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Minutes of actions taken by the Board of Governors of the Pederal Reserve System on Friday, February 25, 1949. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman pro tem. Szymczak Draper 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 -4-e-1- Reserve System on February 24, 1949, were approved unani- Telegrams to the Federal Reserve Banks of Boston, New York, el"elazd, Richmond, Chicago, St. Louis, Minneapolis, Dallas, and "talacisco stating that the Board approves the establishment "IcIlt change by the Federal Reserve Banks of St. Louis and San 01414"-sco on February 23, by the Federal Reserve Banks of New York, 19evelalld, Richmond, Chicago, Minneapolis, and Dallas on February 24, or 9) arte• by the Federal Reserve Bank of Boston today, of the rates cliecount and purchase in their existing schedules. Approved unanimously. rector Memorandum dated February 24, 1949, from Mt. Thomas, DiOf the Division of Research and Statistics, recommending ITErfli-,4ent of Miss Nancy Ann Ware as a clerk-typist in that Yleioh 011 a temporary indefinite basis, with basic salary at 2/25/49 —2- tile rate of $2,350 per annum, effective as of the date upon which she enters upon the performance of her duties after having passed the usual physical examination. Approved unanimously. Memorandum dated February 21, 1949, from Mr. Bethea, Direc0 t 4'°f the Division of Administrative Services, recommending an increase in the basic salaries of Clyde Divers and Carl Nickens, laborers in that Division, from $2,020 to $2,086 per annum each, efve March 6, 1949. Approved unanimously. Letter to Mr. McCreedy, Secretary of the Federal Reserve )1 Wak of ph iladelphia, reading as follows: "The Board of Governors approves the appointments 21" Messrs. B. F. Mechling, Harry L. Miller, Keith vowlison, James M. Skinner, and Daniel H. Schultz as erdbers of the Industrial Advisory Committee for the ohird Federal Reserve District to serve for terms of viile Year each, beginning March 1, 1949, in accordance : ti th the action taken by the Board of Directors of ce Reserve Bank of Philadelphia, as reported 4 Your letter of February 21, 1949." T Approved unanimously. te tira Letter to Mr. Volberg, Vice President of the Federal Retelik Of San Francisco, reading as follows: "This refers to your letter of February 15 regardierrors in the published statement as of December 31, of the Commercial Bank of Utah, Spanish Fork, Utah. It 144.-Le noted that a reserve for bad debts on loans amountt° $86,270.84 was included in capital accounts and l c-cW. 2/25/49 -3- "not deducted from total loans in item 6, thus overstating both loans and capital accounts by that amount. "In the circumstances mentioned in your letter, it appears that republication of the bank's report would serve no useful purpose and we agree with you that it should not be required." Approved unanimously. Letter to Mr. M. Robert Deo, General Counsel, National Autor4c)b11e Dealers Association, 1026 Seventeenth Street, N. W., Washingt°4 6, D. C., reading as follows: In your letter of February 16, 1949, you ask whetha er certain transaction is subject to Regulation W. The ransaction is the sale of a new car for $2,000, with 1,500 paid when the automobile is delivered and the re-aining $500 to be paid in one payment at the end of IlinetY days. "We assume that both buyer and seller intend in ?()cl faith that the WO will in fact be paid in a single Payment at the end of the ninety days, and that there 8 no different agreement or understanding. If that as; tUraPtion is correct, the transaction would not be subject 4, the present provisions of Regulation WI and the taking ) 0( 4. a lien would not, in and of itself, make the transetton subject to the regulation. However, the question , 1/, 0 Whether or not such transactions are subject to the begUlation depends on whether or not they are in fact t!na fide single payment credits. In this connection he Practices and records of the Registrant would be !Portant. Such transactions are, we believe, somewhat cual. If a registrant had many of them the manner of uidation would be of interest and an undue number of er-called single payment obligations being paid in sev- Payments or converted to an instalment basis would ce2 inlY raise questions of evasion and questions as to ' crerether the transactions really were single payment it8. In this connection, section 6(i) would be of 17 Approved unanimously. 