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189 A meeting of the Board of Governors of the Federal Reserve stem was held in Washington on Friday, February 5, 1943, at 1:30 p.m. PRESENT: Lir. Mr. Mr. Mr. Mr. Yr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Bethea, Assistant Secretary Mr. Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinafter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on February 4, 1943, were approved unanimously. Telegrams to Mr. Paddock, President of the Federal Reserve Ilarik of Boston, 1.:essrs. Treiber and LicCreedy, Secretaries of the Fedsal Reserve Banks of New York and Philadelphia, respectively, Mr. McLarin, Presiaent of the Federal Reserve Bank of Atlanta, and Messrs. Dill, 'clad and Hale, Secretaries of the Federal Reserve Banks of Chicago allci San Francisco, respectively, stating that the Board approves the eetabli 1— -...siLment without change by the Federal Reserve Bank of San Francisco on February 2, by the Federal Reserve Banks of Atlanta and Chicago 4 February 3, by the Federal Reserve Banks of New York, Philadelphia, fls:1 sat Francisco on February 4, 1943, and by the Federal Reserve Bank Bcston today, of the rates of discount and purchase in their exist11le schedules. Approved unanimously. 190 2/5/43 -2Memorandum dated February 3, 1943, from Mr. Morrill, sub- mitting the resignation of P. Otarren Kidwell as a junior operator (duPlicating devices) in the Secretary's Office, to become effective as of the close of business on February 7, 1943, and recommending that the resignation be accepted as of that date. The resignation was accepted. Letter to Honorable Guy T. helvering, Commissioner of the 1311reall of Internal Revenue, Treasury Department, reading as follows: "The Federal Reserve Bank of New York has had under consideration the question whether the fees paid to its directors for attendance at meetings of the board of directors and committees of directors constitute 'salaries' to 'employees' within the meaning of section 4001.9 of the Regulations dated October 27, 1942 of the Economic Stabilization Director, so as to be included within the payments which are subject to the limitation on salary prescribed by that section. A similar question has likewise been considered as to whether the new Victory Tax withholding Provisions apply to fees paid to directors of the Federal Reserve Bank for attendance at meetings of the board of directors and committees of directors. "In connection with this matter, there is enclosed a c°1DY of a memorandum on this subject dated January 20, 1943 addressed to the President of the Federal Reserve Bank of New York by Counsel for that Bank. "It will be appreciated if you will advise the Board on behalf of the Federal Reserve Bank of New York whether fees paid by the Federal Reserve Bank to its directors for attending meetings of the committees of directors are included in the payments which are subject to the limitation of section 4001.9 of the Regulations dated October 27, 1942 of the Economic Stabilization Director, and also whether the Victory Tax withholding provisions are applicable to fees paid to the directors of the Federal Reserve Bank of New York for attending meetings of committees of directors." Approved unanimously, together with the following letter to Mr. Sproul, President of the Federal Reserve Bank of New York: 191 2/5/43 "Reference is mAe to your letter of January 23, 1943 requesting the Board to obtain a ruling from the Commissioner of Internal Revenue with respect to the application of the Regulations of the Economic Stabilization Director dated October 27, 1942 and the withholding provisions of the Victory Tax to fees paid to the directors of your Bank for attending meetings of committees of directors. "For your information, there is enclosed a copy of a letter which the Board addressed to the Commissioner of Internal Revenue under today's date requesting the opinion referred to In your letter of January 23 and the memorandum enclosed therewith." Letter to Mr. Hale, Vice President and Secretary of the Federa ' Reserve Bank of San Francisco, reading as follows: "On November 30 you wrote to Mr. Phelan at the Federal Reserve Bank of New York regarding General Motors Acceptance Corporation 'Retail Renewal (Refund Plan)' stating that you felt that the plan did not comply with Regulation V14 You sent a copy of your letter to the Board, and short, thereafter Mr. R. E. Murphy of General Motors Acceptance Corporation called at the Board's offices to discuss the matter with members of the Board's staff including Mr. Parry and Mr. Dreibelbis. "Mr. Murphy has now been advised by telephone that the members of the Board's staff did not see any escape from the conclusion that the instalments 'restored' to the obligor .constitute a loan within the meaning of the Regulation. Mr. Murphy decided not to submit the question in writing for a rIlling by the Board. Mr. Murphy said that it would take him TIci his associates several days to work out a new procedure lor handling this type of case but said that he would pro!eed as promptly as possible and that the branches of the orporation would be advised as soon as the details were completed. "Incidentally, Mr. Murphy raised the question whether in ?ases of this kind where a Statement of Necessity is accepted (x.M.A.C. at the time of the renewal, the Statement could !lso serve as the statement mentioned in section 8(c) of the xtegulation, assuming that it contained the recitals necessary Iladev section 8(c). Mr. Murphy was advised orally that section i(o) does not prescribe any form of statement and that if the 192 2/5/43 "recitals are contained in a statement in the files of the Registrant, the Regulation is not violated if the statement is written on a Statement of Necessity form. This 3-S true even if the Statement of Necessity itself is required under section 10(d) in connection with the revislon of the sale contract, as distinguished from the restored instalments, which are regarded as a separate Part of the credit under section 12(b). As Mr. Murphy knows, the Statement of Necessity form could not be altered so as to call for the obtaining of any additional information from the borrower, and since the form does not call for all the recitals required by section 8(c), it is assumed that those not called for would be written on blank Spaces not otherwise used." Approved unanimously. Thereupon the meeting adjourned. Chairman.
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