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1.410 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Monday, July 13, 1942, at 11:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Evans Mr. Morrill, Secretary Mr. Bethea, Assistant 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 Federal Reserve System held on July 10, 1942, were approved unanimcns 7. The minutes of the meeting of the Board of Governors of the Federal Reserve System held on July 11, 1942, were approved and the actions recorded therein were ratified unanimously. Memorandum dated July 9, 1942, from Mr. Morrill, recommendthat James E. Richardson be appointed as an elevator operator ill the Secretary's Office on a temporary basis for an indefinite Period, with sal at the rate of $1,200 per annum, effective as date upon which he enters upon the performance of his duties after having passed satisfactorily the usual physical examination. Approved unanimously. 1411 7/13/42 —2-. Memorandum dated July 10, 1942, from Mr. Morrill, recom— mending that the following increases in salaries of employees in the Secretary's Office be approved, effective as of July 16, 1942: Name Helen B. Wolcott June A. Moore Robert P. Warner L. Paige McLeod Edwin J. Weeks Julian R. Scott Desiallation Clerk-stenographer Stenographer Clerk Page Laborer Messenger Salary Increase From To $1,860 $1,740 1,680 1,800 1,680 1,560 1,380 1,260 1,320 1,200 1,320 1,200 Approved unanimously. Memorandum dated July 10, 1942, from Mr. Morrill, recom— mending that the temporary appointment of Miss Mary Alice Deuterman, a clerk in the Secretary's Office, be made permanent and that her ealarY be increased from $1,260 to $1,440 per annum, effective July 16, 1942. Approved unanimously. Memorandum dated July 10, 1942, from Mr. Wyatt, General e°12neel, submitting the resignation of Mrs. Nancy Kengla Jones as a law clerk in the Office of General Counsel, to become effective 48 0f the close of business on July 20, 1942, and recommending that the resignation be accepted as of that date. The resignation was accepted. Letter to the American Investment Corporation, Ogden, Utah, l'eading as follows: 1412 7/13/42 _3— "This refers to your letter of June 5, 1942, to the Federal Reserve Bank of San Francisco, relating to the holding company affiliate status of your corporation. "The Board understands that your corporation was organized in 1929 to provide centralized management for a.group of banks; that, however, since 1933 the activities of your corporation in this field have been limited to the holding of a minority interest in two banks (except for a relatively small temporary investment in stock of Nevada Bank of Commerce, Elko, Nevada, since disposed of) and your corporation is being slowly liquidated through the disposal of its assets and the retirement of its own shares; that no expansion is contemplated and liquidation will be completed, with due regard to tax problems; that the stock of your corporation is closely held and the holdings of the stock of your corporation and of the two banks in which it is interested are such that the distribution of the assets of your corporation to its shareholders would not materially affect the power of the present managements of the two banks to continue to control such banks; that your corporation owns 36.5 per cent of the stock of Commercial Security Bank, Ogden, Utah, a member bank, and 43.5 per cent of the common stock (29.9 per cent of all stock) Of Idaho Bank and Trust Company, Pocatello, Idaho, a nonmember bank with two branches; that it does not own or control any stock of, or manage or control, any other banking institution; and that, while it is a holding comparlY affiliate of Commercial Security Bank by reason of the fact that it owns more than 50 per cent of the number of shares voted at the latest election of directors of the bank, it would not be a holding company affiliate if the shares which it owns had been voted at such election. "In view of these facts, the Board has determined that your corporation is not engaged, directly or indirectly, as a business in holding the stock of, or managlng or controlling, banks, banking associations, savings banks, or trust companies, within the meaning ?f section 2(c) of the Bunking Act of 1933; and, accordyour corporation is not a holding company affiliate for any purpose other than those of section 23A of the Federal Reserve Act. "If, however, the facts should at any time differ from those set out above to an extent which would indicate that your corporation might be deemed to be so 1413 7/13/42 -4- "engaged, this matter should again be submitted to the Board. The Board reserves the right to make a further determination at any time on the basis of the then existing facts." Approved unanimously, together with a letter in the following form to Mr. West, Vice President of the Federal Reserve Bank of San Francisco: "This refers to your letter of June 9, 1942, and its enclosures, relating to the holding company affiliate relationship between American Investment Corporation and Commercial Security Bank, both of Ogden, Utah. "There is enclosed, for transmittal, a letter of this date to American Investment Corporation advising that corporation that the Board has