Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, December 12, 1941, Volume 28, Part 4

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1748

A meeting of the Board
of Governors of the Federal Reserve
SYstfmivas held in Wash
ington on Friday, December 12, 1941, at 12:50

PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Ransom, Vice Chairman
Szymczak
McKee
Draper

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 hereinreferred to was taken
by the Board:
. The
minutes of the meeting of the Board of Governors of the
Pede—,
Reserve
System held on December 11, 1941, were approved unani11101,181y.
Telegr
ams to Mr. Young, Presiden of
t
the Federal Reserve Bank
°t Bost n 11,
‘
°-3 --L. Sanford,
Secretary of the Federal Reserve Bank of New
Leach Pres
ident of the Federal Reserve Bank of Richmond,

ttr. Bo
Atlanta,

Assistant Vice President of the Federal Reserve Bank of

Messrs. Dillard,
Stewart, and Powell, Secretaries of the Federal Res
erve Banks
of Chicago, St. Louis, and Minneapolis, respectively,
a
c441well, Chai
rman of the Federal Reserve Bank of Kansas City, Mr.
41bert p
-resident of
the Federal Reserve Bank of Dallas, and Mr. Hale,
/1415era
et
0
::of the
Federal Reserve Bank of San Francisco, stating that
tho
d aPProves the
establishment without change by the Federal Reof Kansas
City and San Francisco on December 9, by the




1749
12/12/41

-2-

Federal Reserve Banks
of New York, Richmond, Atlanta, Chicago, St. Louis,
flfl
eapolis, and Dallas on December 11, 1941, and by the
Federal Reserve Bank of
Boston today, of the rates of discount and purchase in
their
wasting schedules.
Approved unanimously.
Telegram to the Presidents of all Federal Reserve Banks,
reading as

follows:

tion:

Reg. w_115.

Board has been asked the following ques-

'Registrant is asked to consolidate three
outstanding obligations repayable t10 each on
10th, 15th and 20th
of current month respectively
with an
additional
advance
of $90 repayable
Per month.
In consolidating these obligations
maY Registrant,
under section 8(b) "Option One",
schedule first payment of
35 one month from
date of such
consolidation even though this may
result in
extending credit on outstanding oblitions beyond the
maximum 18 months maturity.'
obi' OPtion 1 requires that the terms of the consolidated
mee-gatlon shall
be such as would have been necessary to
hadt
requires of the Regulation if no consolidation
ca t'Ken place, and
therefore the consolidated obligation
fentnot have
a schedule of
payments which would have the efomitting a
payment which would have been due on the
obligations during the month when the consolidat:;11.°1c°1li
tIlace, or which would have the effect
Zit
ofextendemttty of any of
the outstanding obligations bepermitted by the Regulation, namely, 18
t1.
31Als the l5-day
adjustment permitted by section 9(b).
vide 1,-Lluer Option
1 the consolidated obligation can pro
:
this ""cer one payment
each month, and in order to accomplish
than 1,e_sult the date
of payment may be earlier in the month
etexid,'-ine dates
on which the
instalments on any of the outexte:tng obligations
were payable, or it may be later to the
inD
?eitted by section
9(h) with respect to the outstandq4:?lmlgations. For
example,
in the case described in the
onthe°thif the
outstanding obligation which was repayable
10 of
each month had been originally
made on the

p




I 50
12/12/41

-3"5th so that only 5 days out of the 15 days permitted by
section 9(b) had been used, the consolidated obligation
could call for instalments payable on the 20th.
"Furthermore, the $5 payable on account of the new
$90 advance would
not have to be included in the first inbut could be included in the instalment falling
aue in the
month after the consolidation took place. In
Other words, the
consolidated loan could have a $30 instalment in the current month, and 05 instalments in the next
months."
Approved unanimously.
Letter to the Presidents of all Federal Reserve Banks, reading
aa

f011oWS'

sl "Enclosed are
25 copies of a specimen form of the
ff,A TEMENT OF THE
BORROInER
which the Board has prescribed
tor use on
and after January 1, 1942, pursuant to the proof section 5(d) of
Regulation W. This specimen
.Lorm has
been designated as Form F.R.
564.
"The forms for
actual use by Registrants will not be
Printed
by the Board or by
the Reserve Banks, but specimen
,
°rMs are to
be distributed by the Federal Reserve Banks
th?
lending
, ?ither by trade so that Registrants may secure a supprinting or otherwise reproducing them or by
at .* 1.1111g them from stationery
or supply houses. The notice
Line top
of the form indicates the restrictions on reprotion.

