Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, January 23, 1952, Volume 39, Part 1

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

123

Minutes of actions taken by the Board of Governors of the
Federal Reserve System on Wednesday, January 23, 1952.
PRESENT:

Mr. Martin, Chairman
Mr. Szymczak
Mr. Norton
Mr. Carpenter, Secretary
Mr. Sherman, Assistant Secretary
Mr. Kenyon, Assistant Secretary

Memorandum dated January 22, 1952, from Mr. Sloan, Director,
Division of Examinations, recommending increases in the basic annual
salaries of the following employees in that Division, effective
February

3, 1952:

Name
F. W. Troup
°. P. Sturges

Title
Federal Reserve Examiner
Assistant Federal Reserve Examiner

Salary Increase
From
To
$87570
$8,555
5,310
5,435

Approved unanimously.
Memoranda dated January 16, 1952, from Mr. /bung, Director,
Division of Research and Statistics, recommending that Messrs. Reavis
Cox, Albert Haring, Raymond J. Saulnier, Duncan M. Holthausen, Morris
A. Copeland, and Ernest M. Fisher be engaged as consultants to the
Division of Research and Statistics during the year 1952 on a contractual, temporary consulting basis at a fee of $50 per day for
each d4y worked for the Board plus actual necessary transportation
e%Penses in accordance with the Board's travel regulations applicable
tO heads
or assistant heads of divisions and a per diem in lieu of
subsistence of $15 while traveling for the Board
in connection with




124
1/23/52

-2-

their duties as consultants. The memoranda stated that Messrs. Cox,
Haring, Saulnier, and Holthausen would be employed on the consumer
credit series revision, Mr. Copeland on moneyflows work, and Mr.
Fisher on real estate problems.
Approved unanimously.
Letter to Mr. Stevens, Federal Reserve Agent, Federal Reserve
Bank of New York, reading as follows:
"In accordance with the request contained in your
letter of January 18, 1952, the Board of Governors approves the appointment of Mr. Richard E. Hunke as Alternate Assistant Federal Reserve Agent at his present salary
of $6,200 per annum.
"This approval is given with the understanding that
Mr. Hunke will be placed upon the Federal Reserve Agent's
pay roll and will be solely responsible to him or, during
a vacancy in the office of the Agent, to the Assistant
Federal Reserve Agent, and to the Board of Governors, for
the proper performance of his duties. When not engaged
in the performance of his duties as Alternate Assistant
Federal Reserve Agent he may, with the approval of the
Federal Reserve Agent, or during a vacancy in the office
of the Federal Reserve Agent, of the Assistant Federal
Reserve Agent, and the President, perform such work for
the Bank as will not be inconsistent with his duties as
Alternate Assistant Federal Reserve Agent.
"Mr. Hunke should execute the usual oath of office
which should be forwarded to the Board of Governors.
Your advice with respect to the effective date of Mr.
Hunke's appointment will be appreciated."
Approved unanimously.
Letter to Mr. Weigel, Secretary, Federal Reserve Bank of St.
Louis, reading as follows:




425
1/23/52

-3-

"The Board of Governors approves the reappointments
of Messrs. Van Dyke, Franke, Houser, Crawford and Swaim
as members of the Industrial Advisory Committee for the
Eighth Federal Reserve District to serve for terms of
one year each, beginning March 1, 1952, in accordance
with the action taken by the Board of Directors as reported in your letter of January 17, 1952.
"It is noted from your letter that, after the Committee has elected its officers for the ensuing year,
the Board of Governors will be advised."
Approved unanimously.
Letter to Mr. Gidney, President, Federal Reserve Bank of
Cleveland, reading as follows:
"Referring to your letter of January 14, 1952, the
Board of Governors approves payment to your special counsel Squire, Sanders and Dempsey, of a bill totaling
43,427.87 for special services and expenses up to December
15, 1951, in connection with the law suit brought against
your Bank by Bank of America N. T. & S. A. It is noted
that your board of directors has authorized the payment
of this bill subject to the prior approval of the Board
of Governors, and that your Bank intends to treat such
payment as an item for which your Bank will be reimbursed
by the Treasury."
Approved unanimously.
Letter to Mr. Johns, President, Federal Reserve Bank of St.
Louis, reading as follows:
"Reference is made to your letter of January 160
1952, advising of the transfer of Mr. Fred Burton, on
a temporary basis, from the Louisville Branch to the
Head Office and enclosing a copy of the current resolution adopted by the Board of Directors authorizing such
transfers.




