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51. A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Saturday, January 9, 1943, at 10:45 PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak Draper Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary 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 Fed"al Reserve System held on January 8, 1943, were approved unanimously. Memorandum dated Tanuary 5, 1943, from 'Mr. Goldenweiser, Director of the Division of Research and Statistics, recomaending (1) that lisey David Domar be appointed as an Associate Economist in that Division (3171 a temporary basis for a period of not to exceed one year, with salary at the rate of ”,600 per annum, effective as of the date upon which he enters upon the performance of his duties after taking the usual physical examination, and (2) that, if his heart condition should prevent his 13a5eing the usual physical examination, Ur. Domar be brought into the l'aderal Reserve retirement system on the restricted basis by waiving death and disability benefits for ten years. Approved unanimously. 52 V9/43 -2Memorandum dated January 8, 1943, from Mr. Wingfield, Assist- ant General Attorney, submitting the resignation of Miss Helen V. Dolan ae a law clerk in the Legal Division, to become effective as of the close C/f business on January 11, 1943, and recommending that the resignation be accepted as of that date. The resignation was accepted. Memorandum dated January 8, 1943, from Mr. Carpenter, submitting the resicnation of Miss Margaret Wadley as a junior file clerk in the Secreta_, s Office, to became effective as of the close of business on nuarY 31, 1943, and recommending that the resignation be accepted as Of that date. The resignation was accepted. Letter to the Presidents of all the Federal Reserve Banks, reading as follows: "Among the decisions of the Comptroller General of the United States involving the provisions of the Assignment of Claims Act of 1940, the enclosed decision (B-29657, December 8) 1942) has recently come to our attention. The enclosed copies are for your information and also for the information of Counsel for your Bank with respect to financing of war production. "It should be noted that although the decision deals with the question of a notice of assignment to the surety Slid to the effect of an assignment of claims under the contract to the surety while a previous assignment to a bank ls outstanding, the rights of the surety company under the contract of suretyship do not appear to have been involved since there was no default under the contract." Approved unanimously. 53 1/9/43 Letter to Mr. Woolley, Vice President and Secretary of the Federal Reserve Bank of Kansas City, reading as follows: "This refers to your letter of December 14, 1942, enClosing a copy of an investigation report dated October 3, 1942, and a copy of a memorandum signed by Mr. Geary, dated November 13, 1942, relating to an advertisement of the Askins Clothing Company, Denver, Colorado, which you also enclosed With your letter. "You asked whether the instalment sale without a down payment of either of the groups contained in such advertisement constitutes a violation of section 12(1) of Regulation W. Representative of these groups is the following: $ 5.98 'Dress 4.98 Shoes 1.98 Hat Bag 1.49 1.19 Hose $15.62 Total 'All for Only %112.95 'No Down Payment Required' "The principal purposes of section 12(1) were to make the Regulation more realistic by making it conform to customs and merchandising methods, and also to prevent evasion. Of course, whether groups of items sold together should be considered single articles under section 12(1) necessarily depends Upon all the facts relating to the particular sale, and borderline cases are inevitable. "The groups in Question, however, not only are comprised Of closely related items but are also offered and sold as single units. It is the Board's view, therefore, that the offering and sale of such groups without a down payment constitutes a violation of the Regulation. The fact that in some cases the customer might have some selection of the various items on the basis of style, color, etc., is immaterial." Approved unanimously, together with the following letter to Mr. Phelan, Assistant Vice President of the Federal Reserve Bank of New York: "For your information there is enclosed herewith a copy of a letter to Mr. Woolley, Vice President and Secretary of the Federal Reserve Bank of Kansas City, relating to the application of section 12(1) of Regulation W. This matter is being called to 54 1/9/43 -4- "your attention in view of the fact that the manager of the Askins Clothing Company store in Denver, Colorado, related orally to an investigator for the Denver Branch of the Federal Reserve Bank of Kansas City that the home office of the Askins Clothing Company in New "York City had obtained the approval of your bank of the advertising and merchandising method involved in the enclosed letter." Memorandum dated December 21, 1942, from Mr. Smead, Chief of the Division of Bank Operations, recommending