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51 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Tuesday, January 11, 1949. The Board Met in the Board Room at 10:35 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Eccles Szymczak Draper Evans Vardaman Clayton Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Thomas, Director of the Division of Research and Statistics Mr. Vest, General Counsel Mr. Townsend, Solicitor Mr. Mr. Mr. Mr. Mr. Mr. Chairman McCabe stated that on Friday afternoon, January 7, there was received from the Bureau of the Budget a request for a report on a draft of bill "To Establish a Comprehensive and Coordinated Stabilization Policy and for Other Purposes", that a reply was Prepared for his signature on Saturday, January 8, based on ecti°ne already taken by the Board, and that, in view of the ur6encY of the request, the reply was sent to the Budget Bureau on that day. The reply, a copy of which was sent to each member of the Board yesterday, read as follows: "This refers to your letter of January 7, 1949, In which you request an expression of views regarding the draft of bill, enclosed with your letter, 'To establish a comprehensive and coordinated stabilization 1/11/49 -2- "'program, and for other purposes'. The bill, which is entitled 'Stabilization Act of 1949', contains eight proposed titles, the last of which relates to consumer credit and bank reserves. "In its letter to the Director of the Bureau of the Budget dated November 30, 1948, the Board stated that the subject of bank reserves was being given thorough consideration with a view to the formulation Of a recommendation at a later date when economic trends could be evaluated more accurately. The Board also stated that it expected to propose that the authority over consumer instalment credit be extended or made permanent by appropriate legislation formulated in the light of experience under the existing legislation with a view to the introduction of a bill during the early part of the next session of Congress. Since writing that letter, the Board has given considerable thought to the problem of the most appropriate time at which legislation on these subjects might be introduced and has come to the conclusion that it is desirable that such legislation should be introduced, not as a part of a comprehensive bill, but later as separate legislation. "In conformity with the principle of decentralization on which the Federal Reserve System was established, it is the policy of the Board to obtain the views of the twelve Federal Reserve Banks on important proposals affecting the System. In pursuance of this policy, the Board has submitted to the Presidents of the Federal Reserve Banks tentative drafts of bills on bank reserves and consumer credit which its staff has prepared in the light of the study given these subjects and in accordance with the President's Economic Report. The Board has not yet received the comments of the Reserve Banks. "In the Board's judgment, there is not the same urgency for the presentation to Congress of bills with respect to bank reserves and consumer credit as exists With respect to the other titles of the proposed Stabilization Act of 1949. The Board now has authority to increase reserve requirements of member banks and to regulate consumer credit. This authority, which was enacted August 16, 1948, will not expire until June 30, 1949. "In view of these circumstances, we believe it is important from the standpoint of obtaining favorable 1/11/49 -3-- "Congressional action to have as much experience under existing authority as possible before determining finally upon the specific details of legislation to carry into effect the recommendations in the President's Economic Report on these subjects. This would be in accord with the understanding which was had at a recent meeting of the committee of which Mr. Nourse is chairman. "I have no comments to offer at this time with respect to other titles of the proposed Stabilization Act of 1949. I appreciate the opportunity which you have afforded me to comment on the proposed bill and also the opportunity for members of our staff to participate Iii the discussions which have been held at the offices of the Council of Economic Advisers with regard to the Proposed, legislation. When our drafts of bills regarding bank reserves and consumer credit have been completed, we will, of course, transmit them to the Budget Bureau." All of the members of the Board indicated the letter was sat isfactory to them and that they were willing to approve it. Chairman McCabe also said that yesterday he sent a copy Of the letter to Dr. Nourse, Chairman of the committee coordinating Material for the President's legislative program, and that Dr. Iklurse, in a telephone conversation, confirmed the understanding t a .rig, of the Nourse committee that legislation on consumer meet1 credit and reserve requirements would be excluded from any omnibus bill. Dr. Nourse also stated, Chairman McCabe said, that his of- fice had received a call from Mt. Murphy at the White House on 'IsidaY, January 7, asking that all of the legislation for the esident's program be 4 nc1uded in the bill, but that he (Dr. ' i'l 11°111.8e) would discuss the matter with Secretary of Agriculture 1/11/49 -4- Brannan, who was coordinating the bills and testimony on the legislative program for the President, and remind him of the agreement regarding the exclusion of the Board's proposals from an omnibus bill. Chairman McCabe added that Dr. Nourse was in com- Plete agreement with the manner in which the -legislation on reserve requirements and consumer credit was being handled by the Board and, had agreed to call back after his conversation with Secretary Brannan. Chairman McCabe stated that, in view of the agreement of the Nourse committee, he also informed Secretary SnYder of these developments and sent him a copy of the letter Of January 8. Question was raised as to what the position of the Board /1°uld be in the event of a request that the omnibus bill include legislative proposals with respect to consumer credit controls atd reserve requirements, and it was agreed that in such case a Illeetimg of the Board should be called to consider the matter further. Chairman McCabe wide the further statement that the Chairmen of the Banking and Currency Committees were coming to luncheon °A different days this week, when it was hoped the question of legOn