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1822 A meeting of the Board of Governors of the Federal Reserve was held in Washington on Friday, December 8, 1944, at 10:30 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Hammond, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Smead, Director of the Division of Bank Operations Mr. Paulger, Director of the Division of Examinations Mr. Parry, Director of the Division of Security Loans Mr. Vest, Assistant General Attorney Mr. Wyatt, General Counsel There were presented telegrams to Mr. Flanders, President of Pede ral Reserve Bank of Boston, Messrs. Treiber and McCreedy, Secrett.ri tte es of the Federal Reserve Banks of New York and Philadelphia, ell°ct* I lve-q, Messrs. Leach and McLarin, Presidents of the Federal Reserve 8 p, anks of Richmond and Atlanta, respectively, Mr. Dillard, Vice titor eilt of the Federal Reserve Bank of Chicago, Mr. Stewart, Secrethe 41,1141, Federal Reserve Bank of St. Louis, and Messrs. Ziemer and :'ice Presidents of the Federal Reserve Banks of Minneapolis : 0414 4 the Board approved the st4gi re'ticisco, respectively, stating that 11111ent without change by the Federal Reserve Banks of St. Louis 1.8(4, -)t)'" LV8/44 —2— arkisA.„ rrancisco on December 5, by the Federal Reserve Bank of AtOn 41444 December 6, by the Federal Reserve Banks of New York, PhilaRichmond, Chicago, Minneapolis, and San Francisco on December 7, 191., "f4, and by the Federal Reserve Bank of Boston today, of the rates Or di --scount and purchase in their existing schedules. Approved unanimously. Reference was made to the procedure that might be followed at the In -eet g with the Presidents of the Federal Reserve Banks on Tuesday, ileceraber 1,, J"' 1944, which is to be devoted to a discussion of papers III'ePal'ecl by members of the staffs of the Board and the Reserve Banks ck the subject of Banking and Credit Policy. Upon motion by Mr. McKee and by unanimous vote, the procedure to be followed during the meeting was referred to Messrs. Eccles, Evans, and Goldenweiser, With the understanding that the question of the publication of the papers would not be raised at this time. Draper stated that a few days ago the Federal Reserve of Boston received a request from the Military Affairs Commit- r the Senate, which is investigating Mr. Robert A. Hurley and tietItetiant Colonel E. Heller in connection with their nominations as that Mr. Pitman, Vice President the the taak, Surplus Property Board, , 41*8 come to Washington and bring with him the Bankts records, P4cal Agent for the War Department, in connection with the fi444eirle by the War Department of war production contracts with the 1824 12A/44 —3— Narra gansett Machine Company of Pawtucket, Rhode Island. Mr. Draper als° said that Colonel Mechem of the War Department had requested by teleph '911e that the records referred to be made available to the Senate 0 orrgaittee by the Federal Reserve Bank. All of the members were agreed that, in view of Colonel Mechem's request, there was no reason why the records should not be made available but that, on the con— trary, the Board should cooperate with the Senate Committee, and it was unanimously understood that Mr. Smead would, (1) call Mr. Pitman and tell him to bring the records with him when he came to testify before the Senate Committee, and (2) call Colonel Mechem and ask him for a letter confirming his telephone request that the files in question be made available to the Senate Committee. In anticipation of discussions with the Presidents of the Fed— ez,ki see Banks next week of matters on which the Presidents' Con— terelle e, which is meeting in Washington today and tomorrow, might wish to kake ' l ecommendations to the Board, there was an informal discussion (3t the t Ilaemad °Pies on the agenda for the Presidents' Conference. Reference e in this connection to proposed enabling legislation for the tr ttOr kch 4°°ds apreem.ents. The members of the Board felt that, inas— the draft of the legislation received from the Treasury Depart— %It a e l'4-ier in the week was in tentative form and was being studied trlee nierribers of the Board's staff for the purpose of a staff confer— at th e request of the Treasury staff, the matter was not at a point 12/8/44 -.4where it could be discussed profitably with the Presidents at this tits, and that in any event it could not be discussed without the perof the Treasury. 