12fi

1/23/52
"Inasmuch as Mr. Burton will be serving in the
capacity of an Assistant Vice President in his nem assignment, it is believed that such action is in effect a change
in title as referred to in the Board's letter of August 3,
1948, F. R. L. S. 9090.1. Accordingly, the Board of Governors approves the payment of salary to Mr. Fred Burton at
his present rate of $8,000 per annum, while serving as an
Assistant Vice President at the Head Office, for the period
beginning January 14, 1952."
Approved unanimously.
Letter to Mr. Bryan, President, Federal Reserve Bank of Atlanta,
reading as follows:
"There is enclosed a copy of a letter dated January 8,
1952, with enclosures, addressed to the Board by Mr. Charles
B. Galloway, Chairman of the Board of The First National
Bank of Clearwater, Clearwater, Florida, with respect to
the holding company affiliate status of the Mickler Corporation, Tampa, Florida.
"On the basis of the facts presented by Mr. Galloway's
letter, there does not appear to have been any material
change in the status of the Mickler Corporation since the
Board's determination of June 1, 1949; nor mould the proposed stock dividend by The First National Bank of Clearwater affect the situation.
"Accordingly, no action by the Board seems necessary
at this time. It would be appreciated if you will advise
Mr. Galloway to this effect."
Approved unanimously.
Letter to Mr. Bryan, President, Federal Reserve Bank of Atlanta,
I'eading as follows:
"This refers to your letter of January 14 concerning
the proposed air-conditioning of the third, fourth, fifth,
and sixth floors of the Silvey Building.




127

1/23/52

-5-

"In view of your statements that the equipment is
said to be available and that prompt delivery and installation can be effected if the order is placed now, the
Board will interpose no objection to the expenditure of
approximately $35,000 to air-condition the remaining
four floors of the Silvey Building*"
Approved unanimously.
Letter to Mr. W. Wilson White, White, Williams and Scott,
Land Title Building, Philadelphia, Pennsylvania, reading as follows:
"This refers to your letter of January 16, 1952,
addressed to Mr. Solomon, with which you enclosed a proposed amendment to RegulationW in behalf of your client,
the T. & E. Company, Wilkes-Barre, Pennsylvania.
"Regulation W and the automobile instalment leasing
arrangements of the T. & E. Company were discussed at the
December 11, 1951, meeting in Washington attended by you,
Messrs. Jenkins and Trembath, and certain members of the
Board's staff. At the conclusion of that meeting you indicated that you would endeavor to prepare and forward for
consideration a suitable proposal to change the regulation
to meet the desires of your client. The draft amendment
which you now have submitted is designed, briefly, to
exempt from the regulation instalment rentals or leases
of automobiles to employees for business use.
"Various proposals advocating a use test for listed
articles in determining the application of the regulation
have been urged from time to time since the regulation
was first instituted in 1941. Some of these proposals
have been quite similar to the one made by you and have
related to instalment leasing as well as to other instalment transactions subject to the regulation. However, the
Board has felt it would be undesirable to depart from the
general test, now long established, based on the design
of the article.
"Serious difficulties are inherent in a use test
under a regulation covering so broad and complex a field
as that covered by Regulation W. Not only would such a
test be a less workable approach from the regulatory




128

1/23/52

-6-

”standpoint, but it also would place upon Registrants
an additional responsibility of value and indefinite
proportions. Furthermore, uniformity of application,
except where clearly impracticable, has always been
viewed as an essential attribute of fairness in the
application of this regulation as of other regulatory
measures. An exemption of the kind proposed would be
certain to result in proposals for its extension in
favor of other articles and transactions for various
reasons, including an understandable desire for what
would be regarded as equal treatment.
"If the Congressional purpose in authorizing the
regulation is to be effectuated, the acquisition of the
use of funds or property through instalment transactions
within the scope of the statute and regulation cannot
be expected to continue free of restraint. Otherwise,
the inflationary pressures, which the regulation was intended to help curb would proceed unabated.
"Assuming that some apparent or technical disparities
may exist between some aspects or consequences of a conditional sale as compared with an instalment lease, their
initial impacts on the economy, as well as other major
substantive features, are essentially indistinguishable.
Both involve credit, and both add to the inflationary
effects that occur in the bidding for goods and services,
especially during a time of vast defense expenditures.
In addition, by affording a customer the continuous use
of an automobile or other listed article, a lease or loan
of any such article clearly serves substantially the same
purpose or achieves the same effect as, for example, a
chattel mortgage or conditional sale. To be effective
and equitable in its application, the regulation cannot
properly disregard competitive forms of credit which are
of a character to add to the over-all problem which the
statute and regulation were designed to meet.
"In considering your proposed amendment the Board
has carefully reviewed its position with respect to leasing
arrangements; but in view particularly of the foregoing
considerations, the Board does not feel that the proposal
suggested by you should be adopted. Consequently, instalment leases of the kind dealt with in your proposal




