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Minutes of actions taken by the Board of Governors of the Neral Reserve System on Friday, July 20, 1951. PRESENT: Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Evans Norton Mt. Carpenter, Secretary Mt. Sherman, Assistant Secretary Mt. Kenyon, Assistant Secretary Minutes of actions taken by the Board of Governors of the Neral Reserve System on July 19, 1951, were approved unanimously. Telegrams to the Federal Reserve Banks of New York, Philadelphia, eilleego) St. Louis, Minneapolis,and San Francisco stating that the Board 41113t°7es the establishment without change by the Federal Reserve Bank of Poli on ally 12, by the Federal Reserve Bank of San Francisco on 1 , 1/ by the Federal Reserve Bank of St. Louis on Jay 18, and by the Peder 1951,8'1 Reserve Banks of New York, Philadelphia, and Chicago on July 19, °11 the rates of discount and purchase in their existing schedules. Approved unanimously. Memorandum dated July 19, 1951, from Mr. Leonard, Director, Division °t Et clerk buie OPerations, reconnnending the appointment of Miss Mary R. Lynch as 'TYPist in that Division, on a temporary indefinite basis, with 4%1 vehe-1417 at the rate of $2,955 per annum, effective as of the date Det4ea ieh she enters upon the performance of her duties after having the completion of a EtEtti8t the usual physical examination and subject to Y employment investigation. Approved unanimously. 7/20/51 -2Memorandum dated July 9, 1951, from Mr. Carpenter, Secretary of the Board, recommending increases in the basic annual salaries of the roll e.wing employees in the Office of the Secretary, effective July 22, 1951: Name teatrice Hunter 1411dred E. Pilger tlizabeth Jones kaalixie a. Beeson Title Assistant Chief, Files Section Supervisor, Administrative Subject and F.O.M.C. Files Assistant Supervisor, Administrative Subject and F.O.M.C. Files Review Classifler, Administrative Subject Files Salary Increase To From $4757 Sit)70 3,700 4,200 3,850 4,07) 3,275 . 3,475 Approved unanimously. Memorandum dated July 9, 1951, from Mr. Carpenter, Secretary of the Bo era, recommending an increase in the basic salary of Miss Cornelia A. te '-uPervisor, Non-Current Records and Records Disposal in the Office °I' tile Se eretary, from $3,355 to $3,575 per annum, effective July 22, 1951. Approved unanimously. Letter to Mr. James A. McCullough, Director, FLnencial Policy eald Tra (1 Development Division, Econovic Cooperation Administration, 800 e°114ecti , -e -- totenue, N. W., Washington, D. C., reading as follows: has "Th13 is to inform you that the Board of Governors tor eXTroved the request contained in your letter of July 17 010e the services of Miss Florence I. Jaffy, of the Financial icals and Policy Section of the Division of Internatio Ble Pinance, to serve as a technical adviser to Mr. 8clell at the Hearings in Paris before the Financial and , 40 '4).nlic Board of NATO during the week of July 23. 7/20/51 _3_ "It is understood that the Economic Cooperation Administration will make all necessary arrangements and will bear the cost of travel, per diem, and travel insurance for Miss Jaffy's trip." Approved, Mr. Vardaman voting "no". Letter to Mr. Ferdinand Kaufholz, Jr., Deputy Director of Civil fetch "for Federal Buildings, Regional Office Building, General Services 141inistration, 7th and D Streets, S. W., Washington, D. C., reading as foliove "In response to Mr. Young's letter of July 13, IDY)1, enclosing a memorandum relative to the Civil oefense Organization to be set up in all Federally f?cuPied buildings, you may be assured of our coopera--"on in this program. trat4"Mr. L. P. Bethea, Director, Division of Adminis„ J-ve Services, is authorized to act for the Board Governors in local Civil Defense matters. Mr. Joseph se Kelleher, Assistant Director, Division of Administrative -111.ces, has been designated as Chief Building Warden." Approved unanimously. Letter to Mr. Clarke, Secretary of the Federal Reserve Bank of York / reading as follows: 1951 "This will acknowledge your letter of July 161 or :;*/ advising that the executive committee of the board 1)Et "irectors has granted a further leave of absence with tji.'° Mr. Wroslav A. Kriz for short periods from time me during the summer to enable him to complete the re kivrt of his assignment with the International Bank. to ;The Board of Governors will interpose no objection arrangements indicated in your letter." Approved unanimously. 1599 7/20/51 -4Letter to the Honorable Burnet R. Maybank, Chairman, Joint Committee on erense Production, United States Senate, Washington, D. C., reading as follows: "In response to your letter of July 10 regarding Production cut backs in the gas range industry, the attached, table summarizes factory shipments of these Products during the first five months of 1950 and 1951. Other data on factory production of gas ranges are not available but we believe these shipment data tend to indicate the general level end trend of output. These P's range shipment statistics are released each month by the Gas Appliance Manufacturers Association. "The attached table reflects a rather sharp decline in shipments during the month of May but it is ( 1, 3. : 1 some significance that total shipments for the first ' ve months of 1951 exceed those for the comparable 1950 Period by approximately 10 per cent. It is difficult to provide a definitive answer to lr question concerning the effect of Regulation W on j Y it , 01,18 Particular industry. As you know, the Board has t ten expressed the view that