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1235 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Friday, July 20, 1945, at 10:30 a.m. PRESENT: Mr. Ransom, Vice Chairman Mr. Szymczak Mr. Evans Mr. Carpenter, Secretary Mr. Connell, General Assistant, Office of the Secretary Mr. Thurston, Assistant to the Chairman The action stated with respect to each of the matters herein— al''t'er r eferred to was taken by the Board: Telegrams to Mr. Flanders, President of the Federal Reserve 13 cr Boston, Mr. Treiber, Secretary of the Federal Reserve Bank of NellYork, Mr. McCreedy, Assistant Vice President and Secretary of the Pecieral Reserve Bank of Philadelphia, Mr. McLarin, President of the Pecleral Reserve Bank of Atlanta, Mr. Dillard, Vice President of the Federal Reserve Bank of Chicago, and Mr. Earhart, Vice President of the ecieraa• Reserve Bank of San Francisco, stating that the Board approves the establishment without change by the Federal Reserve Bank of San Prarleisco on July 17, 18' by by the Federal Reserve Bank of Atlanta on July the Federal Reserve Banks of New York, Philadelphia, Chicago, 11(t Sari Francisco on July 19, and by the Federal Reserve Bank of Boston t()cles 'c)f the rates of discount and purchase in their existing schedules. Approved unanimously. the Memorandum dated July 18, 1945, from Mr. Bethea, Director of Divisi -on of Administrative Services, recommending that the resignation 1236 7h0/45 OnArs. -2Violet Herrmann, cafeteria helper, be accepted effective at the Close of business July 15, 1945. The resignation was accepted as recommended. Letter to Mr. Hays, First Vice President of the Federal Reserve Elallk of Cleveland, reading as follows: "This refers to your letter of July 14, 1945, advising that the board of directors of your bank has authorized the ” tablishment of discount committees at the Cincinnati and Pittsburgh branches and has granted power to such committees ! , such branches to authorize loans and advances under sec,1°n8 13 and 13(a) of the Federal Reserve Act to member banks ! .-n their respective territories subject to such rules, regulations and limitations as may be adopted by the discount ?ommattee at the main office. We also note that applications ,tor loans under section 10(b) are to be handled at the °ranches in the same manner as those under sections 13 and a3 1 ) i( .except that there shall be approval of such loans by ore discount committee at the main office prior to the making anY commitment or disbursement thereof. „ "The Board approves of this action taken by the board of ' Ll-rectors of your bank." Z t Approved unanimously. Letter to Mr. Gidney, President of the Federal Reserve Bank of atIcil reading as follows: "The Board of Governors approves the changes in the Persn -nnel classification plans of the Cincinnati and Pitts:7gh Branches, involving the establishment of the position ;:41PI:cs1Z21 Reserve Agent's Representative at each Branch, as in your letter of March 14, 1945. "As cated in the Board's letter of July 17, 1945, the ti- alaximum annual salaries under the personnel classificain°n plans for such positions have been eliminated. Accordi)aglY, the appropriate changes have been made on the Form A thV8 submitted with your letter and it is requested that mum annual salaries be cancelled also on your copies of liose pages." Approved unanimously. r-,1 6-PaY —t—A;a4 7/20/45 Letter to Mr. Gilbert, President of the Federal Reserve Bank of Dallas, reading as follows: „ "The Board of Governors approves payment of salary to 4.r. George M. Snellings, Jr., as Counsel of the Federal Reserve Bank of Dallas at the rate of $9,000 per annum for the period ending May 31, 1946, which is the rate fixed by the d irectors, as reported in your letter of July 14, 1945. "Please advise us as to the date the appointment becomes effective." Approved unanimously. Letter to Mr. Wiltse, Vice President of the Federal Reserve Bank ot New ork, reading as follows: . ."Reference is made to your letter of July 11, 1945, subtt for the consideration of the Board, under the provi_1c3ns of an applicable condition of membership, the proposal I The Oystermen's Bank and Trust Company, Sayville, New York, eo Purchase for $23,750 a site for a new bank building and to _rect. on the plot after the war a new building at an estimated COst of from $75,000 to $100,000. 