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(.:1)(1.? Minutes of actions taken by the Board of Governors of the Ner., g'J- Reserve System on Tuesday, December 5, 1950. ?RESENT: Mr. Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Vardaman Norton Powell Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Minutes h4e of actions taken by the Board of Governors of the Reserve System on December 4, 1950, were approved unAnimous1y. Melllorandum dated December 1, 1950, from Mr. Sloan, Assistant biree rcsr the Division of Examinations, recommending that the lrat_orL Of Mrs. Margaret J. Betts, a stenographer in that Div toil 'be accepted to be effective December 1, 1950. Approved unanimously. Telegram to Mr. Woolley, Vice President of the Federal Reserve or 411811S City, reading as follows: aesi "Reurlet November 27, 1950, Board approves assi/31184 tion of Dean Robert Young as a special orvant examiner for the Federal Reserve Bank 4.44 a4 sas City while a trainee for position as ass4 , -stant examiner." Approved unanimously. 4 Letter to Honorable Ralph E. Flanders, United. States Senate, p • C., reading as follows: "This refers to your letter of November 17, With Which you enclosed a letter from Mr. Kenneth 50 -2; 11 'Beckwith, an automobile dealer of Middlebury, 07.1710n.t. Mr. Beckwith stresses the seasonal nature vhs;'lle automobile business and the depressing impact t.'u31 the recent amendment to this Board's Regula14 is likely to have on automobile sales during •' l erod of normally dull activity. Bem, 'We have been particularly interested in Mr. to-;rth's letter and in his thoughtful approach 4c,i7"e Problem. We agree, of course, that seasonal wi;°1 ' s customarily result in a slowing down of '1210bile sales in some regions. The Board recogi d that its • recent amendment and the period of va :automobile sales activity would coincide. It th; (3/11Y after the most thorough appraisal of all ri4Jactors that the Board decided to amend the be „ —-ation. The specific action appeared necessary ric :Ve Of the immediate danger of a serious inwhir:rn. It was found that inflationary pressures, cot1;" had been gathering momentum for some time, re ! „1111ed .. to be strong and, unless vigorously to,could have no ultimate result other than IlizZI llsh seriously upward on prices. It was recogre81-3;%that the level of terms, as amended, would 8o111-e—;' in sone hardship to some businesses and to 144i: ndividuals. In view of the urgency of the to 1 °11.arY problem, however, it did not appear • J11. the public interest to defer action and tati'he risk of the more severe hardships to the Vo °4 as a whole which a disastrous inflation titttl "YoU may be certain that the Board will conStudy the regulation and its effects on NpIZItomobile and other industries. We particularly 4i;'ciate Your kindness in forwarding Mr. Beckwith's it t° us and giving us the opportunity to study comment on it." Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, f ollows: of co"The threat of buyers' markets in certain lines 4s1zmer durable goods coming concurrently with the 1944 12/5/50 -3- H wreletively strict terms prescribed by Regulation as led to the development or increased use of ire'e Promotional devices which may have the effect, t: Yt the purpose, of avoiding the restrictions of Isegulation with respect to down payment or "Certain dealers have already come forward with vitHl°118 Proposals, some of them new, in connection Nroa;their Plans to sustain or increase their sales tI ; r -e ' The Regulation W status of these plans when rev.: come to the attention of the System should be thel.,,ved with considerable caution. In some cases facerPose is not immediately evident nor are the -, 411y set forth. asker4 4-4 this connection the Board was recently 'whether certain transactions would be excluded clesj,..eglalation W. The transactions were not fully to J.413ed, but appeared to be similar in many respects tert ; rtain ones which the Board, in a previous intiol letation, had stated were subject to the regula, tion 4fter a careful study of the general informaPresented, the Board stated that it did not frok 84Ything to distinguish the present situations 4cti the , general principles under which the transto' b° s ia the previous interpretations were held the Subject to the regulation. In that connection added that: 'Although it might not be entirely . (31"rect to say that there would never : 4 allY circumstances be any exception 0 those principles, it is clear that 14 . 