determined that it is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies, within the meaning of section 2(c) of the Banking Act of 1933, and that, accordingly, it is not a holding company affiliate for any purpose other than those of section 23A of the Federal Reserve Act. A copy of the letter is enclosed for your files. . "While you made no recommendation concerning action with respect to this matter, we have assumed that you considered such a determination to be in order. If, however, You believe that for any reason this matter should be reconsidered by the Board, please withhold transmittal of the enclosed letter and advise us concerning your views. "In view of the Board's action, it appears unnecessary to consider the question, raised by you in another letter dated June 9, 1942, concerning the effectiveness of the agreement on Form P-5 executed by the American Ir.lvestment Corporation in 1933. However, in accordance with your request, we are enclosing a copy of the agreement in order to complete your files." Letter to Mr. Bowman, Assistant Vice President of the Pede ral Reserve Bank of Atlanta, reading as follows: "This will acknowledge your letter of July 3, 1942, enclosing a mimeographed Sheet used by your bank in 1414 7/13/42 —5— "calling for data to be furnished with applications for loans to be guaranteed under Regulation V, and referring to the Board's letter 6-521, dated June 30, 1942. "It is noted that you feel that substantial supplemental information is necessary in order to make a definite recommendation as to what action should be taken on each application. As previously indicated, it is most important from the standpoint of the armed services that as much uniformity as possible be achieved in the submission of applications. While it is for you to decide what supplemental information is necessary, it nevertheless should be held to the minimum. It was thought that the information which the armed services deem necessary for acting on applications would be a sufficient basis for your recommendation. "A review has been made of the mimeographed sheet enclosed with your letter, and there follows a brief comment on each item. "Item 1 seems to be in order with the exception of the word 'schedules'. The inclusion of this word would indicate that on each and every application you anticipate other su- orting information in addition to the financial and orating statements. "Items 2 and 8 are in order. "Items 3 and 4 are not thought necessary. "Relative to item 5, it would appear that this would only be necessary in unusual cases. "Information called for by item 6 may be desirable in the case of certain types of loans, particularly long term credits or large loans, but should not be included as one of the standard requirements. "Item 7 is adequately taken care of by caption #8 in the application form (see 8-521-a). "Item 9 is unnecessary, since it is the policy of the War and Navy Departments and the Maritime Commision to have the loan guaranteed by the service having the largest percentage of contracts. Only in rare cases have there ever been more than one of the armed services guaranteeing a single loan. One application should be made and should be sent to the department having the majority of the contracts. "Item 10 is adequately covered by caption #11 in the application form (see 8-521-a). 1415 7/13/42 -6- "Item 11 may possibly be necessary but normally the balance sheet of the company will properly show the total amount of pledged assets and in most cases this information would be satisfactory. "The information requested in item 12 would normally be contained in the balance sheet submitted by the company and therefore is unnecessary. "In the circumstances, it is suggested that you reduce to the absolute minimum the supplemental information required consistent with the information necessary as a basis for your recommendation." Approved unanimously. Letter to Mr. Olson, Assistant Vice President of the Federal Reserve Bank of Chicago, reading as follows: "Reference is made to your letter of June 29, 1942, with regard to remittances of guarantee fees by financing institutions. "While the question raised in your letter has not been taken up with the War or Navy Departments or the Maritime Commission, it is quite possible that the Federal Reserve Banks may be asked to furnish detailed data as to how the amount of the fees is arrived at and, if so, it is doubtful whether the General Accounting Office would accept in any given case anything less than the exact amount due. Accordingly, it is suggested that the Government be credited With the exact amount of fees due on each guaranteed loan." Approved unanimously. Letter to Mr. Wallace, Counsel of the Federal Reserve alank of Richmond, reading as follows: . "This refers to your letter of June 9, 1942, asking five questions under Regulation W. "Your first question is whether a Registrant, at the time of making a single-payment loan, may agree that turity will be extended, at the option of the borrower,as provided in section 7(c)(1) or 7(c)(2). In this connection you refer to W-47 and W-107 which say that if there is an agreement to pay the loan in more than one payment the loan becomes an instalment loan. 141_6 7/13/42 -7- "As