Zf

0T+
of t
-Ls suggested that your bank should print a supply
tionhe specimen form in such number as will permit a distribupea - of one copy to each
Registrant in your district who apin rs to be
engaged to any extent in the business of extendasg instalment loan
credit. Such additional specimen copies
otjou deem
necessary may be distributed to Registrants and
ser
:
re for sample
purposes. The Board requests that the Rethe :.8auks, in preparing sample copies, adhere strictly to
4
of the sheet
Pec;1ze
and the style of type used for the
Copy.
"Yo
Regar
,
u

will also find herewith a suggested form of 'Notice
Reeteulg Use of
Statement of Borrower in Connection vdth
gestia
,
ti°fl Vi e. This form is designed to serve only as a sugto '
c- 11 to the Reserve
Banks and, of course, you are at liberty
°mPose your
own appropriate form of notice or to modify




1751

12/12/41

—4—

or alter the suggested form in any particular.
"Use by Registrants of this form of Statement of
Borrower will demonstrate whether the form accomplishes
its obvious
objective. The Reserve Banks are invited to
comment from time to time on reactions from the trade and
the public.
"The Board and its staff gratefully acknowledge the
helpful suggestions of the Reserve Banks."
By unanimous vote, the letter was
approved and the form of Statement of
Borrower referred to therein, a copy of
Which has been attached to these minutes,
was prescribed for use on and after Jan—
uary 1, 1942, in accordance with the pro—
visions of section 5(d) of Regulation W.
Letter to the Presidents of all Federal Reserve Banks, read14g 43 fttflollows:
closed are 25 copies of a specimen form of the
4,144AENT OF NECESSITY TO PREVENT UNDUE HARDSHIP
which
'Te Board has
prescribed for use pursuant to the provi—
!
1°118 of
uas been section 8(d) of Regulation W. This specimen form
designated as Form F.R. 565, "The forms
for actual use by Registrants will not be
'Inted by the
Board or by the Reserve Banks, but specimen
t°rIlls are to be
distributed by the Federal Reserve Banks
the instalment
selling and lending trade so that Regis—
42,nts
secure a supply either by printing or otherwise
s
produrclg them or by obtaining them from stationery or
t111,13,131Y houses. The
notice at the top of the form indicates
res
trictions on reproduction.
,It is
suggested that your bank print a supply of the
spe
of el-men form in such number as will permit a distribution
dit°ne copy to each Registrant in your district. Such ad—
al specimen
copies as you deem necessary may be dis—
The 1:,
1ted to
Registrants and others for sample purposes.
ard requests that
the Reserve Banks, in preparing
2 copies, adhere strictly to the size of the sheet
tr style of type
used for the specimen copy.
lows: Section 8(d) of Regulation W reads in part as fol—

T

Iz

aner




1752
12/12/41

-5"Until the Board has prescribed the form
and content of the Statement of Necessity the
Registrant may in good faith accept a written
statement in any form, provided such statement
otherwise conforms to the requirements of this
section.'
The Board
has set January 15, 1942 as the date on and after
which the use of a form in accordance with Form F.R. 565
will be required.
Until that date, a Registrant may accept
a statement in
any form meeting the other requirements of
section 8(d)
.
"The enclosed form of notice to Registrants to accomPanY the specimen
forms is designed to serve only as a sugestion to Reserve
Banks and, of course, you are at liberty
Fto compose
your own appropriate form of notice or to modify
r alter the suggested form in any particular.
"Use by Registrants of this form of Statement of NecesY will
demonstrate whether the form accomplishes its obobjective. The Reserve Banks are invited to comment
,
:
11 °r4. time to time on reactions from the trade and the pubBoard and its staff gratefully acknowledge the
"Thelpr
Lu.
suggestions of the Reserve Banks."

