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1980 A meeting of the Board of Governors of the Federal Reserve Shtem uas held in Washington, on Tuesday, December 18, 1945, at 10:30 PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman McKee Draper Evans Mr. Carpenter, Secretary Mr. Hammond, Assistant Secretary Mr. Connell, General Assistant, Office of the Secretary Mr. Morrill, Special Adviser Mr. Thurston, Assistant to the Chairman Mr. Vest, General Attorney Mr. Wyatt, General Counsel Ransom stated that he had discussed with Messrs. Morrill, Vest, and Wyatt the provisions of the administrative procedure bill / Which recently had been reported to the Senate by the Senate hclie ry 'a Committee, and that while the bill in its present form was itlIchiess objectionable than earlier drafts, there were provisions &lithe new bill which he felt might have a very important effect on the Boara's procedures. For that reason, he said, he had asked that the matter be discussed at this meeting so that all of these questions be thoroughly considered and the members of the Board acquainted Ilith the provisions of the bill and a decision reached as to what, if 411. 'action the Board might wish to take in connection with the pro— legislation. In explaining the status of the bill now before the Congress, vatt stated that the revised draft of the bill had been reported 1981 12/18/45 —2- to the Senate by the Senate Judiciary Committee without hearings, that an identical bill had been introduced in the House, and that 4was understood that the House Judiciary Committee proposed to 414 brief hearings shortly after the end of the year when an effort Wetild be made to push the legislation through both Houses. He also 8844 that the new bill had been materially revised in order to aim,141ate objections that had been made to earlier drafts of the legisla— tion ) aad that while according to the information available to the 110a0.6A I no agency of the Government had unqualifiedly endorsed the bill i ts present form, it was felt that it had a good chance of being ellacted by the Congress. It was suggested, in this connection, that the Board should decide to present its position to the House Coin— &1tee) it should be done promptly without waiting for a decision on the hearings before the House Committee would be held. Following a discussion, and at Mr. Ransom's request, Mr. Wyatt a statement in which he explained the provisions of the bill which vifeo, • Of interest to the Board and the possible ways in which they might 'rreet the 14'• Wyn4.4., Board's work and the procedures followed by it. A copy of statement has been placed in the Board's files. There ensued a detailed discussion of all of the important pro— 1/181orls of the bill as referred to by Mr. Wyatt, and Mr. Ransom stated 'Nt if the members of the Board felt it was important to suggest that the b ill be changed, the question for decision would be whether the Board undertake to get an amendment to the bill on the floor of the 1982 12/18/45 Senate, —3- or whether its position should be presented to the House Judi— cial,' Committee for consideration in connection with the hearings on the °-11 before that Committee. Mr. Vyatt stated that it would be possible to ascertain from illdividuals working on the bill what the possibility of obtaining an 4%dment on the Senate floor might be. There was agreement with the suggestion made by Mr. Vest that ri°thing should be done to get an amendment on the floor of the Senate 11/11ess it was clear that such an amendment would be accepted, the l'e48011 being that it would be undesirable to have the legislative t017 of the bill show a rejection of such an amendment. During the course of the discussion, reference was made to a tatEtient that might be made by the Chairman of the Senate or House jildiciary Committee during the debates on the bill which would clarify theaPPlication of the bill to the Federal Reserve System, and Mr. /Feat read a draft of statement which might be used in that connection. Mr. Evans indicated that he would be opposed to the bill in any tot,. and the other members of the Board were of the opinion that, while the t_ Qard probably could operate under the bill in its present form, it 1111c1 be unwise to endorse it because of the possibility of changes oth —e of the provisions which would make the legislation highly ob— heti °nable from the standpoint of the Board's procedures. Mr. McKee suggested that Mr. Ransom give further study, in ight of the discussions at this meeting, to what the Board's 1983 12/18/45 -4— should be with respect to the bill and that he submit a recottl endation for consideration by the Board. At the conclusion of the discussion, it was understood that Messrs. Vest and Wyatt would prepare a draft of letter to the Chairman of the House Judiciary Committee setting forth the position of the Board with respect to the administrative procedure bill, incorporating therein a draft of statement along the lines of the statement read by Mr. Vest at this meeting, and that when the