31 exception that might exist would extremely rare and unusual case, not of a character to be susceptible Of the kind of sales promotion in which the company has shown itself tri) 1)-3711-67.78-Ied.' er: 110 Board also stated the following which is of that irlterest in connection with some inquiries ' 0/11etil e to the Board or the Reserve Banks as to (lAeziajcertain transactions are excluded from the 104 of the regulatioii: -7 12/5/50 -4"'Another factor may deserve mention here. The Board and the Reserve Banks do on some occasions express opinions regarding classes Or types of situations without all the facts Of a Particular case having been fully presented. However, the present situation presents an entirely different type of problem. It emPhasizes the need for full information before ruling on questions, especially before .1-5suing a ruling that might have more sweep.trig. consequences than expected or that might invite evasions. In the circumstances, the Board is convinced that it would be impracticable 414 undesirable to state that any transaction , 11ch as here involved was outside the scope of regulation without first giving the question the most careful consideration on the basis of a full statement of all the facts and circum!tances of a particular case, including intcrmation as to how the question arises, how rre quently or infrequently the situation occurs, etc.'" ! Approved unanimously. kltit Telegram to Mr. Hampton Powell, The Lane Company, Inc., /71sta vi j —rginia, reading as follows: ayZhis is in reply to your wire of November 27 hylltg. Regulation W. We attempted to reach you Yo lphone last week, both in Alta Vista and in this Vnington hotel. The Board has no plans at '4e either to include jewelry or to raise the $50 reqftli."glire presently applicable to listed article, coiXillg a down payment. Board after thorough Illation has concluded that jewelry for a (1)f reasons should not now be included in the or egulation. Among other reasons the amount or -'eclit arising out of jewelry sales is az-It 4tB ili nn Magnitude to warrant, under present conthe -448) its inclusion under Regulation W. For most Part such credits are arranged with e"ivelY short maturities. 12/5/50 -5- are aware that because jewelry sales are subject to Regulation W there might be some tlasferral of demand from listed articles to tp:IrelrY but, our studies have indicated that the 3:4118ferral would be exceedingly slight particuan'in view of the fact that a figure as high ei::50 should take care of a large percentage of chases. We appreciate your interest in the Purchases. re Matter and we know you will agree that the ciet letion to be effective must materially dampen pe-rrii Particularly during this pre-Christmas When sales pressure is heaviest." Approved unanimously. Letter to Mr. Boyd, Chief Examiner of the Federal Reserve 414 Of n, `''Leveland, reading as follows: 30 I H Reference is made to your letter of November vi4ch i; 950, advising that, because of abnormal you , " er conditions, you were forced to abandon gb;,schedule of examinations for the week belt-4'4g November 27, 1950, and that, as a result, TOPears that it will be impracticable to examine Savings & Trust Company, Youngstown, "'"Vithin the current year. Piet„It is noted that your program will be can'with this one exception, that The Dollar Octo -}, xigs & Trust Company was last examined 110 s; Z e 31, 1949, which examination disclosed --`•")118 Problems, and that its examination the V1.1l be scheduled early in January 1951. In illta.c-ircumstances, the Board of Governors will etea °8e alc objection to deferment of the -41ation of the bank as proposed." Approved unanimously. or Letter to Mr. Walter F. Ryan, Clearance Officer, Division 411"ical Standards, Bureau of the Budget, Washington 25, D. C., 4: -N an follows: 4/5/50 -6theTh Board has approved, in connection with c e forthcoming end-of-year call for reports of by °11diti°11, the collection of reports of deposits ci e°11nties from State member banks that have outdiv 7, °1111tY branches and reports of deposits for inbranches from a few State member banks in of-i. , 11seW England States which have branches outside ren"'leir metropolitan areas, provided that similar CliZts are obtained by the Comptroller of the De, --tleY from national banks and by the Federal nie'sit Insurance Corporation from insured nonrequest is part of the program for lett.,:etillig branch statistics outlined in our ls Of April 5, 1949. It Is designed primarily ill.1-:.u0vide iormation by counties for publication 001.1 Pamphlet, Distribution of Bank Deposits by =-2, which was published by the Board as of Trearer 31, 1947 and June 30, 1949, and by the j ur as of December 31, 1941-44. We also 118.11 te131,1 ° expand this pamphlet somewhat to include kt,e;:"ions for some of the principal metropolitan as recently defined in the Bureau of the slio ; e release dated October 17, 1950, and to ' Clepo figUres for total deposits in addition to the tioxisits of individuals, partnerships, and corporais anticipated that reports would be ) c14:ed only from banks with branches