By unanimous vote, the letter was
approved and the form of Statement of
Necessity referred to therein, a copy of
whlch has been attached to these minutes,
was prescribed for
use on and after January 15, 1942, in accordance with the
provisions of section 8(d) of Regulation
W.
Letter to Mr. W.
A. Goddard, Secretary of The H. A. Hillmer Co.,
l'eePort, Tliz
--4-1-Lnois, prepared
for the signature of Mr. Ransom and readas
follows:
is will acknowledge
:
your letter of December 3 re
coiLlIng to the
Company
Hillmer
in
Registration
A.
of
H.
The
netion with
RegulationW.
It was
not intended that the filling out of Form
pari 5.t3 would
require any undue amount of labor on the
'
o any Registrant,
for this reason the circulars of




1753
12/12/41
"the Federal
Reserve Banks to prospective Registrants included, at our request, a
suggestion that a Registrant
should communicate with the
Federal Reserve Bank in case
that
uncuei following the instructions exactly would
Icleaujs47:11gm
expense or inconvenience. In cases like
that Which
you outline in your letter, where it would inf
li?lve undue
inconvenience or expense to provide exact
lgures in answer to
question 4, 6 or 7 under group III-B
on the
form, the Reserve Banks have been telling
Registrants that
estimated
figures
will
be
acceptable.
Against
question
5 under group III-B, which calls for the percentages of
instalment and other sales, it was not expected
at very many Registrants
would be able to furnish exact
figures and the
form
therefore
authorizes estimates from
Pal
Registrants.
Reser I am sending a
copy of this letter to the Federal
ve Bank of
Chicago and, as the administration of RegVlis decentralized among the twelve Federal
Reserve
ii"'s, I would
suggest that you communicate with that bank
to ru have any further questions or suggestions relating
gulation W or to the Registration
Statement."
Approved unanimously.
Letter to Mr.
Hugo Werber, Manager of Broad Street Taxi Owners'
443ciation T
-3 -01o., New
York, New York, reading as follows:
cab "Your letter of
December 4 requesting that taxire s.De exempted
from
the Board's Regulation IV has been
celved and
will be given consideration.
er "The
statement in your letter that the Packard TF?di„41
Corporation has been exempted from Regulation 11 is
'
ar:% rect- It was found
that certain extensions of credit
welr--ng out of
the
sale
of
taxicabs by this corporation
not
subject to the provisions
cause
of Regulation:V. be-.
to
t:ract entered into by the corporation prior
ZXemt:T 1941,
when Rek,ulation Wbecame effective."




Approved unanimously.

1754
12/12/41




Thereupon the

ei ing adjourned.

Secretary.

?Olt
tht Re4i9oR mArti

Form F. R. 564.
SPECIMEN FORM
EGISTRANT
5ftidit4ssttroantt c":. PriPntNer
OR PRINTER ONLY—NOT TO BE PRINTED AS
suchPARTfo
tFORM:
°shPalal
mayarTyn
reproducing
this form,
follow exactly the
anY
wording and arrangement ,of the frontthe
Sineadflit"
S e form,
,the,1T°rTn.
spacing as desired.
an
by
the
borrower
that
he
has
receive
permitted
provided they do not call for the obtaining
r°rtriinformati:ns
may be changed
freon:otrirmoewetor. time, it is suggested that Registrants
do not stock large supplies of the form.

Pr
"cribed b

STATEMENT OF BORROWER

the Board of
Governors of the Federal Reserve System under its Regulation W,issued pursuant
to Executive
Order No. 8843 of the Presiaent of the United States.
TO BE FILLED IN BY REGISTRANT
(Date of Loan)

(Amount of Loon)

I, is

any
rof the money
from
Eaternent on back this loan to be used to buy a Listed Article?
of this sheet)
botia_nlYitPart of
this
3,
within the loan to be secured by any Listed Article which you have
last 45 days or
which you intend to buy .
iii,tali
9Ytletu
of the
debmooney from this
loan to be used to pay all or part of any
artY of tb
Purchas_ --e money
rorm
z of a ListedfA
tictlfeii; loan to be used as a down
payment on the

2.