4, "It is understood that the quarters presently occupied by Tember bank are inadequate and the bank is unable to nequire room for expansion at the present site but anticipates 1°_ difficulty in disposing of the property for an amount at ,cdst 26,000equal to the present carrying value of approximately 0 Z of 4,"In view of the generally satisfactory asset condition bank, the Board, in accordance with your recommendation, -L interpose no objection to the purchase of the property roposed and the proposed further investment in a suitable cludc .ling provided the total investment in bank premises, in' ' nIng the premises now occupied if not sold, does not exceed $15 „.I -1°00 which is the par value of the bank's common capital -uck.m o Q Approved unanimously. INItata Letters to "Farmers Bank & Trust Company of Indiana, pa.,” / Pennsylvania, "The Savings & Trust Company of Indiana," Indiana, Perh, -q'nv-an tollowat ia, and the "Mazon State Bank," Mazon, Illinois, reading as 1238 7/20/45 —4— "The Board is glad to learn that you have completed all a rrangements for the admission of your bank to membership in Federal Reserve System and takes pleasure in trans— matting herewith a formal certificate of your membership. "It will be appreciated if you will acknowledge receipt of this certificate." Approved unanimously. Letter prepared for Mr. Vest's signature to Mr. James L. DcAleheity, Assistant General Counsel, Reconstruction Finance Cor— poration, reading as follows: "This refers to your letter of July 17, 1945, and to the .c1, 1 euesions which have been had regarding the proposal to Introduce in evidence in the case of RFC v. Rudolf Hecht et 414 on behalf of the RFC, certain information contained in the report of examination of the Hibernia Bank and Trust °mPah,Y, Nev. Orleans, Louisiana, made as of May 21, 1932. "In accordance with the understanding reached, I en— close herewith a certificate of the Secretary of the Board as to certain entries in Schedules A and G of the report of nanianation above mentioned. I believe that this certifica011 conforms to the provisions of Rule 44(a) of the Federal 'ullee of Civil Procedure." Approved unanimously. Telegraa reading as follows, to Mr. Evans, Vice President of the p , er'eral Reserve Bank of Dallas, replying to his inquiry of July 17, 1945 , whether two directors of the Texas State Bank of Jacksonville, Texas (which Bank is contemplating membership in the System) who have ' 40 °tr. leial title and receive no salary but who are permanent members °t the --Lscount committee would be considered as executive officers 141der Regulation 0: 4Helet seventeenth a_ it is understood that directors mentioned ar not also officers of the bank. In circumstances, such o t rs are not considered to be executive officers within the 1,11-eaning of Section 22(g) and Regulation 0 merely because of-, ' ueir service on the discount committee." Approved unanimously. 7120/45 -5Letter to Ir. Fry, Vice President of the Federal Reserve Bank r Richmond, reading as follows: "This is in reply to your letter of July 13, 1945, en— closing a copy of a letter received by you from Mr. Wymond Cabell of Branch, Cabell & Co., Richmond, Virginia, relative to the recent amendments to Regulation T and Regulation U. "While we can understand Mr. Cabell's point of view with respect to the withdrawal of a particular security previously Purchased with a 75 per cent margin deposit, we have never considered that it was possible to differentiate between 12,e rticular securities in an account so as to make the with— urawal rule different depending upon the conditions under which they were purchased. Changes in market values alone woulc' create unmanageable problems. In many cases, further— more, the withdrawal of the security upon the deposit of the emaining 25 per cent would leave the rest of the account 'lien more undermargined than before. "As to Mr. Cabell's suggestion that Regulation T permit Withdrawals against the deposit in cash of the full market alue of the security withdrawn, this matter is under study nd his views will be given careful consideration. We need know more about the circumstances in which customers would Want to do this, particularly what the customers expect to a ccomplish and how often cases would arise. If Mr. Cabell could_ give us some information along this line it would be wuch appreciated." f Z Approved unanimously. Telegrams the to the Presidents of all Federal Reserve Banks and to °Iificers in Charge of Branches, reading as follows: rele "The Board today has given to the press for immediate ase the following statercent and text of decree of the nostrict Court of the United States for the Eastern District ' t' 4ichigan, Southern Division, restraining Consumers Home lec110-Pment Co. of Detroit, Michigan, from violations of Regu— elIion W. It is urged that you give statement and decree to jossible local publicity. This telegram is being