for the reasons stated therein (1) that the Board authorize the discontinuance of a separate Federal t Reserve note clearing effective February 1, 1943, or as soon hereafter as practicable, and (2) that the letter quoted below with respect to the procedure proposed to be followed be sent to the Presidents of all the Federal Reserve Banks. The memorandum called atten- ti°fl to the fact that the discontinuance of the separate note clearing the conseauent elimination of telegraphic advice of shipment of " notes of other Federal Reserve Banks might have the effect of slightly increasing the figures showing the liability of the Reserve Banks for Federal Reserve notes in circulation, i.e., by the amount of such notes In transit at any given time, but that there would be no effect upon the figures of Federal Reserve notes in circulation, as used in the Trea.-urY monthly circulation statement or in the Board's daily estimate "111°IleY in circulation, except when there was a delay in the mails, and that the probable effect in that case would be exceedingly small. "The replies to Mr. Smeadts telegram of November 16, 1942, indicate that a majority of the Federal Reserve Banks are in favor of, or interpose no objection to, the discontinuance of the separate Federal Reserve note clearing. 55 1/9/43 -5- "The proposed settlement procedure is as follows: 1. Banks shipping fit Federal Reserve notes of other Banks to the issuing Bank will bear shipping costs including insurance, and will carry the notes while in transit in an appropriate account, such as 'Federal Reserve notes of other Federal Reserve Banks in Transit.' On the day the notes Should arrive at the issuing Bank, the shipping Bank will credit this account. Notes of other Federal Reserve Banks in transit, whether fit or unfit, are to be included along With Federal Reserve notes of other Federal Reserve Banks on hand in the item 'F. P. notes of other F. R. Banks' on Form F. P- 34. 2. The same procedure should be followed with respect to unfit Federal Reserve notes of other Banks forwarded to lhashington for redemption, except that credit will be taken for such notes on the day that mail advice of the shipment Should arrive at the issuing Bank. 3. On receipt of its own fit notes from another Federal Reserve Bank or branch, the issuing Federal Reserve Bank will credit the shipping Federal Reserve Bank in the transit clearing for that day. Similar credit is to be given for unfit notes forwarded to ; 1 .:ashington for redemption on receipt of mail advice of shipment. 4. Appropriate arrangements should be made between each Federal Reserve Bank and its branches, if any, so that payment for notes of other Federal Reserve Banks shipped by its branches may be made to the Federal Reserve Bank just as if the notes had been shipped by it. 5. The new procedure in regard to settlement for fit notes returned to the Bank of issue and unfit notes forwarded to Washington for redemption will not affect any existing arrangement between Federal Reserve Banks for shipment of notes of another Federal Reserve Bank to a member bank in the issuing Bank's district, except that payment will be made for such notes through the transit clearing on the date of shipment. "One Federal Reserve Bank has suggested that the Bank , fit or unfit notes of other Federal Reserve Banks be shiPpinr, Permitted to take credit on date of shipment by making deductions from credits in the regular transit clearing of the Interdistrict Settlement Fund. It seems inadvisable, however, to adopt this suggestion, in part because of the effect on the figures showing the amount of Federal Reserve notes in circulation. "If you have any suggestions or comments to make with resPect to the proposed settlement procedure, it will be appreciated if they are furnished as promptly as practicable." Approved unanimously. Memorandum dated January 5, 1943, from Yr. Smead, Chief of the Di- 7181°1 of Bank Operations, submitting a preliminary statement of earnings 56 1/9/43 -6- and expenses of the 12 Federal Reserve Banks combined for the year 1942) with corresponding figures for 1941, together with the follow14 statement for release to the press on January 12, 1943, with re- 8Pect to earnings and expenses of the Federal Reserve Banks for 1942: "Preliminary figures received from the Federal Reserve Banks indicate that during the year 1942 their current earnings amounted to $52,663,000, which was rn,283,000 more than in 1941. Current expenses and other deductions, net, amounted to $40,193,000, leaving net earnings for the year of $12,470,000. Net earnings in 1941 amounted to $9,137,000. "Distribution of 1942 net earnings of the Federal Reserve Banks was as follows: Dividends to member banks, 48,669,000; payments to the United States Treasury under provisions of Section 13b of the Federal Reserve Act relating to Industrial advances, if198,000; net additions to surplus accounts, $3,603,000." Approved unanimously. Thereupon the meeting adjourned. __.112c4Fe.,411s 1-r) Chairman. sec tary.
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