(Answer "Yes" or "No")

(Answer)

(Answer)

(Answer)

tiisehatencLibtlyintghewiheent_ih_eti.: any
article involved in this loan is a Listed Article, I have been guided by information
'Icompleteèie I certify that,
to the best of my knowledge, the information given by me on this sheet
(bate
(Borrower's Signature)
List
Nair,

etl

-ed..44R
from QUESTION
19
:N 1 OR 2 HAS BEEN ANSWERED "YES", the
following information must be
Article 130 borroSLI
or use_l'ght or T
9 Be
u as
security

Bought

Purchase
Price

Date Purchased
(if before loan)

Trade-in
Allowance

Amount
To Be Borrowed

List e You b
orrovved any
'.(1
6, Articles
money elsewhere, or
do you intend to borrow any, to be used in buying any of the
speCified
above?
If "Yes", how much? $
bort90,4811024
(Anszver yes'
, or "No")
•ver:
3
HAS BEEN

Ilatne of
Person

Holding Debt

ANSWERED "YES", the following information must be obtained from
Total
Unpaid Balance

Instalment Terms

Amount
To Be Paid Off

1
er 0 r
(Is to -rtn
esinot elender, acting in good faith, may rely upon the above statements of the borrower.
I additioavail hims
provide all of the
ar for the lender to have if
information that it may be necessary
. elvileasi in.
.certain
of Regulation W. In any case as to which the. lender must
lied ;._ willformeatfioonf
p.ca„, l orderprovisions
to be
r .loan under consideration, the
in making .the
trotn
"This, however,protected
Ilit ktox tt-7
"e borrower
does not affect the right
,
1 pa
o.irthiceula
lender to rely upon statements of
pursuant to applicable provisions of the Regulation.
81‘RANT RECEIVING
THIS STATEMENT MUST KEEP IT ON FILE



LISTED ARTICLES

t needie,de
covers
equileri
and
labor,
materialS,
using
borroisei
Regulation
The instalment purchase of classes of consumers' durable goods
8843.
ruoneY),Inent
for national defense is regulated under the President's Executive Order No.payments
with
or
extension of credit to buy these articles, whether bought directly on instalment based upon the SuPI te,
Articles"
"Listed
of
classes
. on an instalment basis. The following are the
from the list at anAYRIIICI5
Regulation W in effect December 1, 1941, but articles may be added to or taken
,Ac':;
A "LISTEYmn''EF,
DETERMINING WHETHER AN ARTICLE INVOLVED IN A LOAN IS
TR
`
"
1-r-THE
BY
A. BORROWER MAY BE GUIDED BY INFORMATION FURNISHED CHANGE **REGISTRANTS MUST KEEP THEMSELVES INFORMED AS TO
"LISTED ARTICLES".

PASSENGER AUTOMOBILES
AIRCRAFT
MOTOR BOATS AND BOAT MOTORS
MOTORCYCLES AND MOTOR BICYCLES
REFRIGERATORS AND ICEBOXES
WASHING OR IRONING MACHINES
VACUUM CLEANERS
COOKING STOVES
HEATING STOVES AND HEATERS
ELECTRIC DISHWASHERS
AIR CONDITIONING EQUIPMENT
SEWING MACHINES

S
STOO
RADIOS AND PHONOGRAPH NTS
INSTRUME
METAL MUSICAL
BURNEIZS, AND
FURNACES, OIL ,OR GASPUMPS •,c
WATER HEATERS AND
FIXTURr-'
5
PLUMBING AND SANITARY
Trn sp
FANS
ATTIC VENTILATING
FURNITURE, ac'''
NEW HOUSEHOLD
MATTRESSES
ORGANS
PIANOS AND ELECTRIC
SERVICES USE I
ALTERATIONS,
MATERIALS AND
WITH REPAIRS,
BUILDINGS
MENTS OF

i5,,,
ft 0"
on'
„s\il
or
nt
WARNING
)11
t:
tenle
nlissta in Par lat''bC
material
Regulation W provides that no borrower shall willfully make any was issued rea( sole ()r regt)
01aY00
Order ense, order, r
.
in his Statement. The law under which the President's Executive
'n
iiatural Pe _ ratio
c
ver willfully violates any of the provisions of this subdivision or of any or,"
v
S10,000,
issued thereunder, shall, upon conviction, be fined not more thandirector, or agerit
1°1.
j
°f
O
n
for not more than ten years, or both,; and any officer,
imprisoned
inpriso
imprisonnieut'
fine,
knowingly participates in such violation may be punished by a like




