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1850 A meeting of the Board of Governors of the Federal Reserve SI/Steri was held in Washington on Wednesday, Decemb er 24, 1941, at 11:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The action stated with respect to each of the matter heres illafter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Pederal Reserve System held on December 23, 1941, were approved 114111401181y. Memorandum dated December 24, 1941, from Mr. Wyatt, General e°11118e1) submitting the resignation of Mary F. Tesh as a stenogler in the Office of General Counsel, to become effective as of the Close of business on January 9, 1942, and recommending that the Ile"gllation be accepted as of that date. The resignation was accepted. Memorandum dated December 22, 1941, from Mr. Goldenweiser, bil'ector of the Division of Research and Statistics, recommending that48Bent be given by the Board to the examination and certifica110Y the Civil Service Commission of Mary Jane Harrington, clerk 1851 12/24/41 -2- that Division, for the position of Junior Professional Assist")Junior Administrative Technician option. Approved unanimously, with the understanding referred to in Mr. Goldenweiserts memorandum that before accepting a position covered by the examination she would obtain the consent of the Board of Governors. Memorandum dated December 22, 1941, from Mr. Paulger, Chief q the Division of Examinations, recommending that John C. Franzoni, 48s1stant Federal Reserve Examiner assigned to the road force, be granted leave of absence without pay beginning December 9, 1941, so that he might enter active duty with the United States Navy, and that granted the benefits provided in the policy adopted by the Board on u, et vvember 14, 1940, and amended August 20, 1941, for all employees military service. Approved unanimously. Telegram to Mr. W. W. Waymack, Des Moines, Iowa, reading as "Board of Governors of Federal Reserve System has aPPoint,„1 of el,. --, you a Class C director of Federal Reserve end Bark i i,_ "lcego for unexpired portion of three-year term wl.December 31) 1942. It will be appreciated if you advise by collect telegram of your acceptance." Approved unanimously. C Letter to Mr. Young, President of the Federal Reserve Bank of r eading as follows: or Go"v: ur a letter of December 20, the Board irialig3p = rfleoll7s salary of $5,600 per annum, as 1852 12/24/a —3— "fixed by your Board of Directors for Mr. Paid C. Hodge, Assistant Counsel, for the period December 16, 1941-March 31, 1942." Approved unanimously. Letter to Mr. Young., President of the Federal Reserve Bank of Chicago, reading as follows: !ferring to your letter of December 20, the Board of G overnors approves a salary of 361000 per annum, as fixed IDY your Board of Directors, for Mr. Harold L. Diehl, Cashier, Detroit Branch, for the period December 16, 1941March 31, 1942." Approved unanimously. Telegram to Mr. Davis, President of the Federal Reserve Bank "t. Louis, stating that, subject to conditions of membership num- 13'eci 1 to 3 contained in the Board's Regulation H, the Board approves the 4Plication of "The Maries County Bank", Vienna, Missouri, for r44111ellshiP in the Federal Reserve System and for the appropriate amount st°ek in the Federal Reserve Bank of St. Louis. The telegram recillested that the Federal Reserve Bank advise the applicant bank of the 114alls - approval of the application and conditions of membership pre'to geth-q- with necessary instructions as to the procedure for kee041 Plishing membership, and stated that a letter containing detailed : 4'tee l'egardin'' such approval would be forwarded to the applicant till'ough the Reserve Bank. Approved unanimously. or legram to Mr. Davis, President of the Federal Reserve Bank Stt Low stating that, subject to conditions of membership 1853 12/24/41 —4— ntinbered 1 to 3 contained in the Board's Regulation H and the folio 1144ig special condition, the Board approves the application of the "Montrose Savings Bank", Montrose, Missouri, for membership in the Federal Reserve System and for the appropriate amount of stock &tithe Federal Reserve Bank of St. Louis: 114. At the time of admission to membership such bank shall have a paid-up and unimpaired capital of at least 125,000." he telegram requested that the Federal Reserve Bank advise the apPiicant bank of the Board's approval of the application and conditicma of membership prescribed, together with necessary instructions 48 to the procedure for accomplishing membership, and stated that a letter conta ini (7 detailed advice regarding such approval would be Nbvirarded to the applicant bank through the Reserve Bank. Approved unanimously. talik or Letter to Mr. Hill, Vice President of the Federal Reserve Phil adelphia, reading as follows: 1 , "Reference is made to your letter of December 18, 1,2041) submitting for the consideration