draft of the letter was satisfactory to Mr. Ransom he would submit it to the Board for consideration. In taking this action, it was also understood that no attempt would be made to obtain an amendment to the bill on the Senate floor unless it was clear from discussions with individuals who had been working on the bill that an amendment, if proposed by the Board, would be accepted. There was also discussion of the extent to which notice had bee4 taken or might be taken in the newspapers of the proposed legis- latio 4 and whether it might be well to discuss the matter with Mr. 8Pro1 l —4-) President, and Mr. Logan, Vice President and General Counsel, Pect velY, of the Federal Reserve Bank of New keht so that they be familiar with the problems involved and be prepared to answer %lett°Ile from the press and elsewhere regarding them. At Mr. Ransom's suggestion it was understood that Mr. Wyatt would send to Mr. Logan a copy of the statement which he had prepared regarding the bill and would discuss the bill with Mr. Logan over the telephone and suggest that he stucly 1984 12/18/45 -5the problems involved and be in a position to make suggestions with respect to any action that should be taken in connection therewith.' At this point Messrs. Vest and Viyatt withdrew from the meeting. The action stated with respect to each of the matters hereintter referred to was then taken by the Board with Chairman Eccles part pating: The minutes of the meeting of the Board of Governors of the N[ ' ral Reserve System held on December 17, 1945, were approved unanikotLely. Memorandum dated December 12, 1945, from Mr. Parry, Director n e -ivision of Security Loans, recommending that Francis R. Fawley be a PPointed as Special Assistant in that Division on a temporary basis an indefinite period, with basic salary at the rate of g5,180 per atirtilm $ effective as of the date upon which he enters upon the performklee op . his duties after having passed the usual physical examination. The m eilloramthmn stated that Mr. Fawley was a member of the Civil Serv14 Re • tarement System and would remain in that System. Approved unanimously. Memorandum dated December 17, 1945, from Mr. Carpenter subXtti„ "g the resignation of Mrs. Gladys Glover, his secretary, and becoiruli ending that the resignation be accepted effective as of the 0e of business January 11, 1946, and that a lump sum payment be 1985 12/18/45 -6- inacie or accrued annual leave remaining to her credit at that time. The resignation was accepted as recommended. Memorandum dated December 17, 1945, from Mr. Bethea, Director q the Division of Administrative Services, recommending that the Board 413P1'°ve leave without pay for Mrs. Lyda Sanders, a cafeteria helper in thatDivision, for the period from noon on October 30 to December 10, 1W6, inclusive. Approved unanimously. Letter to Mr. Williams, President of the Federal Reserve Bank or pL, u tiadelphia, reading as follows: "The Board of Governors approves the payment of sal1 to the following officers for the period January 1, -4946, to April 30, 1946, inclusive, at the rates shown Which are the rates fixed by your Board of Directors, as indicated in your letter of December 11, 1945. Annual Salary Name Title Philip M. Poorman $10,000 Cashier Norman G. Dash 6,000 General Auditor L. E. Assistant Vice Donaldson 9,500 President Robert N. Hilkert Assistant Vice 9,500 President Robert R. Williams Assistant Vice 6,500 President James V. Vergari Assistant Vice 6,000 President Wallace 6,500 M. Catanach Assistant Cashier "It is noted from your letter that, effective January 1,2 1946, Mr. Poorman will become Cashier and that Mr. rilhenny will continue as Vice President without change 441 Salary.n Approved unanimously. 1986 12/18/45 -7Letter prepared for the signature of Chairman Eccles to Mr. %r) President of the Federal Reserve Bank of San Francisco, reading as follows: "The Board has been advised by Mr. 'Wellman in a let— ter dated December 11, 1945, of your intention to retire at the end of this year and that, in accordance with your wishes, the Federal Reserve Bank of San Francisco has ac— cepted your resignation as President effective December 31. "Be know that you have been looking forward to re— tirement and on behalf of the members of the Board I want express to you our sincere appreciation of your serv-Lees to the Federal Reserve System and to extend our best wishes to you in your well earned rest. "During your long period of association with the Federal Reserve Bank of San Francisco in various capaci— ies, ranging from Assistant Deputy Governor in July of '-917 to President since April of 1936, you have played a Oct important part in making the Federal Reserve Bank of 'an Francisco the efficient organization which it is. "The meetings of the Presidents will not seem the !ame without you and we shall miss your visits to Wash-ington, "With all best wishes for the future and many Happy New Y"Withears," Approved unanimously. Letter to Mr. William Mllett, First Vice President of the Fed— Bank of Boston, reading as follows: "Reference is made to your letter of December 4, 1945, bmitting for the consideration of the Board, pursuant to th provisions of condition of membership numbered 8 to ;f4lch the member bank is subject, the request of the Bar L',411Dor Banking and Trust Company, Bar Harbor, Maine, for IPProval of a proposed additional investment of $19,000 real estate for banking premises. ."In view of your recommendation and the information Ilulalltted, the Board will interpose no objection to the 1987 12/18/45 -8- "proposed additional investment for the stated purpose." Approved unanimously. Letter to Mr. Fletcher, First Vice President of the Federal Re41"'s Bank of Uleveland, reading as follows: "Reference is made to your letter of December 4, 1945, submitting the request of The First-Central Trust Company, Akron, Ohio for approval of the establishment Of a branch in Mogadore, Ohio, in connection with the Proposed absorption of The Mogadore Savings Bank, Mogadore, Ohio. "It appears that the absorption of The Mogadore Savings Bank will not result in any change in the general character of assets of The First-Central Trust Cornor broadening in the functions exercised by it withln the meaning of its condition of membership numbered 1, and the Board will interpose no objection to the proposed Purchase of assets and assumption of deposit liabilities. "In accordance with your recommendation the Board of Governors approves the establishment and operation of a branch in Mogadore, Ohio by The First-Central Trust ComPanY, Akron, Ohio provided the approval of the appropriate State authorities is obtained and Counsel for the Reserve aarak will review and satisfy himself as to the legality of all the steps taken to effect the purchase of assets and assumption of liabilities and to establish the branch. "Your comments with respect to the capital position °f The First-Central Trust Company have been noted. While you state a substantial portion of net profits is being retained in the capital account and the earnings of the trust company are average and improving, it does not appear that earnings will provide commensurate capital within he near future. The substantial growth of the trust com,allY and aggressive expansion policy of the management, evidenced by the establishment of the branch approved .Lerein and the proposed establishment of a branch within he City in a thickly populated area, would indicate a for obtaining capital through other means. It is noted, 4otsd, also, that the management of the institution realthat it is under-capitalized and the Board would be P 1988 12118/45 —9- "interested in learning of any plans under consideration for increasing capital and of any action that may be taken in this respect at the coming annual stockholders meeting." Approved unanimously. Letter to "The Pleasant Hill Bank," Pleasant Hill, Missouri, ream_ ,-Lag as follows: ' "The Board is glad to learn that you have completed all arrangements for the admission of your bank to member— !hip in the Federal Reserve System and takes pleasure in ta'ansmitting herewith a formal certificate of your member— ship. "It will be appreciated if you will acknowledge re— ceipt of this certificate." Approved unanimously. Letter to The Wayne Pump Company, Fort Wayne, Indiana, reading a follows. ' "As requested in your letter of December 10, 1945, 11 18 will confirm the correctness of your understanding ' ; that Regulation V/ (which imposes certain restrictions instalment sales) is not applicable to sales of gas— °J-Ine dispensing pumps, air compressors, car washers and allto hoists. Regulation VI is applicable only to sales ?f certain articles which are listed in section 13(a) of the Regulation, a copy of which is enclosed for your in— f ormation. "The administration of the Regulation has been de— ,!entralized and if you have any further inquiries it may more convenient for you to address them directly to ehe Federal Reserve Bank of Chicago, Chicago, Illinois." Z Approved unanimously, together with a similar letter to Mr. C. B. Moore, As— sistant to the Vice President of the Tokheim Oil Tank and Pump Company, Fort ?Jayne, Indiana, and a letter to Mr. Dillard, Vice President of the Federal Reserve Bank of Chicago, transmitting copies of the two letters. 1989 12/18/45 -10- Telegram to Mr. Hodge, Assistant General Counsel of the FedReserve Bank of Chicago, and Mr. Haefele, Assistant Counsel of the Detroit Branch, reading as follows: "Oral argument in Motor City Credit Jewelry Company matter postponed to 10:30 a.m. Friday, January 18, 1946." Approved unanimously, together with a similar telegram to Mr. Hugh W. Allin, Detroit, Michigan. Letter to the Presidents of all the Federal Reserve Banks reading as follows: "A Federal Reserve Bank has inquired about the application of section 8(a) of Regulation W, as amended by Amendment No. 18, when the repair, alteration or improvement con83-St's in whole or in part of an article which is still on the list of articles in section 13(a). "The question arises in those cases where items like attic ventilating