimously that Mr. McLarin's letter should be circulated among the members of the Board for consideration at the next meeting of the Board at which all of the members were present. 141". Dreibelbis stated that yesterday Mr. Keech, Corporation C°11rieel for the District of Columbia, called on the telephone and stated 1414t hs had been waiting to hear further from the Board with respect to the IpaPilent of taxes on the Board's building, and that he told Mr. Keech ht t he had not understood that the Board was to communicate with him bilt rather that his telephone conversation of November 16, 1942, IlLt1111111 Wyatt was made as a matter of courtesy to the Board. Mr. 4eibelbis went on to say that he informed Mr. Keech that he had talked Carusi, Executive Assistant to the Attorney General, on an in''.S regarding the matter, and that thereafter the matter had beellconsidered by the Board which had taken the position that it should : : tItlk II° action at this time, but that it was anticipated that during til es of the next year there would be certain matters affecting ederal Reserve System concerning which the Board would wish to Ntorlita "(I to Congress that legislation be passed, and that if this 0Co f.:"41 -5 811(411d develop it was hoped that the question as to what should be done about the taxation of the Board's building could be settled at that Ur. Dreibelbis added that after the conversation with Mr. Keech he ealled Mr. Carusi again and informed him of the position that the 11°a/ ' d had taken in the matter, that Mr. Carusi was inclined to do nothltig in the matter until further action was taken by the District - and that he told Mr. Carusi that if the property wereCornOfles adfor sale it would only make the position of the District Com411.881.°11ers more difficult, that,if any action were to be taken by the qfice of the Attorney General, Mr. Carusi might want to give censidel'atl•°11 to such action before the building was advertised, and that if heThollad desire to do so he (Mr. Dreibelbis) would be glad to talk (4.11 him and Mr. Keech about it. Mr. Dreibelbis stated that he also t"d 14% Carusi that he proposed to call Mr. Keech again and make the 4'4)1e suggestion to him, and that Mr. Carusi's response was that he take the matter up with the people in his office who were han41r1k '" kid, he Subsequent to the conversation with Mr. Carusi, Mr. Dreibelbis talked with Mr. Simon, Assistant Corporation Counsel, in the %tlee Of Mr. Keech and repeated the offer to consider with Messrs. 1Ceech and Carusi whether there was any ground upon which an agreement c'411c1 be reached. In the discussion which ensued, Mr. Dreibelbis referred to the 411 '/141-ch had passed the House of Representatives and was now pend'‘11€ bet— 're the Senate, which would exempt from taxation by the District 2251 12/1/42 -6— o C°11111thia all property of the United States Government, and stated that one of the possible ways to meet the problem would be for the Senate Committee to include in its report on the bill a statement that thell °ard's building was regarded as property of the United States Gayarid therefore was not mentioned in the bill as being exempt fr°111 taxation by the District of Columbia. At the conclusion of the discussion, it was understood that Mr. Dreibelbis would discuss this suggestion with Messrs. Carusi and Keech and, if such a procedure were agreeable to them, that the matter should be taken up by them with Senator McCarran, Chairman of the Senate Committee on the District of Columbia. Mr. Morrill referred to a telegram dated November 30, 1942, troral, 'r. Leedy, President of the Federal Reserve Bank of Kansas City, Which . - it was stated that as a part of the present Treasury financamPaign the suggestion had been made that banks having tine de- 13(laits be permitted to pay such deposits prior to their maturity with interest on the condition that the proceeds would be used thx‘°11gh the banks of deposit for the purchase of one or more of the Ntrent Government offerings and that, if the Board had not already ciered an amendment to Regulation Q which would permit this being (1°11e, Ur. Leedy would appreciate the question being submitted to the 130aro. Mr. Morrill was requested to reply to the telegram by stating that the subject had been brought up a number of times during the past year and had been under informal discussion with the Federal Deposit Insurance Corporation 2252 12/1/42 —7— and the Treasury, but that so far the Treasury had not felt that action to permit such withdrawals should be taken and consequently the suggestion had not been pressed beyond the point of informal consideration. At this point, Messrs. Thurston, Smead, Dreibelbis, and Vest wiAlldrew from the meeting, and the action stated with respect to each " he matters hereinafter referred to was then taken by the Board, elk Illan Eccles participating: The minutes of the meeting of the Board of Governors of the ?eclerea Reserve System held on November 30, 1942, were approved unani111(4181Y. Bond in the amount of $102000, executed under date of November 1 19.