14r. Szymczak reported that recently Mr. Harry White, Director t14°rietarY Research in the Treasury Department, called on the tele111414e t° saY that he had appointments in Birmingham, Louisville, and 114111111e, for speeches on the Bretton Woods agreements and inquired *tether the bankers in those towns would be interested in meeting with f0I'luncheon discussions. Mr. Szymczak said he got in touch with the Presidents of the Federal Reserve Banks of Atlanta and St. Louis 44 the luncheon meetings were arranged. At this point Messrs. Goldenweiser, Smead, Paulger, Parry, Vest, allcltfyatt withdrew from the meeting. The+ action stated with respect to each of the matters herein- referred pecierel. The minutes of the meeting of the Board of Governors of the Reserve System held on December 41040_ "the . J. to was taken by the Board: 7, 1944, were approved unani- Me'rlorandum dated November 29, 1944, from Mr. Paulger, Director vision of Examinations, recommending that the basic salary of Mee lelland, a Federal Reserve Examiner in that Division, be infr°111 $5,000 to :!',5,200 per annum, effective December 16, 1944. Approved unanimously. I 826 12/8/44 Letter to Mr. Clark, Vice President of the Federal Reserve Bank Atlanta, reading as follows: "In accordance with the request contained in your letter of December 5, 1944, the Board approves the ap??.1ntrnent, effective December 1, 1944, of Adolphus D. iblirn as an assistant examiner for the Federal Reserve lBank of Atlanta." Approved unanimously. Letter to Mr. Koppang, Vice President of the Federal Reserve knic of, aansas City, reading as follows: "As requested in your letter of November 29, 1944, 1;e Board of Governors approves, effective December 1, the Payment of salary to Mr. R. J. McMullen as a,glneer and Building Supervisor, Oklahoma City Branch, the rate of 82,700 per annum, which is i53OO in excess p̀l . the maximum provided in the personnel classification Plan for this position. fo "Since a salary at the rate of $2,700 per annum ojthe position of Engineer and Building Supervisor, orhorna City Branch, was covered by the certificate enthosed vdth your letter of July 21, 1944, it is believed it will not be necessary in this instance to subcertificate to the Joint Committee. Ac' yo llglY, as requested, the certificate submitted with letter of November 29, is being returned." Approved unanimously. Letter to Mr. Day, President of the Federal Reserve Bank of q -°00, reading as follows: of "The Board of Governors approves the establishment ! l maximum annual salary of $7,500 for the position ot g er Examiner, under the personnel classification re - of the Federal Reserve Bank of San Francisco, as queted in your letter of November 16, 19411por it is noted that the description of work on the 111 A page submitted with your letter for the position 12/8/44 -6- "of Chief Examiner is somewhat similar to the page now ila-rcluded in the plan, whereas the duties and responsities of the position as reflected in the certificate Uurnitted appear to be considerably broader. "In the circumstances, it is suggested that the Form 4 page be revised to reflect more fully the duties and resPonsibilities of the position as presently constituted." Approved unanimously. Letter to the "Peoples National Bank of Edwardsville", Edwards7.111e, p ennsYlvania, reading as follows: s refers to the resolution adopted on April 25, 19 'l'qY the board of directors of your bank, signifying +1,44 '"e banK i s desire to surrender its right to exercise fiduci arYpowers heretofore granted to it. di "The Board, understanding that your bank has been vrIZ!harged or otherwise properly relieved in accordance a f" the law of all of its duties as fiduciary, has issued .°Pmal certificate to your bank certifying that it is h '°nger authorized to exercise any of the fiduciary eWers covered by the provisions of section 11(k) of the 'ede ol Pal Reserve Act, as amended. This certificate is en*4.°8ed h erewith. the ,"In this connection, your attention is called to ,',aet that, under the provisions of section 11(k) of the . eat r hederal Reserve Act, as amended, when such a certifipede -as been issued by the Board of Governors of the siZal Reserve System to a national bank, such bank (1) no longer be subject to the provisions of section of the Federal Reserve Act or the regulations of the -oard of Governors of the Federal Reserve System made , pilr to t thereto, (2) shall be entitled to have returned Stal"' anY securities which it may have deposited with the or e or similar authorities for the protection of private powcourt trusts, and (3) shall not exercise any of the AotePs conferred by section 11(k) of the Federal Reserve or trceePt with the permission of the Board of Governors he Federal Reserve