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162 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Tuesday, February 10, 1948. PRESENT: Mr. Mt. Mr. Mt. Mt. Mt. Eccles, Chairman pro tern Szymczak Draper Evans Vardaman 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 hderIll -Reserve System on February Memorandum dated February ()li the 6, 1948, were approved unanimously. 4, 1948, from Mr. Leonard, Director Division of Examinations, recommending the appointment of Miss KYrtle Pearl Brown as a stenographer in that Division, on a temporary Illcietinite basis, with basic salary at the rate of $1,954 per annum, ertettive as of the date upon which she enters upon the performance other duties after having passed the usual physical examination. Illeraemorandum also stated that it was contemplated that Miss Brown 14(2111cibecome a member of the Federal Reserve retirement system. Approved unanimously. Memorandum dated February 6, 1948, from Mr. Bethea, Direc0 tor . the Division of Administrative Services, recommending the 41klib+m of J. Robert Surguy as a clerk in that Division with bast_ u salary at the rate of $2,544.48 per annum, effective as of 1_63 2/1q48 the -2- date upon which he enters upon the performance of his duties atter having passed the usual physical examination. The memorandum 8 '180 stated that it was contemplated that Mr. Surguy would become 8. member of the Federal Reserve retirement system. Approved unanimously. Memorandum dated February tor 6, 1948, from Mr. Bethea, Direc- ul the Division of Administrative Services, recommending the 1113130int.Thc, —116 of Mrs. Louise Florian Snowdon as a stenographer in that Divon with basic salary at the rate of $2,168.28 per al11311111, effective as of the date upon which she enters upon the Pe"°11)1saice of her duties after having passed the usual physical eXstanation. The memorandum also stated that it was contemplated t119:t Mrs. Snowden would become a member of the Federal Reserve retilieltent system. Approved unanimously. Letter to Mr. Latham, Vice President of the Federal Re%'1.re Bank of Boston, reading as follows: "In accordance with the requests contained in letters of January 30, 1948, the Board approves 4 e appointments of Warren K. Hadley and Oscar W. Lind assistant examiners for the Federal Reserve Bank of -rston. Please advise us of the dates upon which the tIPPointments are made effective and also as to salary l'ates.” Your Approved unanimously. 164 2/10/48 -3Letter to Mr. Clarke, Assistant Secretary of the Federal serve v Bank of New York, reading as follows: "The Board of Governors approves the reappointlients of Messrs. Arthur G. Nelson, Edward J. Noble and William H. Pouch as members of the Industrial ,.c./371.80r3r Committee for the Second Federal Reserve District to serve for terms of one year each beginrung March 1, 1948, in accordance with the action taken by the Executive Committee, as reported in Your letter of February 5, 1948. "It is noted from your letter that, in view 21) the small volume of applications for loans under .0ection 13b of the Federal Reserve Act, the directors consider it inadvisable at this time to seek additional members of the Committee to fill the two eZisting vacancies." Approved unanimously. Letter to Mr. Sproul, President of the Federal Reserve Batit or New York, reading as follows: "Governor Szymczak has circulated to the members of the Board your letter of February 2, 1948 request, 1 ,1_1E the Board's approval of the proposed mission to 411 Salvador by members of your staff. staffi e you know, the Board's representatives on the Group on Foreign Interests have felt, and cont oinue to feel, very skeptical as to the desirability the proposed mission. The task which the mission undertake seems somewhat outside the usual scope or tt SYstem undertakings and, given the political situa1°11 in El Salvador, there appears to be little ex, Pectation of concrete results. these doubts, it appreciates the "While the Board shares desire of your Bank to maintain some direct contact th Latin American problems, and under all the circumahces is not inclined to interpose any objection to the, Proposed mission. While the Board is unable to iVIre anY of its personnel to participate in this work, Will follow the development of the project with in' L erest, n Approved unanimously. 165 -4Telegram to Mr. A. Howard Stebbins, Sr., Stebbins and Robert^, 0 Incorporated, Little Rock, Arkansas, reading as follows: "Board of Governors of Federal Reserve System ha*s aPpointed you Director of Little Rock Branch of Federal Reserve Bank of St. Louis for unexpired ?ortion of term ending December 31, 1950, and will be , Pleased to have your acceptance by collect teleg," Approved unanimously. Telegram to Mr. Gentry, First Vice President of the Federa]. l'eserve Bank of Dallas, reading as follows: It your letter of February 4 and Mr. Gilbert's letter of January 27, 1948, enclosing documents subn.litted by member banks in Waco and Galveston requestcontinuance of reserve city status, such documents Satisfactorily meet requirements of Board's action of December 19, 1947, on this subject." Approved unanimously. Letter to Mr. Wayne, Vice President of the Federal Reserve 118. 11k (n Richmond, reading as follows: a "This refers to your letter of February 2, 1948, lid its enclosure regarding the suggestion of Mr. Herman P. , Hamilton, Chester, South Carolina, that the Board lye consideration to amending Regulation R so as to ! 