you intimate, this is still true, anti the references to sections 7(c)(1) and 7(c)(2) in connection with W-47 and W-107 in the Board's letter S-475 were merely cross references and, as you say, were not intended to indicate that W-47 and W-107 had been modified by the May 6 revision of the Regulation. "Your second question is whether a Registrant may make an unsecured single-payment loan or an unsecured instalment loan to a farmer if the proceeds are to be used to purchase additional land, suitable for agriculture, as an aadition to an existing farm, there being no buildings or other structures on the land. The Board agrees with your view that such a loan is exempt by section 8(i) of the Regulation. Section 2(i) refers to a loan for agricultural purposes and section 8(i) refers to a loan for general agricultural purposes, but, as you suggest, the only purpose of inserting the word 'general' in section 8(1) was to emphasize the difference between a loan made to a person engaged in agriculture for the purpose of purchasing a listed article and a loan made to the same person for other purposes. "Your third question is whether a merchant who delivers a listed article to a prospective purchaser on approval' and requires a deposit in order to protect himself, can treat the sale as dating from the date upon which the customer makes his election to buy, rather than the date upon which the article was originanydelivered to the customer. In this connection you Point out that W-64 would have permitted this procedure except for the fact that W-64 discussed a case in which no deposit was required. However, W-112, to which you also refer, discusses a case in which a deposit was required, and therefore the answer, as you suggest, is that the merchant may treat the date on which the customer makes his election as the date of the sale for the purposes of the Regulation. "Your fourth question has been receiving considerand has now been made the subject of an interpretation, S-528. "Your fifth and last question would seem to be covered by S-471. "In order to facilitate filing letters by subjects for reference purposes in connection with later inquiries, 1417 7/13/42 -8- “we would appreciate it very much if you would write a separate letter on each topic instead of covering several topics in one letter. This is a trifling matter and hardly worth mentioning, but a letter containing several different questions has the additional disadvantage that one extra difficult question may delay the answers to the Other questions.” Approved unanimously. Letter to Mr. Fredrick Jordan of the American Shuffleboard C°111ParlY, Union City, New Jersey, reading as follows: "This refers to your letters of July 3 and July 6, r?questing that Shuffleboards be excluded from classificalon under Regulation W. The Federal Reserve Bank of New York has already advised you that they are included in games' equipment' under Item 33 of Group A of section 13(a), but you have advanced a number of arguments against this conclusion. "A very similar question has already been considered by the Board in connection with billiard tables and pool tables, which are constructed, sold and installed in very much the same manner and under very much the same conditions n as Shuffleboards. The Board has taken the position that such tables are 'games' equipment' within the meaning of the Regulation and there does not appear to be any reason for reaching a different conclusion with respect to Sh uffleboards." Approved unanimously, together with similar letters to Mr. Paul Kotler of the Modern-Art & National Shuffleboard Co., Irvington, New Jersey, and Mr. W. L. Acker, Legal Department of the Bankers Commercial Corporation, New York, New York. Telegram to Mr. Clerk, First Vice President of the Federal 11"erve Bank of San Francisco, reading as follows: "We are now in receipt of a letter from Mr. Bell ad • vising that Treasury desires to have 324,000,000 1418 7/13/42 -9- "additional notes your Bank overprinted, total cost Of printing to be charged to your Bank but Treasury to assume all costs of shipping the notes to your Bank. Assuming this program will be satisfactory to your Bank, we are advising Treasury that plan is satisfactory to Board." Approved unanimously, together with a letter in the following form to Honorable D. W. Bell, Under Secretary of the Treasury: "Reference is made to your letter of July 10, 1942, in which you state that the Treasury desires to have printed an additional amount of Federal Reserve notes of issue of the Federal Reserve Bank of San Francisco with the Hawaiian overprinting as follows: 5's $ 4,000,000 16,000,000 10's 4.000,000 20's Total $24,000,000 "You state that in accordance with your oral Understanding with Mr. Szymczak, you have instructed the Bureau of Engraving and Printing to bill the ?osts of production of these Hawaiian notes, including the overprinting, to the Board. This plan is satisfactory to the Board provided, as is understood, the notes are shipped to the Federal Reserve Bank of San Francisco by the Treasury without expense to the Federal Reserve System." Thereupon the meeting adjourned. .6C .C-4421 hr ) 04AA: 9 2 Secretary. %roved: Chairman.
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