of the Board the pequest of the Miners Bank and Trust Company, : I ykens, coll453Tl1rania, for approval of a proposed reduction in paa1,1°11 114 capital from 1150,000 to 75,000 by reducing the rel Iialue of outstanding shares from )2.0 to 15, thereby sto:lap ;i0 p ,0Orti. capital funds to be returned to e%5 In view of your 84brilitt recommendation and the information as „ ed, the Board approves the reduction in capital Eiplz“)Posed subject to thecondition that the formal tal of the appropriate State authorities be ob4ere "The suggested requirement that the bank shall to dispose of all substandard securities now held 1f54 12/24/41 -5- "bY it within one year of the date of approval of the Proposed capital reduction has not been made. In view of the condition of the bank, the quality and amount of the securities involved, and the fact that the proposed reduction and distribution of capital practically represents a payment on waived deposits, it was felt that the matter might be handled in the regular course of supervision rather than through the proposed condition. It is understood that you concur in this position." Approved unanimously. Letter to Mr. Woolley, Vice President of the Federal Reserve of Kansas City, reading as follows: "Please refer to your letter of December 3, 1941 arid previous correspondence, regarding the right of a uank or trust company in Colorado to deposit in its °wn banking department funds held by it in a fiduciary ,claPacitY, and to pledge security, where required to ,o SO of such ainZdition of membership, for the protection funds. "The condition of membership in question contem: I lates that any deposit of securities by a member bank 4.4 its trust department for the purpose of complying :ith the condition shall result in a valid pledge of ,Iloh s ecurities for the protection of the trust funds e1)°81ted by the bank in ,L0 1 its banking department. It barl °ws that, where a valid pledge cannot be made, a fr_ Can comply with the condition only by refraining um d epositing trust funds in its own banking departMeat 4 "While the question apparently has not been taken _P o with the State banking authorities or the banks ncerned, Mr. Leedy, as counsel bank, has un for yur o JPI:essed the concur, opinion, in counsel which our IlZt State banks in Colorado do not have authority, tio : r ,tate law, to pledge securities for the protecbarli;.,01 trust funds deposited by them in their own batit'r'ng departments. It seems clear, therefore, that Or of that State which are subject to the condition 14 tleiut"hip must discontinue depositing trust funds with e cnolb iEtuitg department in order to comply the 141wja1gurther, in similar cases the Board has been 4-11 to waive compliance with the condition, 1855 W24/41 -6- "expressing the view that the mere fact that the bank cannot validly pledge securities does not justify such a Waiver. The Board has waived compliance only where, Wider the State laws, when a bank is liquidated, trust funds deposited by it in its own banking department are fullY protected by a statutory preference in all the assets of the bank over its general creditors and it is understood that the laws of the State of Colorado do not create such preference. In connection with the foregoing, attention is called to the Board's letter X-9143 dated March 8, 1935 (FRLS #3722). "In the circumstances, it is felt that United States Bank of Grand Junction, Grand Junction, Colorado, and The Gunnison Bank and Trust Company, Gunnison, Colorado, should be requested to discontinue depositing trust funds in their own banking departments as soon as they can conveniently make the necessary arrangeents. You are requested, therefore, to take the mater UP with the banks at such time and in such manner 8. You may deem best and advise us when corrections have been obtained. a, "In this connection, you may wish to consider the c:visability of suggesting to the member banks conrned the possibility of obtaining an amendment to 'as State law which would definitely authorize the dePosit of trust funds in own bank and the pledge of seto Protect such funds, if the banks deem it sential to deposit trust funds in their own banking epar tments." T Approved unanimously. Ileserv Telegrams to Mr. Force, Federal Reserve Agent at the Federal e Bank of San Francisco, authorizing him to issue limited votil Perrn4 , under the provisions of Section 5144 of the Revised 8t "of the United States, to the "Old National Corporation" '&411.8 t ment and Securities Co.", both of Spokane, Washington, Buch organizations to vote the stock which they own or conof n kzat t4 The Old National Bank of Spokane" and the "First National SP°411s", both of Spokane, Washington, at any time prior to 1856 12/24/41 Aml1 1, of -7- 1942, to elect directors of such banks at the annual meet- shareholders, or any adjournments thereof, and to act there- at upon