System." la(kt Approved unanimously. Letter to Mr. McRae, Chief National Bank Examiner at the 12/8414. -7Ped. Reserve Bank of Boston, reading as follows: "This refers to your letter of May 9, 1944 and subsequent correspondence regarding an inquiry which you have received from F. S. Moseley & Co., Boston, Massac chusetts, a member of the New Stock Exchange, con4.erning the application of section 7(a) of Regulation T :J..? certain transactions conducted by that firm. Section (ka) reads as follows: '(a) Arranzinf; for loans by others. A creditor may arrange for the extension or maintenance of credit to or for any customer of such creditor by any person upon the same terms and conditions as those upon which the creditor, under the provisions of this regulation, may himself extend or maintain such credit to such customer, but only upon such terms and conditions, except that this limitation shall not apply with respect to the arranging by a creditor for a bank subject to Regulation U to extend or maintain credit on registered seiiirities or exempted securities.' rer,„ The inquiry resulted from an investigation by a th esentative of the Securities Exchange Commission into yer , activities of a securities dealer in Rochester, New &c - This dealer had communicated with F. S. Moseley in behalf of certain individuals to whom he had e.s4-1 u nregistered securities and F. S. Moseley had acted A 2 loan broker in obtaining loans on these securities. pli estion _ . was raised by the Securities and Exchange Comwas r.investigator as to whether F. S. Moseley& Co. Of t ctlng in conformity with section 7(a) in this type ransaction and also in its other activities as loan broker. Vesti"It is our understanding that subsequent to the inanee-gation, F. S. Moseley & Co. discontinued the acceptdOf loan brokerage business from securities brokers - 4-ers, so far at least as unregistered securities are' concerned, and the only question remaining relates to "' ier activities as loan broker. in 0,34If the persons for whom F. S. lioseley & Co. acts t .,_ining loans are its 'customers' within the meaning : 4°n 7(a), then it is clear that F. S. Moseley & Co. coltlf-le' not arrange loans for them on unregistered securities. T 1 8,,c —8— fi r...ti me -te,m 'customer' is defined in section 2(c) of the regulation in the following language: '(c) The term "customer" includes any Person, or any group of persons acting jointly, (1) to or for whom a creditor is extending or maintaining any credit, or (2) who, in accord— ance with the ordinary usage of the trade, would be considered a customer of the creditor. **it' . ma. F. S. Moseley & Co. does not extend credit to or Intain credit for the persons for whom the firm acts i-fl o btaining loans, so the application of the regulation bePends upon whether or not they would be considered to ,customers 'in accordance with the ordinary usage of a'lle trade'. The facts bearing on this question are that clitllough F. S. Moseley & Co. is a broker and dealer in se— rj ltles, the loan brokerage business is operated as a sepa— isL'e department and no loan is arranged for any person who a 1.1stomer of the securities department. dic,,'Inquiry among securities brokers and dealers has in— of-:''ed that loan brokerage is not considered to be a part 'the securities business, and consequently it appears to the ° ard that unless the persons for whom loans are nego— ti„B fi'ed are customers of the securities department of the they would not be customers within the meaning of the ' I m as used in Regulation T. act. "The Board is therefore of the opinion that the stated ecrratTiot: of F. S. Moseley & Co. as loan broker would not Regulation T." Approved unanimously. krt 411 Letter to Mr. Hinrichs, Acting Commissioner of Labor Statistics, Labor Statistics, Labor Department, reading as follows: arid "In accordance with your letter of October 14, 1944, a 8,!ubsequent telephone conversations, there is enclosed pecletement showing the total number of employees of the Reserve Banks on September 30 and October 31, and the ral „ total Pay rolls for September and October 1944, classi— 4-led * ' 7 states. In future these data will be forwarded for each month a8 as they are available." Approved unanimously. 1830 12/8/44 -9Telegram to the Presidents of all the Federal Reserve Banks reaaias follows: . "The Veterans Administration has requested that the , fo Ott°113-ng information regarding the preparation and use al,'orms 1800, 1801, 1802, 1803, and 1806 be made availu-Le to banking institutions in your district: 'The determination of eligibility of the veteran requires the Veterans Administration to inspect original records in the possession of the veteran or in lieu thereof to refer to records in the files of the Veterans Administralon or in the files of the Service departments (War Department, Navy Department, /arine Corps, or Coast Guard). 