fans, linoleum or floor furnaces are intalled, and the question essentially is whether the item tiae become an 'improvement' upon the realty. "If the item is affixed to the structure so as to become an 'alteration or improvement' upon the realty, it wculd come within the terms of the exception and the credit !ould be exempt under section 8(a) even though the item 18 of a class still included in the list of articles in section 13(a). (This is so because the phrase 'other than rticles*** elsewhere listed' which was in Group C is not In section 8(a) as amended.) installation is of such a character "Whether or not the , as to be an 'improvement' would seem to depend on ether the article becomes a part of the realty. This _8 a matter as to which the decisions of the courts have ico,,t been uniform, and the result in particular cases is frten affected by an agreement of the parties, the purpose a°r which the installation was made, the nature of the article (as distinguished from the manner in which it is tached or installed) and other extraneous factors. Howl., cr, for the purposes of section 8(a)(2) of Regulation ", the Board believes that a credit should be considered r 4 1990 12/18/45 -11- "to be exempt only when the article is built into the structure in such a way that it cannot be removed without substantial damage to the structure (see S-437-a). Under this rule, anything which can be taken out by the removal of a few screws, leaving the structure as it was formerly, would not be an 'improvement' upon the realty. On.the other hand, if a section of the wall, floor or ceiling had been removed in the process of installation and the article had been affixed in that space, removal w°uld require restoration of the wall, floor or ceiling, and the article would be regarded as having become a part of the realty and therefore an 'improvement' within the meaning of section 8(a)(2)." Approved unanimously. Letter to Congresswoman Margaret Chase Smith reading as follOwst "This is with reference to your letter of December 1;1; 1945, enclosing a letter from Mrs. William Coyne, and Spring, Maine, which relates to the Board's Regu1(4-ati0n Iv. "Regulation W places certain limitations on the granting of all forms of consumer credit. It is a part c'r the Government's anti-inflation program and is de!igned to keep instalment buying and borrowing from addUnduly to the country's purchasing power which is 41ready far greater than the supply of goods that is aVailable. "There are simply not enough heaters, stoves, refrig,rators and the like to supply the people who want to buy .1.hern. These are things which have not been produced durng the war or have been produced only in insignificant rolume. They are coming back into production slowly. The fegulation helps to limit the demand by requiring higher In Payments and larger monthly payments so that instead ; NYing several items and obligating himself over a long C11-0d, an individual will get one now and the others later ea more will be available. "Up to 75 per cent of these articles of consumers' a u-Le goods are sold through instalment credit of various 1991 12/18/45 -12- "kinds. It isn't a question of making them available to the well-to-do who always pay cash for them anyway, for the number bought by the well-to-do is a small proportion of the total. The instalment terms do, however, help to distribute the limited supplies so that each individual has a better chance at getting his fair share and at a reasonable price. The result is by no means perfect but Most people seem to feel that it is better to have a regulation of this kind than a totally chaotic situation in Which various forms of concealed price rises are resorted t? in order to allocate the limited supply. The regulation helps to maintain price ceilings in which all of us as consumers are vitally concerned. "We have been glad to have this opportunity to comment on Regulation W. Mrs. Coyne's letter is returned to You herewith." Approved unanimously. Memorandum dated December 17, 1945, from Mr. Carpenter review14 the Board's action of December 15, 1944, in authorizing, for the Year, i 4.945, the payment without submission to the Board of extra Pull4144 cha -rges incurred by the Board's examiners in proceeding from one -44nment to another whenever the only available Pullman accommodations at higher rates than were authorized by the Board's travel regu14tion5. The memorandum stated that, in taking this action, it was 14101er stood that the amount in each instance would not exceed $10, and the v°11cher would be accompanied by a memorandum from the Director oiN '81stant Director of the Division of Examinations explaining the 4c1(tit' 1c)nal charge and recommending that it be paid. The memorandum cillended, with the concurrence of Mr. Paulger, that, because of ()titirttled conr,estion in rail transportation, the same arrangement be allthorized by the Board for the year 1946. Approved unanimously. 1992 "/18/45 -13- Thereupon the meeting adjourned.
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