such matters of a routine nature as are ordinarily acted 4Pon at the annual meetings of such banks. Approved unanimously, together with a letter to Mr. Day, President of the Federal Reserve Bank of San Francisco, reading as follows: "This refers to the Board's letter of December 11, 1941 ,' (R-930), requesting that you obtain annual reports or 1941 from the holding company affiliates in your disrlet which hold general voting permits. You will recall that, although Old National Corporation and Investment nd S ecurities Co., both of Spokane, Washington, do not rld general voting permits, annual reports were obtained om them for 1940 pursuant to our letter to you dated ie ! embel' 27, 1940. It is desired that, for the reasons l eicluicated in such letter, you request these two holding p affiliates to furnish annual reports on Form R. 1. 437 covering Covering the year 1941. 014 supply of Form F.R. 437 is enclosed for use in 14 alning the reports from Old National Corporation and vestment and Securities Co." Memorandum dated December 19, 1941, from Mr. Vest, Assist(lilt General Counsel, stating that Deputy Comptroller of the Currency McCe.ticiless had sent to the Board for its information a copy of a letterwritteri by him to the President of the Omaha Clearing House Asac)qation in reply to a letter from the latter requesting advice 4t° the en forcement of the provisions of Regulation Q relating to 114 4144°113tion of exchange charges. The memorandum stated that 1141*Mceszciiess, letter to the Clearing House Association presented 1857 12/24/41 -8- the view that an interpretation of Regulation Q on this point should be made by the Board of Governors rather than by the Comptroller's Office, outlined the history of Regulation Q with regard to this matter, and stated that the Comptroller's Office had asked the Board on several different occasions in 1939 and 1940 for a 114Ling with respect to the absorption of exchange charges by a certain Lank and that the Board replied that the matter was having active con sideration but involved many perplexing problems and the ec'qtroller's Office would be advised of any action taken. The letter -4-s0 expressed the view that absorbing out-of-pocket charges 18 alattrmecessary expenditure of a bank's funds and is regarded unrE"'°rably, and suggested that the bank ascertain from the Federal ile%*re sank of Kansas City whether or not an interpretation of had been made. The memorandum added that presumably the/31°41rd would not desire to open up this question at this time 4141that, acc ordingly, a simple acknowledgment of Mr. McCandless' lette "(3 the Board had been prepared in the following form: ce "Please accept our thanks a muA,er an for your letter of l?e15, 1941 enclosing for the Board's information yoe°4v of a letter dated December 5, 1941, received by Relu2 ffice from the President of the Omaha Clearing Association, Omaha, Nebraska, together wi.?la a whethH !Ifcwr reply thereto, regarding the question the absorption of exchange charges constitutes nt of interest on demand deposits in violation . Board's Regulation of ee The letter was approved u nanimously. 1858 12/24/41 —9— Letter to Mr. Hodge, Assistant Counsel of the Federal Re"'e Bank of Chicago, reading as follows: "Receipt is acknowledged of your letter of December 11 enclosing a copy of a letter dated December 3 lilar the Domestic Finance Corporation to Mr. M. F. 0.7, Assistant Deputy Superintendent, Banking Department, State of New York. "The question is whether a proposed schedule of payments complies with the requirements of section 5(c)(2) of Regulation W which requires that no instal Tent shall be substantially greater than any preceding instalment. The schedule calls for 15 monthly payments Which are equal in amount, followed by 3 smaller payTents to cover the remaining balance of principal and interest. However, in order to avoid undue complexity in c alculating the amounts of the various payments, and also in order to avoid a conflict with certain State requirements, the last payment is larger than the precling payment, although, as stated above, all of the ast 3 Payments are substantially smaller than the 15 Preceding payments. "The principal purpose of section 5(c)(2) was to Prevent a balloon note at the end of the series. Ob4.14)11s] ,Y the schedule of payments described in the leter f ctlit ilsie Domestic Finance Company is not in conflict they oWith purpose, and in view of the fact that : 1 st payment is very much smaller than any of the first 4J PaYments, the Board is of the opinion that it should riot be regarded as violating the above requirement of "e Regulation. "A somewhat similar question was presented by anther inquiry received from Mr. Hale in San Francisco. ; 13 that case certain of the instalments were increased adding semiannual or other periodic interest payIn case you may be interested, a copy of the °ard's reply to Mr. Hale is enclosed." Z T Approved unanimously. 