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Minutes of actions taken by the Board of Governors of the Ped.er,, Reserve System on Wednesday, December 15, 1948. PRESENT: Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Eccles Draper Evans Clayton Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Minutes of actions taken by the Board of Governors of the eserve System on December 14, 1948, were approved unani- MeMorandum dated December 10, 1948, from Messrs. Thomas th 7,Director and Associate Director, respectively, of isi tiOn of Research and Statistics, attaching a cable from t ite t4 rican Embassy in Rio de Janeiro requesting an extension to tilt '1949 of the assignment of Arthur Hersey, an economist 31 ht U DIvisi°n, to the staff of the United States delegation on J°Int l-United States Technical Commission, and recommendhat the request be approved. Approved unanimously, with the understanding that the State Departand Mr. Hersey would be notified. °f the Board's action in this matter. Mein Qrandum dated December 14, 1948, from Mr. Bethea, Direcc/1' the L. ' vision of Administrative Services, recommending that 12/15/48 -24111'Y Tate, a laborer in that Division, be granted leave of absence thollt pay beginning December 15, 1948, for the purpose of entering dlitY pursuant to the provisions of the Selective Service 1948) that he be paid 60.7 per cent of one month's unearned 11€11'Y' together with a lump sum payment for accrued annual leave to his credit as of that date, and that he receive the °‘beriefits outlined in the policy approved by the Board for treatment of employees of the Federal Reserve Banks entersl‘vice in the Armed Forces under the Selective Service Act of Approved unanimously. Meraorandum dated December 14, 1948, from Mr. Bethea, Direc01' the Division of Administrative Services, recommending that 11-guation of Alvin Bissett, a cafeteria helper in that Die accepted to be effective, in accordance with his request, the el°se of business December 31, 1948, with the understanding tilata l sum payment would be made for annual leave remaining to c;r4ecti t as of that date. Approved unanimously. Letter to Mr. Peterson, Vice President of the Federal Re:4k rei Or °f St. Louis, reading as follows: 'Ills refers to your letter of November 30, 1948, to the discovery during a recent examination tilted Bank and Trust Company, St. Louis, Missouri, "6 2130 w15/48 -3- °I 'Possible violations of Federal statutes relating to saPPlication of funds of member banks and political e°ri 4., tributions by corporations and a State statute on the latter subject. It is noted that your Counsel feels that the pos'e violations of the Federal statutes, at least, 4-°Ille within the spirit of the Board's letter dated tlinist 19, 1948 (5-1033; F.R.L.S. #6703), relating to rePorting of violations of criminal statutes, and t'lefore should be reported to the United States DisIt Attorney. However, he feels that the statutes lb ating to political contributions are not strictly bee'llking laws' and that therefore the matter may not ic c°vered by the Board's letter, which refers specifc„!IlY to violations of 'banking laws'. In the cirtances, you request instructions with respect to 141v rePorting of this matter and other action, if any, 'eh should be taken by your Bank. sibi "The Board agrees with your Counsel that the posabo e violations of the Federal statutes mentioned ittile should be reported to the United States District bei()rneY in the usual manner, with copies of your report beplig furnished to the Board for transmission to the exabTment of Justice. It is understood that State exParticipated in the examination during which the beObie violations were discovered, and there appears to reason for your Bank to report the possible violatoe ;°f the State statute to the State authorities. The your%has no suggestions concerning any other action which 'ank should take with respect to this matter. C Approved unanimously. Me. le Letter to "The Exchange National Bank of Chicago", 130 South Street, Chicago, Illinois, reading as follows: tThe Board of Governors of the Federal Reserve Sys' s given consideration to your application for riq11hot cilarY powers, and grants you authority to act, when contravention of State or local law, as trustee, RheZ°r, administrator, registrar of stocks and bonds, e tat,:an Of estates, assignee, receiver, committee of th wil7e °f lunatics, or in