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1446 A meeting of the Board of Governors of the Federal Reserve Sysem Was held in Washington on Friday, July 17, 1942, at 11:30 a.m. PRESENT: Mr. Eccles, Chairman Mr. Ransom, Vice Chairman Mr. Szymczak Mr. Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The action stated with respect to each of the matters herein"ter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Pedelsel Reserve System held on July 16, 1942, were approved unanimously. Telegrams to Messrs. Treiber, McCreedy, Hays, and Dillard, ecretarles of the Federal Reserve Banks of New York, Philadelphia, Cleveland) and Chicar7o, respectively, Mr. Caldwell, Chairman of the l'ederal Reserve Bank of Kansas City, and Mr. Hale, Secretary of the l'ederal Reserve Bank of San Francisco, stating that the Board approves the establishment without change by the Federal Reserve Bank of San 4ancisco on July 14, by the Federal Reserve Bank of Kansas City on 3 111Y 15) and by the Federal Reserve Banks of New. York, Philadelphia, and elevele'nd, and Chicago on July 16, 1942, of the rates of discount 1°11-l'elaase in their existing schedules. Approved unanimously. recommending Memorandum dated July 15, 1942, from. Mr. Morrill, thet O. Burk be appointed to the position of plumber in the period, with etarY'8 Office on a temporary basis for an indefinite -17 at the rate of *1,800 per annum, effective as of the date upon 1447 7/17/42 MRS Which he enters upon the performance of his duties after having passed satisfactorily the usual physical examination. Approved unanimously. Memorandum dated July 16, 1942, from Mr. Goldenweiser, Direct°r cf the Division of Research and Statistics, recommending, with the c°110Urrence of the Division of Examinations, that Miss Eleanor C. gl°vanetti, a stenographer in the Division of Examinations, be transferred to the Division of Research and Statistics as a clerk-stenographer, With no change in her present salary at the rate of $1,800 per annum, errective as of the date upon which she enters upon the performance of her dUtiese Approved unanimously. Memorandum dated July 15, 1942, from Mr. Goldenweiser, Director Of the Division of Research and Statistics, recommending, with the c°fleurrence of the Secretary's Office, that Miss Betty X. Strickler, JUnior file clerk in the Secretary's Office, be transferred to the I)ilrision of Research and Statistics as a clerk-stenographer, with no cb nge in her present salary at the rate of 41,440 per annimi, effective aa or the date upon which she enters upon the performance of her duties. Approved unanimously. Memorandum dated July 15, 1942, from Mr. Morrill, recommending tha. jam es W. Sanderson, a guard in the Secretary's Office, be granted le" 'e °f absence without pay beginning August 1, 1942, so that he Illieht enter active duty with the United States Coast Guard, and that 1448 _3- 7/17/42 be be granted the benefits provided in the policy adopted by the B°11ra on November 14, 1940, and amended August 20, 1941, for all amP1°Yees entering military service. Approved unanimously. Memorandum aated July 17, 1942, from Mr. Wyatt, General Counsel, submitting the resignation of Miss LaRue Sargent as a stenographer in the Office of General Counsel, to become effective as of the close t business on July 15, 1942, and recommending that the resignation be a ccepted as of that date. The resignation was accepted. Letter to the board of directors of the "Truitt-Matthews BankCO3', Chillicothe, Illinois, stating that, subject to conditions c3f Me mbership numbered 1 to 3 contained in the Board's Regulation H, the 13°Eird approves the bank's application for membership in the FedReserve System and for the appropriate amount of stock in the Fed sral Reserve Bank of Chicago. Approved unanimously, together with a letter to Mr. Young, President of the Federal reserve Bank of Chicago, reading as follows: "The Board of Governors of the Federal Reserve Sysem approves the application of the 'Truitt-Matthews Bank-I-11g Co.', Chillicothe, Illinois, for membership in the Pederal Reserve System, subject to the conditions prescribed in the enclosed letter which you are requested to forward to the Board of Directors of the institution. Two copies of such letter are also enclosed, one of which is Your files and the other of which you are requested to c)rward to the Auditor of Public Accounts for the State of Illinois for his information. 1449 7/17/42 _4- “Since the amount of estimated losses shown in the report of examination for membership is relatively small the Usual condition of membership requiring elimination Of losses has not been prescribed. It has been noted, however, that the management intends to charge off the amoUnt classified and it is assumed that this will be done.” Letter to Mr. B. B. Griffith, Assistant to Director of Finance Of the United States Maritime Commission, reading as follows: "Receipt is acknowledged of your letter of Slily 16, 1942, with reference to the desirability of including in the guarantee agreement a provision which would permit the borrower, in case of an adjustment under section 6 or the guarantee agreement, to withdraw uncancelled contracts from the collateral securing the loan and to substitute cancelled contracts in lieu thereof. s you know, this Question was presented at the meeting which was held on June 24, 1942, and accordingly we are furnishing a copy of your letter to Colonel Mechem Of the War Department, Mr. Mitchell of the Navy Department, and to Mr. Mark Brown, for their information. We have not a . s yet heard from any of them in response to our letter of /ullr 3 on this subject." Approved unanimously. Telegram to Mr. Hays, Vice President of the Federal Reserve Batik °f Cleveland, reading as follows: "Reference your telegram rune 26 relative to listed articles under Regulation W. Word 'kitchen' in Group A-35 modifies the following words 'ware, equipment, and utensils'. Con8equently items commonly known as homewares or housewares but not designed for use in the kitchen are not included in this category. This will indicate the basis for determininC the classification of the items specified in your wire Which are all of a similar nature. See S-491." Approved unanimously. Letter to Mr. Dillard, Vice President and Secretary of the FedeI.E0 4- Reserve Bank of Chicago, reading as follows: 1450 7/17/42 -5- "This refers to your letter of Tune 9 regarding the aPPlication of Regulation W to the 'Check Credit Plan' of the Merchandise National Bank of Chicago. "With your letter, you enclosed a form of letter Which the bank addresses to the depositor who is going to use the Check Credit Plan, and which states in