129

-7-

1/23/52

"should remain subject to the regulation. Of course,
as you know, the regulation does not prohibit instalment leasing; and it is understood that some of the
lease arrangements of your client are such as to qualify
under certain exemptions already in the regulation. For
those instalment leases not entitled to exemption, the
regulation merely provides that they meet certain requirements, as is true also with the ordinary instalment loan
or conditional sale.
"The Board always welcomes the opportunity for
developing further information in connection with the
regulation and its administration and, therefore, appreciates having had in this matter the benefit of your
cooperation, and that of Messrs. Jenkins and Trembath.
"Should you have any further inquiry concerning the
regulation in its application to the business of the T. &
E. Company, the members of the Board's staff as well as
the Federal Reserve Bank of Philadelphia will be glad to
be of assistance to you."
Approved unanimously, with
a copy to the Federal Reserve Bank
of Philadelphia.
Orders suspending licenses under Regulation WI Consumer Credit,
Prepared pursuant to the Board's action of January 3, 1952, reading
48 follows:
"UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
In the Matter of
KAHN MOTOR COMPANY, a partnership, and
IRVIN L. COHN and HAROLD GREENBERG,
Partners therein, 3943 Easton Avenue,
St. Louis, Missouri.
ORDER SUSPENDING LICENSES UNDER REGULATION W
On January 21, 1952, the Board of Governors of the
Federal Reserve System ordered that a hearing be held to determine whether or not the licenses of Kahn Motor Company, a partnership, and Irvin L. Cohn and Harold Greenberg, partners therein




:130

1/23/52

-8--

"(such partnership and partners hereinafter being called !the
registrants!), should be suspended, and
On January 22, 1952, said registrants, by their attorney, Irmin White, filed with the Board their !Waiver of
Hearing and Consent to Entry of Order Suspending Registrants!
Licenses', and
The Board, having considered the haiver of Hearing
and Consent to Entry of Order Suspending Registrants' Licenses,
HEREBY ORDERS, under authority of Section 601 of the
Defense Production Act of 1950:
1. That the licenses of said registrants issued
pursuant to Regulation W be and the same are hereby
suspended for fourteen days, from January 28 to
February 10, 1952, both dates inclusive; provided, that
this order shall not prohibit the receipt of any payments on existing obligations, or the making of payments
of any obligations, including obligations to employees
for salaries and wages.
2. Any terms used in this order that are defined
in RegulationW shall have the meaning therein given
them.
By order of the Board of Governors of the Federal Reserve System this 23rd day of January, 1952.
(signed) S. R. Carpenter,
Secretary."
"UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
In the Matter of
KAHN INVESTMENT COMPANY, a corporation,
3943 Easton Avenues St. Louis, Missouri.
ORDER SUSPENDING LICENSE UNDER REGULATION W
On January 21, 1952, the Board of Governors of the
Federal Reserve System ordered that a hearing be held to determine whether or not the license of Kahn Investment Company, a
corporation, hereinafter called the registrant, should be suspended, and
On January 22, 1952, said registrant, by its attorney,
Irwin White, filed with the Board its 'Waiver of Hearing and
Consent to Entry of Order Suspending Registrant's License!, and




131

1/23/52

-9-

"The Board, having considered the Waiver of Hearing
and Consent to Entry of Order Suspending Registrants License,
aforesaid,
HEREBY ORDERS, under authority of Section 601 of the
Defense Production Act of 1950:
1. That the license of said registrant issued
pursuant to RegulationW be and the same is hereby
suspended for fourteen days, from January 28 to
February 10, 1952, both dates inclusive; provided,
that this order shall not prohibit the receipt of
any payments on existing obligations, or the making
of payments of any obligations, including obligations to employees for salaries and wages.
2. Any terms used in this order that are defined in Regulation W shall have the meaning therein
given them.
By order of the Board of Governors of the Federal Reserve System this 23rd day of January, 1952.
(signed) S. R. Carpenter,
Secretary."
Approved unanimously.
Memorandum dated January 18, 1952, from Mr. Townsend, Solicitor,
liecemmending for reasons stated therein, that the matter of Gerald
Iates, doing business as Michigan Home Improvement Company, Saginaw
and Pontiac, Michigan, a registrant under Regulation W, Consumer Credit,
be referred to the Department of Justice for the institution of such
eriminal proceedings as that Department might deem appropriate.
Approved unanimously.
Memorandum dated January 21, 1952, from Mr. Carpenter, SecretarY of the Board, recommending for reasons stated therein that the




1/23/52
following items in the 1951 budget of the Office of the Secretary

be increased in the amounts indicated:




Telephone and Telegraph
Books and Subscriptions
Traveling Expenses
Approved unanimously.

$550
53
200