2/25/49 -4Letter to the Recording & Statistical Corporation, 100 Sixth Avellue, New York 13, New York, reading as follows: "This refers to your letters dated February 16, 22, and 23, 1949, in which you inquired about the views of the Board with regard to certain changes in your automobile appraisal guide books, and confirms the information telephoned to you by Mr. Arthur Olson of the Federal Reserve Bank of Chicago. "The Board has no objection to your publishing used values for the 1949 Ford, Lincoln, and Mercury cars, or Other makes of used cars, in your April 1 edition. You ld.erstand that, as stated in our letter of January 27, 1949, 1949 used car models will not be included in the model years of cars to which the designations of the fruide books apply for purposes of Regulation W until the Board makes an pnnouncement to that effect. Until that the credit value of 1949 model used cars will be fl.e specified percentage (now two-thirds) of the cash Price. i "With regard to the use of the word 'cash' or 'loan' 2,1 the columns now headed 'Average Loan Value' in Offi:tal Automobile Guide, the Board does not require that or other designated guides, use one word or the Other. The appraisal guide provisions of the regulation .Ply to the estimated average retail value and not to T1,e 'loan' or 'cash' value as stated in the guide books. 1 4 word 'loan' seems to be a clearer description of tiot is meant but, as far as the purposes of the regulaM are concerned, you may use either word." Approved unanimously. Letter prepared for Chairman McCabe's signature to the Honor111 11111et R. Maybank, Chairman, Committee on Banking and Currency, taci otateb Senate, reading as follows: ask "BY a letter of February 15, 1949, the Board was for its opinion as to the merits of the bill s 1349 which has been referred to the Senate Committee 9 nking and Currency, and which would amend subseej (s) and (y) of section 12B of the Federal -'ve Act, as amended. 2/ 25/49 00 ••• "The bill would appear to be of principal concern to the Federal Deposit Insurance Corporation, the agency 'Whose activities would be directly affected by the proposed legislation. It is understood that the introduction of identical bills during the 80th Congress was Prompted by certain litigation of interest to the Federal Deposit Insurance Corporation. These bills were S. 2817 and H. E. 6853. Both the Federal Deposit Insurance Corporation and the Board submitted adverse reports on S. 2817. "There is enclosed herewith a copy of a letter dated June 18, 1948, to Senator Charles W. Tobey, then Chairman of the Senate Banking and Currency ComMittee, in reply to a request for an opinion as to the merits of the bill S. 2817. For the same reasons con1-ned in that letter, the Board is of the opinion that ne enactment of S. 949 also would not be desirable. "Your request for the Board's views is appreciated." Approved unanimously. Letter to Mr. Henry E. Price, Counsel, Veterans Organizatioa °°1ancil of Altadena, California, 1021 Tower Building, Washing- tola 5, D. C., reading as follows: "Chairman McCabe has asked me to answer your letter February 10, 1949. You inquire about the basis for t4e decision by the Administrator of Veterans' Affairs m° retain the 4 per cent interest rate on veterans' rtgages, and whether the Board furnished the Adorilistrator with information about the requirements the mortgage loan market. ae "Public Law 901, to which you refer, leaves the toelsien to raise the interest rate to the Administratjof Veterans' Affairs, subject to the approval of "e S ecretary of the Treasury. A01,4 "Before deciding to retain the 4 per cent rate, the vg'nistrator consulted with the Bureau of the Budget ch in turn consulted with the Board and other inte; th-e%ted agencies in the customnry manner. Naturally, clard's consideration of the mntter concerned its : rel )30a.gance to monetary, credit, and fiscal policy. The was not in a position to advise specifically '4 requirements of the mortgage loan market. ' 4 2/25/49 -6- "In the course of making his decision, the Administrator presmflbly weighed the considerations advanced by the Board along with the many other factors involved suggested by other agencies. What importance he assigned to each factor, the Board is not, of course, in a position to say." Approved unanimously. %roved: Chairman pro tem.
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