411re Letter to Mr. Gilmore, Assistant Cashier of the Federal Re- °e ' llk of St. Louis, reading as follows: 1_859 12/24/ 41 -10- "Thank you for your letter of the 12th forwarding to the Board a copy of a 'Protest Accompanying Registration Statement' filed by many credit unions with the Registration Statement. "The credit unions are entirely within their rights ift filing these protests. However, we have been inormed by Mr. Dillard that many credit unions believe aegulation W to be essential during the period of emerPncY. Nevertheless, they wish to be in a position to take whatever action may be necessary when the emergency is over. We have not been informed of any contemplated ?curt action to test the constitutionality of the 1917 ktety the President's Order, or the regulation. . "You are very properly refraining from taking any : 8ct3 on in connection with these protest notices and -=Cfloring them in licensing the credit union Registrants t1:1 the usual manner. The Board has no further sugges:Lions to offer, and it is pleased to learn that you 4ave handled the situation in this way." Approved unanimously. Letter to Mr. R. R. Williams, Head of the Department of Con811111er Instalment Credit at the Federal Reserve Bank of Philadelphia, r"414g as follows: 4 "This is with reference to your letter of December () 1941) inquiring about the status, under Regulation WI certain water heaters which are sold without tanks. whi "The Board agrees with your view that a water heater halr?h is designed to be used in connection with a tank GrollIg a capacity of 85 gallons or less is included in oututh1 .-l e a( 1,1'.the Supplement, even though it is sold withref "It is possible that the person who made the inquiry do red to was thinking of certain water heaters which notssiemploy storage tanks at all but heat the water r,4, through them, being put into action by the turn1.11 a faucet. The Board has not, as yet, issued an he4jPretati0n with respect to the sizes of such water tio,,!rs that are to be considered subject to the regula" It has been thought that almost all of these are 860 12/2 4/41 -11- "small enough so that the question would not be raised. It has been assumed that all of them would be treated as included. If it develops that an interpretation is needed, the Board would be glad to have your suggestions as to its content." Approved unanimously. Memorandum dated December 18, 1941, from Mr. Parry, Chief of the Division of Security Loans, and Mr. Thomas, Assistant Director "he Division of Research and Statistics, reading as follows: „. "Plans for obtaining additional factual information needed for the regulation of consumer credit are bei" developed by the staff. Practically all parts of the progra m will require discussion and negotiation with reporting firms or their repres entatives and in many !ases with other agenci collec es now ting statistics in the fields to be covere d. We wish to recommend at this tijue that the Board authorize the staff to proceed with negotiations regarding three aspects of the program, which are described in accompanying memoranda and sumel'ized below. It is reques ted that the Board authore the staff to make minor technical revisions in the 1 , E1118, where needed. Import ant changes, if required, be submit ted to the Board for approval. Approval formallyrequested of the accompanying drafts of letters openik; the negotiations. "(1) Retail furniture. - We recommend that statist ics on retail furniture sales and credit be collected through the Federal Reserve Banks : nd compiled and published by the Board. The ational Retail Furnit ure Association, recognizt,1) i( the inadequacy of available statistics in yuls field, has offered its cooperation in desel°Ping a current reporting service to furnish treific information needed for the administramar of Regulation W, as well as general inforof interest to the industry and others trade and business conditions. This task CO21 be taken over 4 can by the Reserve System as ouiL.ogical and not too burdensome extension of work in collecting department store statis"s. In this way satisfactory results can be T q il 1861 12/24/41 -12- "obtained more promptly without conflict with other agencies, since there are now no adequate statistics being collected by any one in this field. "(2) Consumer credit in commercial banks.It is recommended that the Reserve System collect monthly statistics from a sample of commercial banks showing the volume of instalment paper obtained and amounts outstanding. This would involve taking over the collection of statistics now being reported to the Consumer Credit Division of the American Bankers Association and tabulated in the Bureau of Foreign and Domestic Commerce. This series is not entirely satisfactory) and it would seem desirable, furthermore, that any banking