any other fiduciary capacity tiolisleh State banks, trust companies or other corporawhich come into competition with national banks -4re Permitted to act under the laws of the State of tr 1111°is, the exercise of all such rights to be subject „- the provisions of the Federal Reserve Act and the R'eg1-11ations of the Board of Governors of the Federal eserve System. the "This letter will be your authority to exercise i lduciary powers granted by the Board pending the t .'i'lleParation of a formal certificate covering such aurization, which will be forwarded to you in due ' ourse.n Approved unanimously, for transmission through the Federal Reserve Bank of Chicago. Letter to the Presidents of all Federal Reserve Banks, translitti4 a Copy of a letter dated December 10, 1948 to Mr. C. G. Frantz, l're"elit ''The Apex Electrical Manufacturing Company, Cleveland, Ohio, as follows: Letter to the Presidents "The Board has had occasion recently to answer a gest r of letters from people in various trades sugsell ; -41g that the restrictions of Regulation W have curtailed their business. let;te, A Copy of the Board's reply to one of these that-re is sent to you herewith with the thought might be helpful to you in answering similar "'ries received by your Bank." Letter to Mr. Frantz Nilli"We have received your telegram of December 3 illthe Board of the current decline in the sales gest111. 1 z alple goods such as household appliances and sug41e that the provisions of Regulation W, particularly elc,!-Ilirement with respect to down payment, be eased. With ' l eg1.11ation W was designed as a flexible measure he idea that changes in the down payment and rakt 4- Provisions could be adapted, from time to 'c) c hanging economic and credit conditions. The 2. 12/15/4.8 -5It ,,:',egulation should be viewed, however, as but one part n a broad program designed to prevent economic instability to the extent this can be accomplished through ,IletarY and credit measures. For this reason, decisions change the provisions of the regulation must be re1-, ' 4 ed to the over-all credit and economic situation. "We Your v • appreciate your sending us this information and be views on the regulation. The points you raise will e.„:°nsidered fully in our continuing study of the scope ' 444 effect of the regulation." j Approved unanimously. Letter to the Presidents of all Federal Reserve Banks reads follo„: te "In connection with a situation brought to its at1.111°11 under section 6(g) of Regulation W, as amended, viillp°ard has issued the following interpretation which - be Published in a forthcoming issue of the Federal 'erve Bulletin: to "Section 6(g) of Regulation W, as amended, applies ail the delivery of a listed article 'in anticipation of Ir stalment sale of that article or a similar article.' ea.t:'ere has been a present instalment sale of a listed tic ele, such sale, of course, is subject to the regula,411ci' in the usual manner without regard to section 6(g), k94-tthis is true even though a part of the sales agreesi agives the buyer an option to return the article, in°f Paying the price, and thereby revest in the venciox ecoMPlete ownership or property in the article. HowWhere a listed article or listed-article 'demontia,a ii°r 1 is delivered to a prospective instalment buyer Celyt e must subsequently in some way manifest his acArc:ce or willingness to buy before ownership or to h;rtY in the article or a similar article passes Igolalqtri, then the original delivery in such a transaction e of the type covered by section 6(g). tioll "In order for the Registrant to delay the collecthat °f the necessary deposit equal to the down payment suntiel.4 1 0111d be required on an instalment sale of an Nh-e such as the one so delivered, the second parade7f section 6(g), as amended, requires the execution lverY to the prospective purchaser of a specific 21813 12/15/48 -6- written agreement covering the two points set out in 811C h Paragraph. If such an agreement is so executed airld delivered in connection with an agreement evidenccirilg a present instalment sale, as for example, a coni tional sales contract, and collection by the Reg' cist e i realt of the required deposit or down payment is or ' -aYed, such an arrangement would not fall within th comply with section 6(g), nor would it comply with e re quirements of section 3(a) of the regulation." Approved unanimously. (1144 Letter to Mr. Myron