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119 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Thursday, January 25, 1945, at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, 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 ecleral Reserve System held on January 24, 1945, were approved unaniM°1183Z. Letter, prepared for the signature of Chairman Eccles, to Mr. ClaYt°n reading as follows: "On behalf of the Board Members and myself, we want You to know that your letter of January 13, being your oral resignation from your position as Assistant to the airman, is accepted by all of us with the deepest regret. Eis also want you to know that your separation from the t°ard and the staff is going to be keenly felt as a maerial loss to the Reserve System. "The ten years during which you have served this SYstem so well have been trying years of almost continu?us emergency and drastic change. The part you have played assisting not only me, but the Board and the staff, has ,?en outstanding. Your personality and ability to work ;1.1th others have impressed us all. We all are interested yrc Ycmr continued progress and, being familiar with what upon for your next step in life, you take With ci4e.6n you our sincere wishes for success in your new enas well as for good health and happiness. r 120 1/25/45 -2-''We trust the time you have spent as a public servant and the experience thus gained will be helpful to you in Your future undertakings. We know that wherever the future may lead you the Federal Reserve System will have an emissarY, fully advised of the System's functions, and devoted to its welfare." Approved unanimously. Letter to Mr. Creighton, Chairman of the Federal Reserve Bank of Bost°n, reading as follows: "Receipt is acknowledged of your letter of January 17, 1945, advising of various actions taken by your Board of Directors at the meeting on January 15, 1945. "It is noted that all officers of the Bank were reapPointed for the year ending December 31, 1945, with the ex.cePtion t, of the President and First Vice President, whose eril's of office are fixed by statute, and Assistant Vice Presidenta Van Amringe, Assistant Vice President Latham, 04.Assistant Cashier Gilbody, who were appointed as such leers at the directors' meeting held on December 29, 944, effective January 1, 1945. "The Board of Governors approves the appointments of Messrs. Reii Carl P. Dennett, Paul A. Draper, Edward M. Graham, P E. Thompson, and J. Colby Lewis as members of the -1131:Idustrial Advisory Committee for the First Federal Reserve 118trict to serve for terms of one year each beginning March 1945, in accordance with the action taken by your Board of Directors. pr. "It is also noted that Mr. Charles E. Spencer, Jr., po?sident of the First National Bank of Boston, was reapre, l ,nted as a member of the Federal Advisory Council to , Present the First Federal Reserve District for the year g1 . 6 : It is noted from your letter of January 18, that „ Ipencer's acceptance of his reappointment has been ree-ored ” '. Approved unanimously. Telegram to Mr. Woolley, Vice President and Cashier of the Fed- eral Reserve Bank of Kansas City, reading as follows: 121 1/25/45 —3— • "Reference wire January 24, Board approves designatl°11 of C. IL Ewing as special assistant examiner for the Federal Reserve Bank of Kansas City." Approved unanimously. Letter to Mr. Morris Goldman, 216 Barristers Hall, Boston, Massaelluset+-.0, reading as follows: , "This is with reference to your letter of January 10, t945, asking two questions concerning the application of the Board's Regulation T to certain transactions in 'when881-ledi or unissued securities. This letter was referred ' 4) in your telegram of January 19. "Since the answers to these questions are somewhat ! °mPlex and may require further communication with you, w? have referred your letter to the Federal Reserve Bank of Boston which handles Regulation T matters in your area. L°u should hear from that Bank shortly." Approved unanimously, together with the following letter to Mr. McRae, Chief Examiner at the Federal Reserve Bank of Boston: 19 "Enclosed is a copy of a letter dated January 10, .. 11,45, from Morris Goldman, asking two questions concerning ; -e application of the Board's Regulation T to certain ansactions in 'when-issued' or unissued securities. We ?tad appreciate it if you would reply to Mr. Goldman's ;otter. The following paragraphs contain material which m?Y wish to use in your reply. 0, 'The first question is whether a rise in the value 10-1,411/11isted securities, a contract for the purchase of ,:tLeh is held in the account, will provide margin for the Irchase of additional securities. The answer to this onIstion is that it will, provided the contract is the Y item in the account or, in case there are other items, pr:lrided the additional value is not absorbed by other e isting or subsequent margin deficiencies. are If, for example, 100 shares of an unissued stock w'_ _ contracted for at $50 per share, a margin of $2,000 uld be required at present maximum loan values of 60 Z Z 122 4%/45 -4- "Per cent (sectio ns 3(d)(4) and 3(h). This $2,000 would be credited to the account. The market then rises to $60 Per share. The margin required would rise to $2,400 but t1 , , 1 i8 figure would be reduced to $1,400 by the application 01 the unrealized gain of $1,000. Since the credit balance is $2,000 or $600 in excess of the $1,400 required, the $600 may be used as the basis for additional purchases. "The second question is whether the margin originally deposited must be retained by the broker after another contract is entered into for the sale of the unissued securiZs sel. t a higher price than that at which they were purThe answer to this question is that the margin °riginally deposited may be withdrawn by the customer, Provided the two contracts are the only items in the acrunt or, in case there are other items, provided there compliance with the second paragraph of section 3(b). The unrealized gain may not be withdrawn until the contracts are settled and then only if the conditions of the Paragraph mentioned in the previous sentence are met. "If, for example, in the case cited, the 50 shares e sold at $60 per share, margin would no longer be resince the net commitment would be zero, and the witred ti Ildrawal of $2,000 would be permissible. The gain of 2u°0, however, being unrealized, could not be withdrawn. 7 "As the handling of this office and as we Goldman asking about 'DJ-Y. e xpedited as much as Ing this inquiry has been delayed have received a telegram from it, we would like to have a repossible." Letter to the Presidents of all of the Federal Reserve Banks readas follows: a t ,"Por your information there is enclosed a copy of An, etegram dated January 17, 1945, received from the Los s cie-Les Branch of the Federal Reserve Bank of San Fran— a :2Linquiring as to whether the Services have approved 51 10W"I 0n for inclusion in Exhibit D of the termination ills .agreement, which in effect would give the financing te 0 .-tution a veto power over the sale or retention of rmaatiation invento ry. ce. 'There is also enclosed a copy of a memorandum relved from the Navy Department, dated January 19, 1945, 123 4%/45 -5- ,!lgned by Commander Donald P. Melles Chief of Finance Lavision, in reply thereto. . ."Lieutenant Commander Griffith of the Maritime Commission has advised us that the Commission also concurs 11 the views expressed in Commander Welles' memorandum." Approved unanimously. Thereupon the meeting adjourned.
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