located rilebe— of the head office county (about 130 8Pec:,ballks and 200 nonmember banks) and that balik: ' 4 listings would be collected from a few icca ill the New England States which have branches listiecl outside of the metropolitan areas. These Eitid, 54gs are necessary for about 10 member banks thtlt 11°Ilmember banks in order to prepare tabulations tel N, e°!' , Iform with the metropolitan area definitions krechj,40agland. Information would be requested for 11.vicii,'ePosit items: (1) demand deposits of intitle ; Ills/ partnerships, and corporations, (2) corr,,'ePosits of individuals, partnerships, and 'rations, and (3) other deposits. We will appreciate any comments or suggestions kA te:b have regarding the proposed request and 1948 -7-Approved unanimously. Letter to Mr. Eustace Mullins, Cleaners' Press, P. 0. Box 6974, co ligress rOliovs Heights Station, Washington 20, D. C., reading as 1411;Thi8 is in reply to your recent letter in YoU refer to the power granted the Federal peciellTe Board under the provisions of the original or! lial Reserve Act 'to suspend or remove any officer or ector of any Federal Reserve Bunk, the cause 1,41:110h removal to be forthwith communicated in 0.6;110€ by the Federal Reserve Board to the removed cer or director and to said Bank'. You ask Vliej.1, 1,11e4er the Board has had occasion to take action ot e tf this provision, and, if so, for a statement 4e circumstances involved. tttlici"There has been one instance 4n which it was Act, , 1 1lecessary to resort to the provision of the thel„"Ich You mention. Since the circumstances bet,'°f are considered to be a private matter Der"eell the Board, the Reserve Bank, and the to Zteoncerned, we regret that we are unable seo0Z1lish You with a detailed answer to the Part of your inquiry." Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, as mollt follows: _ You know, the Board on December 19, 1947, a rule prescribing standards for classlfica°f reserve cities and providing for a triennial 714tion of such cities. The rule appears on pages 86.e til2f the Board's 1947 Annual Report. As a basis tizie 'action which the Board will take under the beellerfective March 1, 1951, the enclosed table has (leponrePared showing total deposits, total demand 1)(141t;''ts, and interbank demand deposits of member 114111/:- ill reserve cities other than Federal Reserve ard ale Branch cities, and in nonreserve cities with rge volume of interbank demand deposits, together '' .at8 tiot. „941, 12/5/50 -8tig1111 tvc interbank demand deposit ratios. The be,,ITs of deposits are averages of call dates po'cill'ar 31, 1948 to June 30, 1950, inclusive. diaL!omParative purposes, however, interbank deposit ratios are shown for the period tr cener 31, 1945 to June 30, 1947, as well as Period December 31, 1948 to June 30, 1950. 118 YOU will observe from the attached table, : the Na-eserve city designation of each of the Boal-,°A%ling 12 cities will be terminated by the 1.11; 1, ell March 1, 1951 unless every member bank City City requests continuance of the designat10 no additional reserve cities will be de -' , igriated: Lit c°14, Nebraska Galveston, Texas esIdar Rapids, Iowa Peoria, Illinois stollz City. Topeka, Kansas Iowa 414sJ08ePh, Missouri Pueblo, Colorado To ,as City, Kansas Waco, Texas ?do, Ohio Dubuque, Iowa lease advise each member bank in any of the ellknire ciesi ties in your district that the reserve city rc tion of the city will be terminated as of -L, 1951 unless written requests for its conare received by your Bank from all member --Luca distri 4 the city (except member banks in outlying 11141651t .?t6 Permitted by the Board of Governors to Yoti 414 reduced reserves) by February 15, 1951. also advise any other interested member bEnal ti04;44 Y°11r district of the forthcoming redesigna' and terminations. the "It will be appreciated if you will forward to i\TNc:end as promptly as convenient all requests d bY Your Bank from the member banks for c0 aav -44ance of the reserve city status. Should h requests be received too late to permit ti N3] ,L ueing forwarded to reach the Board by the-ZrY 16, 1951, it is requested that you advise -yard by wire of the receipt of such requests.” Approved unanimously. 4e dated December 4, 1950, from the Division of "/5/50 _9— Pere°el Ad ministration, recommending that the Board authorize p e'Y4lelit or kre. of the physician's fee for the physical examination Delia Payne, an employee in the Division of Aministrative 11110 has filed an application requesting that she be retir "'effective January 1, 1951 because of disability, as well Biz 48 119X fees for necessary physical examinations of any ettlaoek&lr ' - 8 Or ' tIktres the Board who request disability retirement in the Approved unanimously.
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