)0-

tt Itt
'
4 Rllst-,
P"MAT/ INT

Form F.R. 565.
SPECIMEN FORM
%e
ant 0 •°— OF
aiu,..addition_
REGISTRANT
OR
PRINTER
this form,
FORM:
In
reproducing
ONLY—NOT
OF
TO
BE
PRINTED
AS
PART
to the for shall follow evict! the
11:11plal infosrL.tbe
wording and arrangement of the front and back of the form, but may vary the
as desired; may
L-,th
'
t1 him, c,Tntlenthemfrom, such as an cy
.„,
acknowledgment b the Borrower that he has received a copy, provided .they do. not call for
.or the
t obtaining of any
tiness miller
the Borrower•
may, in a form to be used by a Registrant who contemplates using it only in connection
credits already
opening sentence of ytit n
following
statement
to
tit
the
instalment
read
"I
am
a
change
in
the
terms
of
iziyme
,
,
.
of
requesting
8144 the forme,„t° MI" and omit
the
e n "Name of Creditor"; or may change "Signature of Customer" to "Signature of Borrower".
'''aY be changed from colum
time to time, it is suggested that Registrants do not stock large supplies of the form.

ST
reserib ed

ATEMENT OF NECESSITY TO PREVENT UNDUE HARDSHIP

°Y the Board of
Governors of the Federal Reserve System under its Regulation NV,
Pursuant to
Executive Order No. 8843 of the President of the United States.
This fo
4sescord18 to be used
only in connection with credits subject to Regulation W,in exceptional
exPlanati'ocnance with the
terms of that Regulation. See other side of this sheet for further

"ssued

ante 0

Registrant)

I alii

relues •
iNlebtedness:
ting a changet.1
m the terms of payment, or a refinancing, of the following instalUnpaid Balance

Present terms of payment

'4
"lilt'
e desir
ed
. 4 Illg
Ivere
0frot
d n conchange is necessary in order
to avoid undue hardship to me or mydeio)er nN‘dleitilctis
Wit h..vl n nil
l, tingencies unforeseen by me at the time of obtaining the above credit
tesPe
J control
•
et to
• 0iiowing
is a brief statement of the principal facts and circumstances
such co
Fntingencies:

Nte„,nlalte th.
With -gent is t Is i
statecnolrti
pia
nteitn, andgo
good faith and certify (a) that the information contained in this
and
Or
(b)that the requested change is not to be made inv connection
r `ntentioren to evade
or circumvent the requirements of Regulation W.

(Signature of Customer)

4ctio4
en: See
reverse side for notation to
bemade by the Registrant if the request is granted.
kiss,
IRANT




RECEIVING THIS STATEMENT MUST KEEP IT ON FILE
(Over)

EXPLANATION
015111"ef
relates to c Reserve
States
Executive Order No. 8843 issued by the President of the United
Federal
credit. Regulation NV, which was issued by the Board of Governors of the
instalment credits'
System pursuant to that Order, limits the terms of payment of certain
anced t4)
credit Obi
It would tend to defeat the purposes of the order if, after an instalment
credit refingtotiO
Regulation W had been granted, the terms could later be changed or the
provide terms of payment that would not originally have been permitted by the iteptiwial
flexibility ill e"However,in order to prevent undue hardship, provision has been made for
0,
circumstances.
in li"1
Certtao provide
The Regulation provides that in such circumstances a creditor may, within
iation.
renew, revise, consolidate, or refinance an instalment credit already outstanding Reftitied
by t..,I.:
the
by
a rate of payment below that which would originally have been permitted
statement s'grigor °rill;
creditor may take such action upon acceptance in good faith of a written
ti
o )ligor that the contemplated action is necessary to avoid undue hardship upon thet°bbtaitijog;
titue ot ° ccePta
'
the
at
dependents resulting froia contingencies that were unforeseen by him
cirbase
_d
In order t° be
original extension of instalment credit or which Nye re beyond his
* control.
3 is . Clitir
facts and
principal
such written statement must set forth, briefly but specifically, the
actio::
modificatio
other
stances with respect to such contingencies and upon which the request for
°r &ue
e t must also contain the specific statement that the desired renewal, revision,the req
circumvent
is not pursuant to a preconceived plan or an intention to evade or
of the Regulation.

RECORD OF ACTION TAKEN
on

gran
(To be filled in and signed by the Registrant if a renewal, revision, consolidation, or refinancing is
Statement of Necessity.)
A

the

s'oed'

This Statement of Necessity has been accepted in good faith by the Limier ITerms of credit as renewed, revised, consolidated, or refinanced
Amount

(Date)




Terms of payment

(Signatu

signing
of ind 'dual

for

gior