The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
200 Minutes of actions taken by the Board of Governors of the Pederal Reserve System on Friday, January 26, 1951. PRESENT: Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Vardaman Powell Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Minutes of actions taken by the Board of Governors of the ?ed-eral Reserve System on January 2) 19)1, were approved unanimously. Telegrams to the Federal Reserve Banks of Boston, New York, Cleveland, Richmond, Atlanta) Chicago, St. Louis, Minneapolis, Dallas, 8411 Francisco stating that the Board approves the establishment /litheut change by the Federal Reserve Bank of San Francisco on January 23) b the Federal Reserve Banks of Atlanta and St. Louis on January 24) by the Federal Reserve Banks of New York, Cleveland, Richmond, ellicag°) Minneapolis and Dallas on January 2), 19511 and by the Reserve Bank of Boston today, of the rates of discount and ilill ' ehase in their existing schedules. Approved unanimously. Memorandum dated January 23, 1951, frcm Mr. Marget, Director or the /4 —4-vision of Internationel Finance, recommending an increase in the t 481c salary of Mrs. Franc Valentine, Secretary tc Mr. Margot, TI'°111 $3,450 to $3,575 per annum, effective February 4, 1951. Approved unanimously. Memorandum dated January 15, 1951, from Mx. Young, Director 2(11. 1/26/51 -2- of the Division of Research and Statistics, recommending an increase illthe basic salary of Saul B. Klaman, an economist in that Division, *014 $4,725 to $5,400 per annum, effective February 4, 1951. Approved unanimously. Memorandum dated January 25, 1951, from Mr. Vest, General C°11318(31, recommending the appointment of Miss Rita M. Dixon as a 8teupgrapher in the Legal Division, on a temporary indefinite basis, 814bilact to a satisfactory clearance of her references, with basic '1417 at the rate of $2,810 per annum, effective as of the date 4°4 Which she enters upon the performance of her duties after having Passed the usual physical examination. Approved unanimously. Memorandum dated January 25, 1951, from Mr. Hilkert, Acting 1/itector of the Division of Personnel Administration, recommending the ePpointment of Miss Louise Mayer as a substitute nurse in that to; sUbject to a satisfactory employment investigation, and tilEtt her compensation be fixed at the rate of 41.90 per working day, "ctilre as of the date upon which she enters upon the performance of 1141 'duties, Approved unanimously. Memorandum dated January 15, 1951, from Mr. Young, Director the Division of Research and Statistics, recommending an increase the 13481C salary of Miss Virginia J. Ogilvie, a clerk-stenographer "Division, from $2,650 to $2,875 per annum, effective th February ' 4 1951. 2()2 1/26/51 -3Approved unanimously. Memorandum dated January 15, 1951, from Mr. Young, Director °t the Division of Research and Statistics, recommending an increase lathe basic salary of Murray Altmann, an economist in that Division, trft $3,475 to $3,825 per annum, effective February 4, 1951. Approved unanimously. Memorandum dated January 19, 1951, from Mr. Young, Director °r the Division of Research and Statistics, recommending an increase t4 the basic salary of Clayton Gehman„ Chief of the Business Conditions Section. in that Division, from $8,800 to $9,400 per annum, effective l'abrual7 4, 1951. Approved, Mr. Vardaman voting "no". Memorardum dated January 23, 1951, from Mr. Young, Director c)t the Division of Research and Statistics, recommending an increase the salary of Ramsay Wood, an economist in that Division, from $8 ' 000 to $81 800 per annum, effective February 4, 1951. Approved, Mr. Vardaman voting "no". Letter to Mr. Lewis N. Dembitz, Assistant Director, Division Of Izternational Finance, Board of Governors of the Federal Reserve 87stem ) Washington, D. C., reading as follows: , "Pursuant to a request from the United States t'ePartment of State in a letter dated January 26, ' 4951, to Chairman McCabe, the Board has authorized !ou to proceed to London for a period of approximately I-117e veeks beginning January 28. During this time vill serve as chief adviser on economic and 1/26/51 -4- "financial problems in connection with the German debt settlement. This will be a continuation of the conferences of the Inter-governmental Study Group on Germany, in which you participated last fall. "It is understood that the Board will continue to pay your salary during the period involved but that the Department of State will bear all travel and other expenses connection with the loan of your services, upon the terms of Travel Regulations applicable to the personnel of that organization. "It is requested that you retain the original of this letter and that the file copy, after being Initialed by you, be returned to the Board's files." Approved unanimously. Letter to Mr. Young, President of the Federal Reserve Bank • 0f Chicago, reading as follows: "The Board of Governors will interpose no Objection to an extension in the leave of absence Of George W. Mitchell from March 1, 1951, to April 1, 1951. "It Is understood, from your letter of Jettuary 17, 1951, to Governor Szymczak, that the board of directors has voted to extend Mr. Mitchell's leave and to place him in charge of the Research Department upon his return. As heretofore, it is assumed that during his leave of absence Mr. Mitchell will not engage 14 any political activity which would be incomPatible with his official status at the Reserve Bank." Approved unanimously. Letter to Mr. M: Robert Deo, Managing Director, National Autor,°bile Dealers Association, 1026 17th Street, N. W., Washington 6, D. C., reading as follows: , "This refers to your letter addressed to uovernor Evans dated January 231 1.M., inquiring lether it would be convenient to confer on Fridtty, ebruary 9, 1951, vith a group of automobile dealers r 1/26/51 "from the western section of the country concerning problems under Regulation W which are applicable particularly to those areas far from the point of manufacture of automobiles. "You are advised that February 9 is a convenient date, and it is suggested that the conference start at 11 A.M. Please advise us in advance of the meeting as to the name, address and business connection of each of the persons you expect to attend on behalf of your Association." Approved unanimously. Letter to Honorable Allen J. Ellender, United States Senate, ngton, D. C., reading as follows: "This refers to your letter of January 9, 1951, enclosing correspondence which you received from Mr. Geo. H. Lehleitner of New Orleans, Louisiana, relative to this