effect that the 'Statement of Borrower' required by Regulation W must be filled out and that if any one of the first three questions is answered 'yes' the loan feature of the Check Credit Plan must not be used. The depositor likewise executes an agreement stating that the Statement of Borrower is to be continuously applicable and binding upon him, so that it will apply to all loans made pursuant to his option. "As you were advised in the Board's letter to you of May 28, the question was being considered in connection With several related questions. Since, as stated in that letter, the usual form of Statement of Borrower cannot be Used with respect to all loans made pursuant to the agreement, the question is whether a modified form of Statement can be used in this case. "The related questions which the Board was considering involved other cases where the suggestion was made that a Modified form of Statement of Borrower be permitted in particular cases, and, after careful consideration, the Board decided that to -permit the use of a modified form in one ease would lead to the granting of similar permission in Other cases, and the result would be confusion and a situatlon which would be impossible frci , an administrative standpoint. "The Board has therefore decided to reply to the inquiry reCarding the 'Check Credit Plant in the same manner as it has replied to the other inquiries, namely, that the Statement of Borrorer as adopted by the Board and filed with the Federal register, and the provisions of the Regulation relating thereto, must be applied uniformly to all persons affected, alct that consequently the procedure outlined in your letter nith respect to 'Check Credit Plan' is not permissible." Approved unanimously. Telegram to Mr. Woolley, Vice President of the Federal Reserve 13ank Aansas City, reading as follows: "l eCUlation W does not include any provision that would perinstalment sales of listed articles without down payment uo new employees of Union Pacific Coal Company discussed in Y°111 'July 13 letter. Similar problem regarding new workers Tit 1451 7/17/42 -6- "in defense factories was discussed here several months ego by Robert R. Rau, Vice President, National Retail Furniture Association, Chicago; since we have not heard further from. Mr. Rau it is possible that furniture dealers maY have found satisfactory solution that would be helpful to Union Pacific Coal Company. Assume company giving further consideration to bona fide rental of houses complete With furniture to workmen. Board would like to learn eventually how Union Pacific Coal Company solves problem; will be willing to discuss situation further if necessary." Approved unanimously. Telegram to Mr. Woolley, Vice President of the Federal Reserve 1313. of Kansas City, reading as follows: 'Tour letter July 14 regarding s-479. Understanding (that the last payment on an instalment loan may be in any amount that represents the balance, even though the balance is less than $5.00, just so long as the previous Payments comply with Regulation W) stated in last sentence Of letter is correct." Approved unanimously. Letter to Honorable Byron Price, Director of Censorship, read111C e-e Pollows: "During May we discussed with Commander Creech of Your office a request received through the Federal Reserve illank of Nev, York from the Commonwealth Bank of Australia or Permission to send messages in private code to commercial banks in the United States relating to Australian wool shipments. Under date of May 18, we sent to Commander Creech a copy of a letter addressed to the Australian Min1-l eter by the Federal Reserve Bank of New York under date of 16) 1942, relating to this natter. "We have now been advised by the Federal Reserve Bank New York that it has received a cable from the Commonalth Bank of Australia stating that your office has inrmed the Australian Legation that the request of the lamonwealth Bank could not be approved. The Commonwealth 811k does not think that an arrangement by which the mes, a es involved would be sent through the Australian Govern' inent Trade Commissioner or British consular authorities r e e 1.452 7117/42 -7-- "would be satisfactory, and proposes, if agreeable to your office, to send the messages direct to the Federal Reserve Bank of Boston in the private code of the Commonwealth Bpnk for transmission by mail to the commercial banks involved. Ive understand that all of the messages relate to Government wool shipments and therefore may be regarded as official Government business. Since they c'Dnvey an indication of shippinE movements between Australia and the United States, the Commonwealth Bank is adverse to sending them in open messages or any of the public codes. "The Federal Reserve Bank of Boston has advised that, if the arrangement is approved by your office, it will be willing to handle the messages in the manner proposed and Vie shall appreciate it very much if you will let us know whether your office would have any objection to the arranpement." Approved unanimously. Letter to the Presidents of all the Federal Reserve Banks, Ile dine as follows: "For your information there is enclosed a copy of Treasury Order of Slily 6, 1942, providing, : for the Destruction of Currency in Panama Canal Zone. "It is understood that the greatly increased difficulty and expense of arranging currency shipments due to ar risks was responsible for the issuance of the aboveMentioned order. "You will note that under Section B, paragraph 4, of the order destruction of unfit currency is limited to that on hand on May 19, 1942. This is the date on which restrictions became effective upon the importation of currency into the United States under foreign funds control regulations. It is contemplated that definitive requirements respecting the importation of currency from the epublic of Panama and the Panama Canal Zone will be Iromulyated at an early date, at which time the provisions Of the Treasury order will be supplemented in such manner as may be necessary." Approved unanimously. Letter to the Comptroller of the Currency, reading as follows: 1453 -- 2 "It is respectfully requested that you place an order With the Bureau of Engraving and Printing supplementing the order of Tune 17, 1942, for printing of Federal Reserve notes of the 1934 series in the 5 denomination in the amounts stated for the following Federal Reserve Banks: Number of sheets New York Philadelphia Cleveland Richmond Kansas City 500,000 400,000 250,000 150,000 84,000 Amount 30,000,000 24,000,000 15,000,000 9,000,000 5,040,000" Approved unanimously. Thereupon the meeting adjourned. Secre ary. Chairman.
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