statistics in this field should be collected by the Reserve System. "(3) Sales finance companies. - It is recommended that the Board request the Bureau of the Census to revise and expand its collection of statistics on automobile financing obtained from a Sample of sales finance companies. The principal change desired is to obtain information about the financing of instalment sales of other '.57'Pes of goods than automobiles, i.e., so-called diversified' financing, which has been of growing importance. t_ "It is expected that these plans for establishing, w.rtsferring, or improving basic statistical information meet some of the factual needs of the Board in adm1T.stering Regulation VI and at the same time will minioff?) and in some cases eliminate, the need for required for'cial reporting under the regulation. Other plans in, !:111131.°Iring the statistics of consumer credit are bene"crmulated and may be submitted to the Board in the ar future. "11.9ja: These with Mr. we er proposals have been cleared nis szead.o and that on banking statistics with Mr. . Approved unanimously) together With the letters referred to in the memorandum, which were as follows: Letter to the Presidents of all Federal Reserve Banks: 1_862 12/2 4/a -13- "In connection with the conference of Statistical Divisions in Washington early in January, it was believed that you may be interested in the status of negotiation s not in progress for the collection of stE_tistics on the trade and credit involved in the retail sale of furniture. "The furniture statistics now collected current1Y include the insta lment outstandings and collections Of a small sample of furniture stores compiled in the Bureau of Foreign and Domestic Comme rce, a series on total sales of indep endent furniture stores in 34 States compiled by the Burea u of the Census, and certain sales and inventory figur es collected from a small and non -identical sample collected by the National Retail Furni ture Association. "These series are not adequate for the proper formulation of Board policy with respect to consumer instalment credit. They do not cover all geographical areas and all types of stores. They omit several Vital tYpes of information, and many of the current f igures are not avail able until three to eight weeks after the end of the period to which they relate. One uI the series is based on reports from a list of concerns that changes from month to month. "The National Retail Furni ture Association has ui."-Iered to cooperate in developing a current reportseries which would fill most of the gaps outlined. 14rral Reserve Bank and branch facilities are be; lied to be excellent means through which this job iliZllection could be done. It is hoped that your if i.4.1" in a position to participate in this program th,_' ls put into operation. Suggestion from you on s -Lu matter will be welcome." Letter to Mr. CarrollWilson, Director of the Bureau of Foreign and Domestic Commerce of the Department of Commerce: the t"In dealing with the regulation of consumer credit, retajard needs more and better current statistics of able. ' furnit a sam3iThe ure trade and credit than are now avail-of existing statistical series include e of 0mPIle d by independent furniture stores in 34 States . ed the Bureau of the Census, a sample of furnlstore instalment outstandings and collections 1863 12/24/41 -14- 11 compiled by your Bureau, and sales and inventory figures collected from a small and non-identical sample by the National Retail Furniture Association. "These series do not cover all geographic areas and all types of stores, and they do not provide information of some aspects of business necessary for the Board's purpose. "The National Retail Furniture Association has offered to cooperate in the development of a current reporting series which would supply more satisfactory data. Because the Federal Reserve Banks provide geoa1],y well-distributed facilities for the colof statistics of retail trade and have had considerable experience in this field and because of our direct interest in the results, the Board believes that this task should be undertaken by the Reserve System. "The general policy followed in the Board's statistical work has been to avoid all duplication in re.1.