71cempt from its prohibitions persons engaged solely trl underwriting and distributing bonds issued by the States and their political subdivisions. Tt 15 a150 noted that Mr. Hamilton has expressed a dealeo :ire to appear before the Board in person if it is ueeMed necessary and appropriate. "The Board has heretofore given consideration to the suggestion made by Mr. Hamilton and has decided that an exemption permitting interlocking relationships 166 2/10/48 -5"between member banks and dealers in obligations of States and municipalities would not be consistent with the purposes of section 32 of the Banking Act °f 1933. The danger that such an interlocking re'ationship might unduly influence the investment Policies of the bank and the advice regarding investments which it might give to its correspondents azild customers would be present whether or not the dealer confined his activities solely to State or Municipal bonds. "In view of the intention of the law as stated it is doubtful that Mr. Hamilton's appearance uefore the Board for the purpose of urging the exbefore eziPtion would serve any useful purpose. However, Frangements can be made to have a member of the Board available to discuss the matter with Mr. 1.tamilton if he feels strongly that he should come to Washington for that purpose. You are at liberty Mr. Hamilton of the Board's views in this m:tZ Approved unanimously. Bejak or Letter to Mr. Creighton, Chairman of the Federal Reserve Boston, reading as follows: "The Board of Governors has received your letter January 6, 1948, advising that the report of ex,illation of the Bank, made as of December 2, 1947, il the Board's examiners, has been considered and 'gned by each of the Bank's directors. the"The Board of Governors has noted with interest examiner's comments on page 18 of the report of .3,amination relative to approximately $79 million of ! 1_rculated Federal Reserve notes of the 1928 Series ; allich were retired with the Agent a number of year g° and have remained dormant since that time. In view of the past history and developments in connection with this matter at your bank, it is sUggested that the currency of the 1928 Series which 311 now hold be canceled and forwarded in a series c, ,01 ' shipments to the Treasury for destruction." r Approved unanimously. 167 2/10/48 -6Letter to Mr. Sproul, Chairman of the Presidents' Confer"Lee/ Federal Reserve Bank of New York, reading as follows: "Recently the Board had occasion to review outtaflding authorizations to the Federal Reserve Banks use their own funds in limited amounts in making loansn to their employees. From this review the Board notes that at four of the Federal Reserve Banks which make small loans to employees there is also an employees' credit union, three of which credit unions were 2.rganized under the Federal Credit Union Act, approved 'nine 26, 1934. "In 1936 the employees of the Board of Governors ?rganized a Federal Credit Union under the Federal Credit Union Act, which has operated successfully ince that time and it is believed has satisfactorily taken care of all the meritorious needs of the Board's employees for credit for current purposes not obtained on reasonable terms. The experience at the Board 4)oard with the Federal Credit Union raises a question as to whether it would be feasible for the employees at all Federal Reserve Banks to organize credit unions ld then for the Banks to discontinue making loans to employees from Bank funds. t "It will be appreciated if you will have this 4°Pic placed upon the agenda for the forthcoming meet' 111, of the Presidents' Conference." Z t?..f Approved unanimously. Letter to the Presidents of all Federal Reserve Banks reari4 "-tng as follows: the next quarterly report 04 s 4"Reference is made to J-gnificant developments in the banking field not inarily obtainable from bank statistics, as called in the Board's letter of January 27, 1947 (S-953). e_ should appreciate if, without limiting in any way r, t ' le nature and scope of the next report of your Bank, ; °U would include comments on the following questions: (l) What effects on bank investment and lending policies have been observed as a result of 168 2/10/48 -7"the lowering of support prices in the Government securities market as of December 24? Do bankers generally in your District expect prices of Government securities to hold firmly at present levels? (2) Throughout 1947 Reserve Bank reports in reply to 5-953, with few exceptions, indicated that banks were becoming more 'selective' in lending. (a) Has loan expansion during the past year reflected mainly loans to existing borrowers or loans to new borrowers? If the former, has the increase in loans been going to the better-grade risks? If the latter, do new borrowers generally represent above average risks? (b) Is the loan portfolio quality of recently examined banks substantially improved over a year ago? (3) How generally are bankers adhering to ABA standard terms in consumer instalment financing? And are there any observable tendencies in the durable goads trade towards further easing of instalment credit terms? (4) Has the joint Supervisory Statement of November 24 had any observable effects on bank lending policies? Is there any great concern among bankers regarding the sharp decline in the relation of capital accounts to 'risk' assets which has occurred during the past year? Do they have any plans for doing something about it? (5) Do reports indicate that mortgage brokers in your District are having any difficulties in placing new mortgages? (6) Are there any lines of business in your District which appear to be 'over-extended?' I.The information developed in the reports received in 194_ ' ( as been very helpful, and the Board appreciates the c 1'e with which the reports have been prepared. In view 4 ithe rapidly changing banking conditions, and in order to . ar l acilitate prompt summarization of the material, please 02'ange to have your next report sent to reach the Board " or before March 10. A summary of replies, similar to 169 2/10/48 -8II one covering the last quarterly report sent to you on December 24, will be prepared and forwarded to each :Reserve Bank promptly." Approved unanimously. Secretar . d: Chairman pro tem.
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