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Minutes for To: January 161 1958 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. Chm. Martin Gov. Szymczak Gov. Vardaman 1/ Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson X 1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being sent to Governor Vardaman for initial. 177 Minutes of the Board of Governors of the Federal Reserve System on Thursday, January 16, 1958. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chnirman Balderston, Vice Chairman Szymezak Mills Robertson Mr. Carpenter, Secretary Mr. Kenyon, Assistant Secretary Mr. Young, Director, Division of Research and Statistics Mr. Hackley„ General Counsel Mr. Young, Assistant Counsel on draft bill to amend the Rural Electrification Act Item No. 1 . There had been distributed to the members of the 'a copies of a memorandum from Mr. Young, Assistant Counsel, dated 15, 1958, concerning a request from the Bureau of the Budget or the Board's views on a draft bill submitted by the Department of 4Cricu1ture which would amend the Rural Electrification Act "to en8,46u private participation in financing the loan programs tablish a revolving fund, and for other purposes." VO! W "‘4L1 to The draft bill add to the present law two new titles, one of which would authorize the S ecretary of Agriculture to insure loans made by private lenders which c°1zP4y with certain stated conditions and the other of which would es-. ablish a revolving fund for rural electrification purposes. Submitted with the memorandum was a proposed reply which would state that the tOard. had no comment to make with respect to the proposed amendments 1'78 1/16/58 =2- since they would not directly affect its credit and monetary responsibilities. The Bureau had requested the Board's views by today. Mr. Hackley said that a representative of the Budget Bureau /41° calld about the matter yesterday indicated that there was some IlligencY. The Bureau realized that the Board might not have any comments on the draft bill, but sent the bill to the Board because it involved 4 credit program and conceivably the Board might wish to express itself. Mrs Hackley also said that in view of the current rate of interest on 1°ans under the Rural Electrification Act there might be some question whether the loans envisaged by the proposed amendments would be attractive to PlIvate lenders. be i ncreased. However, it appeared probable that the rates would In a further comment, he said that the loans would be 100 Per cent insured so that they would involve no risk on the part of Private lenders. This meant in effect that the program would still Present a form of direct Government lending. In a discussion which followed, agreement was expresser' with the view that the proposed reply was the one which should be made. In this connection, Governor Mills recalled that at the last session of Collgress rural electrification and college housing loans were singled 014 f Or particular attention in connection with consideration of a Prop, 81 that the interest rates on loans by Government agencies should be at a level sufficiently high to meet the cost of money to the Treasury. P°1nted out that the Board had gone on record in favor of such an arrattgement. 1_ 1/16/58 .3. Governor Balderston stated that although he regarded the pro- Posed reply as the proper answer, he was concerned about the extent of obligations incurred by the Federal Government which were not reflected in the budget. He regarded this as properly a matter of primary concern to the Treasury, since it involved a problem of fiscal policy, but he noted that the growth of such a practice tended to make it more difficult for monetary policy to operate effectively. Following further discussion, unanimous approval was given to the proposed letter to the Budget Bureau. A copy thereof is attached hereto as Item No. 1. The members of the staff then withdraw and the Board went into executive session. The meeting then adjourned. Secretary's Note: Governor Shepardson approved on behalf of the Board on January 15, 19580 a letter to the Federal Reserve Bank of Richmond approving the designation of William H. Tulloh as special assistant examiner. A copy of the letter is attached as Item No. 2. BOARD OF GOVERNORS OF THE Item No. 1 1/16/58 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDCHCE TO THE HOARD January 16, 1958 Mr. Roger W. Jones, kssistant Director for ,Le gislative Reference, ' 31areau of the Budget, Washington 25, D. C. Dear Mr. Jones: This is in response to your communication of January 14, 1958, requ sting the views of the Board with respect to a draft bill proposed by esti to tent of Agriculture "To amend the Rural Electrification Act a et Deparm participation in financing the loan programs, to establish TO°1ving fund, and for other purposes." The bill would add new sec"-es III and IV to the present law. Title III would authorize the of Agriculture to insure loans made by private lenders which bear as !' such rates of interest and comply with such other terms and conditions for'he Secretary may prescribe. Title IV would establish a revolving fund rlaral electrification purposes. Since the proposed amendments do not directly affect the Board's credit and monetary responsibilities, the Board has no comment to make ith respect to them. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 1116/58 WASHINGTON 25. 0. C. ADDRESS OrriCIAL CORRESPONOENCE TO THE SOAR° January 15, 1958 Mr. John L. Nosker, Assistant Vice President, !:ederal Reserve Bank of Richmond, Itichmond 13, Virginia. 1)sar Mr. Nosker: In accordance with the request contained in d.°11r letter of January 10, 1958, the Board approves the 3r esignation of William H. Tulloh as a special assistant examiner for the Federal Reserve Bank of Richmond. ? esse advise as to the date on which the designation s made effective. J Very truly yours, (Signed) Merritt Sherman Nerritt Sherman, Assistant Secretary.
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