„ ' by T. Wesley Bagby as Federal Reserve Agent's Representative 4 the Charlotte Branch of the Federal Reserve Bank of Richmond. Approved unanimously. Memorandum dated November 20, 1942, from Mr. Smead, Acting Adktlitetl'ator for the V#ar Loans Committee, recommending that the followeeas in salaries of employees in the Office of the Administrator tc)r th e War Loans Committee be approved, effective as of December 1, 1942: ILMe Palzcette, Olive C. liqmes, Mary Severud, Esther Designation Salary Increase To From Clerk-Typist Clerk Stenographer $1,620 $1,800 1,560 1,620 1,680 1,800 Approved unanimously. 2253 141/42 Letter to Mr. Hill, Vice President of the Federal Reserve Bank Of Phil adelphia, reading as follows: t "In accordance with the request contained in your leter of November 27, 19L2, the Board approves the designation c)f the following as special assistant examiners for the Federal Reserve Bank of Philadelphia: James A. Aikens Edgar H. Lythgoe Clifford R. Thatcher Willis W. Ulmer Edwin M. Moore John A. Murphy Hugh S. Campbell tilliam J. Allen James A. Gordon John J. Brenner" Approved unanimously. Letter to Mr. Mulroney, Vice President of the Federal Reserve 8411t of C hicago, reading as follows: "In accordance with the request contained in your letof November 24, 1942, the Board approves the appointOf. Edwin Noah Davis as an assistant examiner for the d: eral Reserve Bank of Chicago. Please advise us of the " a upon which the appointment becomes effective." ter Approved unanimously. Letter to Mr. Mulroney, Vice President of the Federal Reserve r Chicago, reading as follows: ter "In accordance with the request contained in your letNovember 25, 1942, the Board approves the appointfont °f Daniel Bartlett Elliott as an assistant examiner cljthe Federal Reserve Bank of Chicago. Please advise us the date upon which the appointment becomes effective." Approved unanimously. rtatii4 Letter to the Presidents of all the Federal Reserve Banks, as follows: oections 5(a) and 5(c) of Regulation W refer to payrite to be made on the tenth day of the calendar month, 12/1/42 _9_ N-, I'vu since this day falls on a Sunday in January next, the question has been asked whether payment may be deferred Until the following day. In accordance with the general rule in such cases, !there the tenth day of the calendar month falls on Sunday, he final day for the purposes of sections 5(a) and 5(c) 18 the eleventh." Approved unanimously. Letter to Mr. Kennel, Assistant Counsel of the Federal Reserve 84krat vl Boston, reading as follows: "Your letter of November 10 addressed to Dr. Parry inill-1'es as to the form of the agreement referred to in section ? (2) of Regulation Wy and inquires as to the degree of for'JAY which is required. th "Section 5(d)(2) calls for a 'written agreement' to pay t;le. amount in default within six months or less by substanlellY equal instalments of not less than $5.00 per month or 0125 per week at equal intervals not exceeding one month. an instalment agreement which satisfies these reV-1 4. reizents would usually have a fair degree of formality, as long as the written document or documents contain all su, elements of the agreement no particular formality is reThe sincerity of the customer in making the agree181 of course, an element as to which the Registrant aris a id be satisfied, since the agreement must be in good faith, 14„ the formality of the documents would have some bearing ecnnthis point. Re , 48 you suggest, the Regulation does not require that the actistrantl 8 adherence to the agreement be in writing. The th of the Registrant in preparing a form of agreement for toe customer to sign would ordinarily signify his readiness ho "CePt the agreement when signed. In the case you described, towever, where the customer writes to the Registrant promising to PaY at certain times, it would be well for the Registrant as evidence of acceptance, a communication to the cUsZoeyntid' indicating that he has agreed to the customer's pro- T Approved unanimously. Letter to Honorable Elmer Davis, Director of the Office of War cartiEltio„ reading as follows: 2255 12/1/42 -10- "In your letter of November 23, which has just been /:.,ceived, you asked to be informed whether a security oflacer had been designated by the Board, as requested in Your letter of September 28. "Following receipt of your Regulation Number One, we nfo Irmed you in our letter of July 25 that Mr. Elliott Thurston, Special Assistant to the Chairman of the hoard °f Governors, had been designated as the Board's repre181entative, with authority to cooperate with the Office of " w Information in expediting the handling of classes of 21i information requiring central clearance. We regret at we failed to realize that your letter of September 28 211ed for an additional designation, and hasten to inform You Mr. Thurston is the official designated as secu,,ltY officer as well as the representative designated in ulir letter of July 25. Mr. Thurston has already been in —uunication with your offices." r Approved unanimously. Thereupon the meeting adjourned. eake."2: Secretary.
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