R. Bone, Vice President, American In- `41'1.8.1 ' bankers Association, Lincoln Tower, Fort Wayne 2, Indiana, 4e4411p. 6 as follows: lett "This will acknowledge and thank you for your er of November 19 enclosing a copy of a resolukr ' adopted on November 19, 1948, by the Board of s0c7ct°rs of the American Industrial Bankers Asex1),ti°n, regarding Regulation W. The resolution 1,e'esses opposition to proposed amendments to the izati.e:tion relating to (1) the inclusion of modernor pl°11 and repair credits and (2) the enforceability Eire-°11tracts. It also refers to the 'inequities which it icUrrently permitted to exist due to the fact that to is Possible for grantors of real estate mortgages eza li.iclUde in their mortgages various listed articles e.rti : , 11erebY permit mortgagors to pay for those listed over a period of time many times longer than * 11-1m permitted under Regulation W. tiorl " - le Board appreciates the views of your organizaN3jend they will be considered in our study of the 'us mentioned." Approved unanimously. Letter ta to- Mr. Laning, Vice President and Cashier, Federal Ilk of Cleveland, reading as follows: 1A0eference is made to your letter of December 2, 111 which you advised that it appears expenses 1 2164 12/15/48 -7- "for 1948 at your head office and branches will exceed tlIdget estimates for the year as follows: Cincinnati Pittsburgh Head Branch Office Branch General 3,090 Overhead Furniture and Equipment 15,100 Provision of Personnel 2,300 ?ostage and Expressage 5,700 13,625 Illstirance 112 Consumer Credit 5,035 6,850 1 oC„ 1,rrencY and Coin 33,115 14,740 1,"eck Collection 3,105 (3ricash Collection 965 4ecol.Intin 1,080 g Legal 5,100 13a4k and Public Relation 3,330 5,550 41-1cliting 3,134 Fg75(70 18,130 476 28,240 960 ?oreign Reserve Note Issues 4,0oo ,„. "The Board accepts the revised figures as sub'tatted, and appropriate notations are being made on the Board's records." Approved unanimously. Letter to Mr. Gales, Assistant Vice President of the Federal e 134,1_ of St. Louis, reading as follows: 191 "Reference is made to your letter of November 26, 194p in which you advised that it appears expenses for ' at Your ur head office and branches will exceed budget -8*Les for the year as follows: Little Louisville Memphis Rock Head , Punction Branch Branch Branch Office 1.Qe'eral 1., Overh.,ad 3,995 p,:11-siori of 4,725 $ 2,723 Space 3,557 'rclitl.lre and 15,417 7,749 Irision. of EquiPment 2,249 Personnel 3,906 Ste Service 6,809 11,729 and 2,730 tbp 7,693 Expressage Qf 1 Supplies 1,881 -'z'allc.:e 402 1)1°°11-11t, and 5147 Credit %% 21 '2/15/48 -8- r Function ,'°11slitner Credit "ec Urities eC}l rencY and Coin Wek Collection A°11cash Collection ' Igecoilnting '.111t and Public Relations LouisLittle ville Rock Head Branch Office Branch $23,652 32,39273 Memphis Branch $1,070 683 15,800 8,262 6,027 3,141 1,549 614 1,313 6,722 bsearch oreign and Statistical 479 339 1,163 1,398 118 6,000 The Board accepts the revised figures as submitted g.e.Ppropriate notations are being made on the Board's -, ,,,cords: Approved unanimously. Letter to Mr. Koppang, First Vice President of the Federal eBallk of Kansas City, reading as follows: 1948 "Reference is made to your letter of November 30, 448' in which you advised that it appears expenses for at Your h.q3,d office and branches will exceed budget 1Mate5 for the year as follows: Oklahoma Omaha City Denver Head P ction Branch Branch Branch Office ral i 04 $1,260 Overhead -175T7 P of 766 10,14,41ttire an space d 11,463 o of Equipment l'otrisiri. 519 3,424 1,877 $5,383 illeral personae tage Service 8,978 arid 4,547 2,716 ,Nek or 24,153 6,772 Expressage 1,767 254 1,663 anceSuPPlies 367 111 309 -01,!Q°1-1.1-1t and. ° 549 383 credit "`'Illrirar ' 0 2,960 21,227 3,103 3,800 ''IlritiesCred.it 547 1,487 527 ,elleY arid C tt. 9,181 4,244 11,363 10,243 Coin Collection 1,591 12,314 23,000 A°441411 -Co Collection 1,905 I ,e.i_l 952 5,628 2,179 100 N N '6 151)48 -9- Oklahoma Denver City Head Omaha 14. Branch Office Branch Branch 11112:2I12 '.'40t and Public Relations $--22-7573 $ 241 1,412 2,270 1,663 1 411k Examination ; 3,671 ii„etleral Reserve Note Issues 10,901 629 1,246 211 .,;41e,arch 11 Aroreign and Statistical 4,530 "The Board accepts the revised figures as submitted, :441 aPpropriate notations are being made on the Board's *ecords.,, Approved unanimously.
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