'It is recommended that lenders endeavor to have the veteran where practicable furnish the lender with evidence of eligibility in the form of discharge or separation papers or Certificate in Lieu of Lost or Destroyed Discharge, or properly authenticated photo copies of discharge or separation papers to be dispatched to the Veterans Administration together with Form 1800 properly completed. 'A photo copy of discharge or separation Papers furnished to the veteran by the Service department may be considered to be properly authenticated if such photo copy is issued under the seal of the Service department. Photo copies of original discharge or separation papers prepared by persons or agencies other than Service departments may be considered to be properly authenticated if such copies are certified by and bear the seal of a Notary Public or other °facer authorized by law to administer oaths or take acknowledgments. 'Statement should be placed on the request for Certification of Eligibility (Form 1800) outlining the type of evidence submitted, if such action is taken, and also a statement of the "C" nl:/mber of the applicant, if a "C" number was assigned by the Veterans Administration and this 1831 12/8/44 -10ill number is known to the applicant. A "C" number is a Veterans Administration file number which is assigned by the Veterans Administration to applications for pension and for certain other benefits. 'Form 1800 filled in and any supporting documents should be forwarded to the Regional Office or Combined Facility of the Veterans Administration located in the State in which the veteran resides. These offices should not be confused with the four Loan Guaranty Division offices hereinafter named. tA discharge or other evidence of eligibility Which is submitted with a request for Certification of Eligibility will be returned by the Veterans Administration with the Certification of Eligibility to the lender who shall return such evidence to the applicant. 'If the veteran is eligible and the Administrator of Veterans Affairs has not already issued guaranties in respect of the veteran totaling $2,000 (the maximum amount which may be guaranteed under the Act), the remainder of the form will be completed and executed by the loan guaranty officer of the Veterans Administration and the original of the form will be returned to the lender. The lender should be sure to include on Form 1800 the address or location of the property to be appraised. 'The lender should then arrange for the preparation of the Loan Guaranty Certificate and Application for Home Loan Guaranty (Finance Forms 1801 and 1802) and, if any real estate is to be mortgaged, the lender should arrange with the appraiser designated by the loan guaranty officer on the Certificatlon of Eligibility (Finance Form 1800) for the Preparation of the Appraisal Reports (Finance Form 1803). The executed original of the Application Ior Home Loan Guaranty, the Appraisal Report (if any), and the other papers required to be submitted pursuant to sections 36.4024, 36.4025, and 36.4032 of the regulations of the Administrator of Veterans Affairs regarding the guaranty of home loans should be fo1arded by the lender to the Loan Guaranty '!-vision for the States listed below, unless some .2„;ther agency is designated on the Certification of to receive the application. 18(V2 -11:•41111 Servicing the States of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York and New Jersey. '2. 1fliri ton, D C. 300 IndianaA Servicing the States of Pennsylvania, Delaware, Maryland, Virginia, West Virginia, Ohio, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Tennessee, Kentucky and the District of Columbia. . 13 - 11 - 4 .00 Z. a • MI .14 Streets Servicing Arizona, California, Nevada, Oregon, Washington, Idaho, Montana, Wyoming, Utah, Colorado and New Mexico. 1 4. Servicing Illinois, Michigan, Indiana, Iowa, North Dakota, South Dakota, Minnesota, Wisconsin, Missouri, Nebraska, Kansas, Oklahoma, Texas, Arkansas and Louisiana. 'Any questions arising in connection with the Preparation or handling of such forms should be taken uP With Regional Offices or Combined Facilities of the Veterans Administration.'" -- Approved unanimously. Thereupon the meeting adjourned. Chairman.
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