sent Charsents of all Federal Reserve Banks and to officers in it ge of all Branches. Please send us copies of all local em8n appearing in press on this matter: A decree restraining Consumers Home Equipment Co. and A. Chereton, its President, from violations of Regulation eZ-z the Board of Governors of the Federal Reserve System was "tered today by Judge Ernest A. O'Brien in the District 1240 71*45 -6- "Court of the United States for the Eastern District of Michigan, Southern Division. The matter was presented to the Court by US. Attorney, John C. Lehr. "The Consumers Home Equipment organization, which has its head , 1 office at Detroit, Michigan, and offices in Illinois, -tncliana, Kentucky, Michigan, New York, Ohio, and Pennsylvania, .-yrld affiliates with offices in Maine, Massachusetts, New ril,amPshire, Rhode Island, and West Virginia, is engaged in the house to house sale of household merchandise on an instalment lunasis. The company has been charged with violating the regu.ati°n in a number of instances by making sales without obtaining the down payment required, by failing to furnish statements of t ransactions to customers, and by not only failing to main1.2in records but attempting to conceal violations by manipulation and alteration of its records. "The effect of the decree, to which the defendants consented, is to render the defendants liable for punishment for of court in the event they are found in the future to Ilie havedecr.v Violated the regulation in any of the respects described J. the "The text of the decree is in part as follows: "NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED c "That the defendants, Consumers Home Equipment Co. and A. 13, hereton, and their agents, servants, representatives, emP-°Yees and persons in active concert and participation with hem, and any and all companies and persons under their control, e sPectively, be and they are hereby permanently enjoined, in the installment sale of merchandise, from: of "1. Making installment sales subject to the requirements s Regulation Wof the Board of Governors of the Federal Reserve stem without obtaining the cash down payment required by Section 4(a) of said Regulation. t "2. Making installment sales subject to the requirements 8 , " ‘ . egulation 17 of the Board of Governors of the Federal Reserve a.4, em without furnishing the obligors the statement of trans1°r11 required by Section 4(d) of said Regulation. Making installment sales subject to the requirements sy "egulation V; of the Board of Governors of the Federal Reserve 0133,em without maintaining and preserving, for the life of the igation to which they relate, such books of account, records Gz, ank4 other papers as are relevant to establishing whether or not in extension of credit within the scope of said Regulation was Se .?nformity with the requirements thereof, as required by e'lon 12(h) of said Regulation. "Dated this 20th day of July, 1945." Approved unanimously. 1 241 7/20/45 Letter to Mr. Dillard, Vice President of the Federal Reserve Bati, of Chicago, reading as follows: "This is with further reference to your letter of June 19, 1945, relative to a request of Mr. L. Shirley Tark, President of the Main State Bank, Chicago, for a change in Reg'ulation W. The Board has considered problems of a similar nature on several occasions since the regulation became ef— Iective and has concluded that it was inadvisable to make sPeoial exemptions for regular passenger automobiles to be Usedfor business purposes. One of the principal reasons for ' ills decision is that a considerable number of regular Passenger automobiles are employed by business concerns and lberal credit terms for these concerns would add just as !rl, ?h to the pressure against price ceilings for automobiles, Ana:ch are consumers' goods, as would liberal credit for Prlvate individuals. m . "Furthermore, a large proportion of the passenger auto— a°b1les are used to some extent for business purposes, and a thosepractical matter it is impossible to draw a line between cases where some special treatment might be called for M those where it would not. As a matter of fact, no cases ' 0 . .1ve been called to our attention in which the application of .e regulation as it stands at present would cause serious dIfficulties. "In view of present conditions, there appears to be no reason for the Board to change its decision at this time. th "We would appreciate it if you would inform Mr. Tark of e Boardts views with reference to his request." Approved unanimously. Thereupon the meeting adjourned. Secretary. 4PAroved.
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