Board's Regulation W concerning consumer credit. Representative Boggs also requested our comments on similar correspondence he received from Mr. Lehleitner and our reply to him is similar to the one we are making to you. "We appreciate the concern expressed by your constituent over the impact of the regulation upon business activity during the conversion period from Peacetime economy to a wartime economy. You will understand, however, that it is difficult to conider Regulation W and its intended purposes apart : 'rom other monetary and fiscal policies all of which !re directed at reducing heavy inflationary pressures. regulation, of course, is designed specifically h° damPen demand for consumer credit because of the :TY impact of such credit throughout the economy a Period such as the present when the entire 13.4-4ce 5 structure is subjected to severe upward pressures oecause of increases in the money supply. In view Af its responsibility under the Defense Production „et and its detailed consideration of all factors 1;acerned, the Board concluded that Regulation WI ri it is to cope effectively with the powerful in. t!°nary forces which now dominate the ecomomy, sha: ()Luc' embody a structure of terms which are quite restrictive. "We recognize that in the administration of any encl. " measure as Regulation W there are bound to be 12(15 1/26/51 -6- "hardships to particular businesses and individuals. We regret that this is so and every effort has been made to keep such hardships at a minimum. The regulation, of course, far from prohibits the instalment sale of articles subject to its provisions. To the extent the regulation is effective, however, a material slowing down in the unprecedented high rate at which consumer durable goods have been manufactured, distributed and sold is to be expected. It is inevitable that any significant slowing down in the rate of sale of important commodities will require readjustment all along the line. If a more sustainable relation of dernAnd to supply is attained In the fields affected and in the economy generally, it will help to avert the danger of further serious inflation and widespread hardship. "The comparative sales figures presented in Your constituent's letter show a somewhat greater decline in November, compared with a year before, than vas experienced generally by retail 'appliance dealers in the South or in the United States as a vhole. It is possible, therefore, that the November in his wholesale volume reflected in part a temporarily cemporarily overhtocked condition by his dealer customers. "In any event, the sales decline experienced by dealers in the major household appliance field in recent months has reflected to a considerable extent both the anticipatory civilian buying prior to the effective date of Regulation W and the 'scare buying' beYond normal needs during the summer following initial develoPments in Korea. Naturally gains then registered ere lost at the end of these buying periods. During , he Year as a whole, we assume your constituent exthe record expansion typical of business generally. Z tem 2hank you for the opportunity to report on Mr. --eJ.4-ner's letter which is returned herewith for '4.!Ifiles. You may be certain that in our continuing of the regulation, as it affects the various b:Ttries subject to its provisions, the points raised 4 Lehleitner will receive careful attention." Approved unanimously, together with a similar letter to Honorable Hale Boggs, House of Representatives, Washington, D. C. `2( 1/26/51 -7Letter to Mr. Clark, First Vice President of the Federal Reserve Bank of Atlanta, reading as follows: "Reference is made to your letter of January 18, 1951, in which you advised that expenses for certain functions at your head office and Jacksonville Branch exceeded the 1950 budget estimates aS follows: Jacksonville Function Head Branch Office Furniture and Equipment 0,717 Stock of Supplies $1,170 5,002 "Appropriate notations are being made in the Board's records concerning these overexpenditures." Approved unanimously. Letter to Mr. James J. Kelleher, 509 North West Street, Alexandria, Virginia, reading as follows: "Thank you for your letter referring to a course of dealing suggested by a used car salesman which in effect would permit an instalment obligation at its inception to have a maturity Inconsistent with Regulation W. "It is true that under certain conditions section 5(a) of the regulation permits a seller or finance company to renew or revise an instalment obligation so that it can have as long a maturity as if it were a completely new credit. However, any reor revisions pursuant to this section must be made in good faith and not as a moans to evade or circumvent the regulation. Section 6(h) of the regulation provides that 'no credit complies with the requirements of this regulation if at the time the °bligation arises there is any agreement, arrangment, ! understanding by which the obligation is to be renewed or revised on terms which would permit final .11871flent to be deferred beyond the date permitted by 41-8 regulation for such credit at its inception'. "A copy of your letter has been forwarded to th the i Federal Reserve Bank of Richmond for attention regulation is decea nc° the administration of the atralizeu among the Federal Reserve Banks. You will gPreciate, however, the difficulty of investigating Ports of alleged violative practices promptly and 207 1/26/51 "taking corrective action without having the name of the person suspected. The Board is very much Interested in curbing any such practices and we appreciate receiving any information that can contribute toward that purpose." Approved unanimously. Letter to Mr. William F. McKenna, Staff Assistant, Joint Committee on Defense Production, Room 301A, Senate Office Building, W"hington 25, D. C., reading as follows: "Referring to Senator Maybank's letter of December 14, 1950, addressed to Chairman McCabe, requesting that there be submitted for the information of the Joint Committee on Defense Production semi-monthly reports informally summarizing the activities of the Board under the Defense Production Act of 1950, I am pleased to send you herewith, in duplicate, statements reflecting developments during the first half of January in the work of the Federal Reserve System with respect to (1) guarantee of defense production loans, (2) real estate credit, (3) voluntary agreements by financing institutions, and (4) consumer credit. "Additional copies of this statement may be Obtained, if desired, through Mr. Cherry, Assistant C ounsel." Approved unanimous Secret
@FedFRASER