°1 'ting in so far as possible. In order to allow us 1;-40 undertake this job without breach of this principle, oculd Your Bureau consider discontinuing the collection instalment outstandin,.s and receivables from furni,7e stores? As in other cases, we would, of course, tj an on making the results of our series available to You Promptly. "A copy of this letter has been sent to the Divib " of Statistical Standards of the Bureau of the QUdget.n ret= Letter to Mr. Walter French, Manager of the Consumer Credit Division of the American Bankers Association: colislaZhis is with reference to the current reports of r credit holdings collected by your office from ' aTe of commercial banks. CO,_ In discharging its regulatory responsibility in ari"eetion with consumer credit, the Board needs prompt t4,TYtematic information relating to commercial bank Ida.crp tNa4. clair„ uion in this field. The current statistics biltvZd 121,Y your reporting service have been useful barlic4- mPter figures, perhaps from a larger number o 13) are needed. The Reserve System does not want to a 1864. W24/41 -15- "Cause any duplication of reporting by banks and in these circumstances would you or your Association have anY objection to discontinuing the collection of the monthly and quarterly reports on consumer credit volume and outstandings or transferring the reporting service to the Reserve System? You would, of course, be supplied promptly with the figures compiled. "The members of our staff who discussed this proposal with you informally also broached it to Messrs. !ardwell and Merriam of the Bureau of Foreign and Domestic Commerce, in which department your reports are now tabulated. They agreed to the arrangement outlined here. "The mechanical details of transfer, if approved, !Ii!aY be settled between yourselves and Mr. Voodlief ihomas, Assistant Director of the Division of Research 4nd Statistics. Presumably the transfer would involve 8IPP4ring us with your list of reporting banks and, so tal ' as possible, with the files of past reports. A :Letter from your office (which could quote from this t:tter or enclose it if you desire) would explain the B ansfer to the reporting banks. If you prefer, the ! lig : 1rd could write directly to the participating banks. -cause the December bank call report will be accomP44ied 107 a supplementary schedule relating to comerbank Consumer credit holdings, it would be parleular],Y desirable to receive the end-of-year sample sport so revised , that it could be checked and, if necessary, j Letter to Honorable J. C. Capt, Director of the Census, Bureau of the Census of the Department of Commerce: the :In dealing with the regulation of consumer credit, ret :rard needs more and better current statistics of abi ' a l furniture trade and credit than are now availor-e a * The existing statistical series include sales compilaTPle of independent furniture stores in 34 States by Your Bureau, a stal sample of furniture store inturznt o and utstandings and collections compiled b,r the °f Foreign and Domestic Commerce, and sales skiael; figures collected from a small and non-identical the National Retail Furniture Association. 1865 12/24/41 -16- "These series do not cover all geographic areas and all types of stores, and they do not provide information of some aspects of business necessary for the Board's Purposes. "The National Retail Furniture Association has offered to cooperate in the development of a current reporting series which would supply more satisfactory data. Because the Federal Reserve Banks provide geographically welldistributed facilities for the collection of statistics of retail trade and have had considerable experience In this field and because of our direct interest in the results, the Board believes that this task should be undertaken by the Reserve System. "If this reporting system is put in operation, it is likely that the respondents would include some that now 11,?port retail sales to you. If your Bureau is willing to discontinue collection of sales figures from these stores, would supply you with the comparable figures. Mr. Luomas, Assistant Director of the Division of ResearCh End Statistics, is prepared to discuss technical procedure with you or your representative. 0 , "A copy of this letter has been sent to the Division Statistical Standards of the Bureau of the Budget." A second letter to Honorable J. C. Capt: th "In discharging its responsibilities with respect to ah.7 regulation of consumer credit, the Board needs dependable and prompt information concerning the operations of e important agencies operating in this field. Sales tIllance or discount companies are one of the most imporsZnt cf these agencies. These concerns purchase the in41ment Contracts created by dealers selling automobiles, _rsehold appliances, and other consumer goods. Your alideau now collects a monthly series on the volume of new vh used retail automotive paper purchased, the volume of pa°1esale financing, and the amount of retail automotive tiPer outstanding. There is, however, no current informaof°111,.about the volume of purchases or amounts outstanding tr,,lnancial paper arising from other types of retail -usactions, als "Because these facts are not only of current but eald0,°f continuing Continuing interest to several Government agencies to itself, it is appropriate that your 1866 12/24/41 -17"Bureau should expand its current reporting to fill this gap, and we urge you to do so. The members of the Board's staff have already discussed this matter informally with Messrs. McClure and Guernsey of your Bureau and there appear to be no obstacles, technical or administrative, to the expansion of your current reporting service. "A memorandum of technical points is attached to this . 