these two matters could be discussed with them. He also 8844 that last week he had a conference with Mr. Woollen, President °r the American Bankers Association, and that while Mr. Woollen -5indicated that he would oppose the legislation proposed by the Board, the conference was a very friendly one. There ensued a discussion of the timing of the introduction of the legislation on reserve requirements and consumer credit, but ao decisions were reached. Mr. Evans stated that yesterday Mr. William F. Kelley, ChairInan of the Consumer Credit Committee of the American Bankers Association and Mr. Walter B. French, Deputy Manager of the American Bankers Association, called to discuss the terms of Regulation W, C°nsumer Instalment Credit, particularly with respect to the possibilitY of lengthening the maturities permitted under the present regulation. Mr. Evans said that both Mt. Kelley and Mr. French felt if any action were to be taken to extend the terms it would be better to eliminate the maturity requirements entirely rather t hcx11 to extend them, since many Registrants would be inclined and able to retain maturities of 18 months or thereabouts if no maxi141114 were specified, whereas if 24 months were specified as a maximum that would tend to become the minimum. He also referred to "her conversations which indicated that, except in certain quarters/ the pressure for relaxing the Regulation was not strong. Mr. Evans then referred to the informal letter he had /ritten to General Motors Corporation, Chrysler Corporation, and 'ord Motor Company under date of December 31, 1948, to which he 1/11/49 -6- referred at the meeting on January 7, and stated that a reply was received from B. E. Hutchinson, Chairman of the Finance Committee of Chrysler Corporation, dated January 5, 1949, in which he reiterated his opposition to instalment credit controls but did not suggest any changes in Regulation W at this time. being circulated among the members of the Board. The letter is He made the further statement that he received a telephone call yesterday from Mr. Albert Bradley, Vice President of General Motors Corporation, in reSPOnse to the letter to that company and that Mr. Bradley 84 ' 4 Possible other representatives were coming to the Board's °ffices to discuss the matter at 9:30 a.m. on Thursday, January 13) 1949. No response, he said, had been received to the letter to the Ford Motor Company. During the discussion Messrs. Leonard, Director of the tivision of Bank Operations, and Young, Associate Director of he Division of Research and Statistics, entered the meeting. There was a general discussion of the present economic sitUation and the relationship of Regulation W to that situation ' ( l also of the conditions under which action might be taken by el the Board to relax the regulation. Mr. Evans stated that the stElff would continue to study the problem and would be prepared to mak e a recommendation for the consideration of the Board at alkY time. raL 1/13/1+9 -7At this point Messrs. Riefler, Thomas, Vest, Leonard, Townsend, and Young withdrew and the action stated with respect to each of the Matters hereinafter referred to was taken by the Board: Minutes of actions taken by the Board of Governors of the Federal Reserve System on January 10, 1949, were approved unaniIllonsly. Memorandum dated January 10, 1949, from Mr. Bethea, Director Of the Division of Administrative Services, recommending an increase in the basic salary of Stanley J. Bloch, Assistant Supervisor, Duplicating and Mail Section in that Division, from $3,978 to $4,103.40 Per annum, effective January 23, 1949. Approved unanimously. Letter to Mr. Caldwell, Federal Reserve Agent at the Federal Reserve Bank of Kansas City, reading as follows: "In accordance with the request contained in Mr. Johns' letter of January 4, 1949, the Board of Governors approves, effective January 1, 1949, the the Payment of salaries to the following members of indicated: rates the at staff Federalqieserve Agent's Annual Salary Title Nwle Head Office Assistant Federal Reserve Maurice Allendoerfer $4,236 Agent Assistant Federal Alternate Xenneth B. Self 5,220 Reserve Agent a. B. Fisher Denver Branch Federal Reserve Agent's Representative 4,320 1/11/49 -8- Name David E. Chase Lee G. Cox Title Oklahoma City Branch Federal Reserve Agent's Representative Federal Reserve Agent's Representative Annual Salary $4,500 4,500 Omaha Branch Federal Reserve Agent's 4,320 Representative Board the that letter Johns' Mr. from noted is "It of Governors will be advised when the branch boards have taken final official action with respect to the salaries tentatively fixed for Messrs. Fisher, Cox, and Streeter." Earl O. Streeter Approved unanimously. Telegram to Mr. DeMoss, Vice President of the Federal Reserve Bank of Dallas, reading as follows: "Reference your letter January 6. Board approves appointment of Nathaniel Buckley Harwell as examiner for Federal Reserve Bank of Dallas. Please advise effective date." Approved unnnimously. Letter to the Presidents of all Federal Reserve Banks readas follows: "Replies to the letter dated December 29, 1948, from the Board's Division of Examinations to the officers in charge of examinations at the various Reserve Banks indicate that the dates proposed for holdlug a conference of representatives of the Bank Examination Departments of the Reserve Banks in Washing_ ton, during the week preceding the 1949 Mid-Winter Trust Conference of the American Bankers Association, would be satisfactory. Accordingly, the Examiners' Conference will be held in the Board's offices in Washington on Wednesday, Thursday, and Friday, February 2-4, 1949. 1/11/49 -9- "It has been suggested that, in addition to discussing bank supervisory matters, the conference give consideration to bank examination problems as well. With this thought in mind, it is hoped that the Chief Examiners for all of the Reserve Banks, as well as the Officers in charge of examinations, will be present and It will be appreciated Participate in the discussions. if you will advise us as to the names of the representatives of your Bank who will attend the conference and whether you desire us to make hotel reservations. "The Reserve Banks have been requested to forward suggestions for the agenda and a copy of the agenda Will be sent to you when it has been prepared." Approved unanimously. APProved: Chairman.
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