1.etter. If your Bureau is willing to undertake the job, _?-t 18 suggested that our staff cooperate in developing, testing, and perfecting the basic statistical schedules and procedures." Telegram to the Presidents of all Federal Reserve Banks reading as follows: "Under present procedure, total estimated earnings 04 industrial advances and commitments are taken into ount in quarterly reallocation of Government securi' n es. Since net earnings on industrial advances and 'rnmitments attributable to funds received from Treasr are not available to cover Bank expenses and dividend or for transfer to Section 7 Surplus, it has been :laggested that reallocation would be more equitable if s.lIch earnings were omitted. Please advise whether you ' e 11117 objection to change." Zr Approved unanimously. Letter to the Comptroller of the Currency reading as follows: o'lr,, "It is respectfully requested that you place an pi er with the Bureau of Engraving and Printing, supprtenting the order reauested June 14, 1941, for the irl4tIng of Federal Reserve notes of the 1934 Series e the amount and denomination stated for the Federal serve Bank of Chicago: Denomination Amount Number of Sheets 20,400,000" 340,000 Approved unanimously. Letter to Mr. Sproul, President of the Federal Reserve Bank °rk, reading as follows: 1_867 12/24/a -18- "Receipt is acknowledged of your letter of December 19, 1941, referring to your letter of December 8, 1941, With regard to a proposed amendment to section 719(a)(1) of the Internal Revenue Code designed to clarify the status of bankers' acceptances under the definition of borrowed capital. "You state that Mr. Rouse of your bank recently conferred on this subject with Mr. Roy Blough, Director of Tax Research of the Treasury Department, and in view of his interest in the subject you suggest that it would f .acilitate effective consideration of the matter if coples of the memorandum enclosed with your letter of Decer!aber 8 are transmitted to the Treasury Department at this time. In the circumstances, it is believed appropriate for the Board to furnish copies to the Treasury uepartment for its consideration, and if you will kind217 send us the necessary additional copies we will be glad to forward them to the Treasury." Approved unanimously. Letter to the Attorney General of the United States reading 41 1.Qllows "This refers to the letter which Hon. Marriner S. Chairman of the Board of Governors of the Federal Reserve System, addressed to you under date of ! 14)ecember 3) 1941 requesting that appropriate proceedings instituted against the Commissioners of the District b Columbia to quash the assessment of taxes which has : n en made against the real property held in the Board's , s ine or to enjoin the collection of such taxes and for 'eh other relief as may be deemed advisable. be "Since the transmission of that letter there have „en informal conferences between representatives of D epartment and the Board's representatives, between coresentatives of your Department and the District of theliVpia, and between representatives of the Board and of ,uistrict of Columbia, which resulted in an exchange between the Board and the District of Columbia whetetters ,ein it is agreed that, in view of the pressure of As6!)e-ness resulting from the national emergency, the t0,"°r of the District of Columbia will be instructed vithdraw the property from the sale to take place on Ecci-0s, 1 868 12/24/41 -19- "January 6, 1942 and the Board will proceed with all reasonable dispatch to bring about a final disposition of this matter by litigation or legislation. Copies of the letters which were exchanged between the Board and the District of Columbia are enclosed for your records. "Hon. Newman A. Townsend, Assistant Solicitor General, has been kept informed of all developments in this matter .P:nd informally approved the Board's letter of December 17, 1941 to Hon. John Russell Young, President of the Board of Commissioners of the District of Columbia, before it was sent. "In accordance ihith the understanding with the Commissioners of the District of Columbia, it will be neces88-17 to give further consideration to this matter at an early date." Approved unanimously. Following informal discussions with Mr. Goldenweiser, it was agreed unanimously that, because of circumstances which had arisen since the conference of Reserve System Economists was called to convene on January 5-7, 1942, the conference should be postponed indefinitely and that Mr. Goldenweiser should advise the Federal Reserve Bank representatives accordingly. Thereupon the meeting adjourned. Secretary. Vice Chairman.
@FedFRASER