it is virtually impossible a° isolate the effect of consumer credit regulation on dugiven industry or specific commodity. All consumer r reble goods are in active competition with one another wcilr the consumer's dollar. The consumer makes the choice a,?ther he will buy a gas range, a television set, an L°mobile or a refrigerator with the amount of money coailable for him to spend. At the present time, of hitlfse, consumer disposable income is at an all-time " and unemployment at its peacetime low. "While it is frequently alleged that the effect of regulation on the use of instalment credit has been crntic, by the end of May •the total amount of instalment ma:'it outstanding was apparently leveling off at approxielY the volume outstanding at the end of August 1950, ju's before the Defense Production Act was passed. Essenti e-LlY, then, the effect of the regulation has been to 13re , 17e t a further expansion of the total amount of consumer ill alment credit and a concomitant increase in consumer chasing power. rl Another factor which is important in evaluating current 41ction and shipment data in the case of certain durable ID1'° ' 4 7/20/51 _5_ goods, especially cooking stoves and refrigerators, is the inventory position and policy of builders and their euPpliers, who purchase these items for original Installation in new homes. The current drop in factory shipraents undoubtedly reflects in part the fact that there Vas a large volume of advance buying in these quarters last fall and winter. "It is hoped that this information will be of ! ssistance to the Joint Committee and if there is any; Iling further you would like to have, please let us know. 2t1 may be assured, however, that the Board will be glad ' 4) consult with the trade at their request on this matter nd will give every consideration to conditions in this .1:ndustry in arriving at any decision with respect to the -611115 specified in Regulation W." Approved unanimously. Letter to Mr. Millard, Vice President of the Federal Reserve Bank Or R, -41 Francisco, reading as follows: it "This refers to your letter of June 26, 1951 and w 8 enclosures, concerning the application of Regulation cot° automobile leasing arrangements proposed by Contra sta, County Schools, Martinez, California. at 'Briefly, this correspondence explains that such to (.1,rrangement would involve the leasing of an automobile 2o, 1111tY Schools and to an individual employee of County ls who would have the vehicle available for both Eto business and personal use. County Schools would be et ?bligated for two-thirds of the rental and the individual Yee for one-third thereof, thus reflecting an equitable 1" : )1 ) div 1°11 of rental based on use. It appears that this arrangeke;.;8, been proposed because it would be more economical .0._ otherwise feasible for County Schools to lease automobiles 1,1Z to acquire them by purchase or pay employees for the °f automobiles awned by them and used for school business. .,11t1Y, it is regarded as unlawful for a political subille di;a 1 .h as County Schools, to charge for the use of eret;c ( ) c)1 1) 1, its ;; tilt :In view of section 6(d) of the regulation concerning vomeg.-credits, the employee's interest in the instalment lease -44 be subject to the regulation, while the interest therein i601 7/20/51 -6- If County Schools would be exempt under section 7(d). Accordingly, a down payment or deposit in an amount equal to one-ninth (one-third of one-third) of the value of the leased automobile would have to be collected from the employee. In addition, the reillaining two-thirds of one-third of the value of the automdbile (plus any charges for such items - or their equivalents - that are specified for inclusion in the time balance by section 6(c)(4)), would have to be arranged for collection through rental payments scheduled in accordance with the instalment payment requirements the regulation. If so handled, the transaction 0111d comply with the regulation. "It would be especially important in any such aes for the Registrant to carry the transaction on 4i8 in such a way that, under section 8(a), the sPeeial nature of the transaction and its compliance /4th the regulation would be readily ascertainable." Y ? Approved unanimously. Letter to the Honorable Charles W. Tobey, United States Senate, 11t811:41EUn, D. C., reading as follows: aa "This refers to your communication of July 5, 19511 cilressed to former Chairman McCabe, with which you ena letter from Mr. James P. Mayo of Nashua, New mPabire, relative to Regulation W concerning consumer Mr. Mayo enclosed a copy of a letter he had ree2 from the Board which said in part that good used 1'8 continue to be available on terms from $25 to $50 'olonth. This statement was strongly disputed by Mr. 7 1401 his letter to you. Mr. Mayo stated that a good car cannot be purchased for less than $800. be "An automobile the full price of which is $800 can to2urchased, after a down payment of one-third, on a 1) rao.;;;Llis contract for approximately $43 per month. Autoe selling for approximately $950 full cash price Purchased on monthly payments of less then $50 15-141ing finance and interest charges under the present Month maturity requirements. r 4 7/2o/51 -7- "The statement that good used cars cannot be Purchased for less than $8001 is in itself open to question. The implications of such a statement are serious and it is doubtful whether very many dealers 'would subscribe to it. Many good used cars costing less than $800 continue to be sold by dealers and give gcloa, economical transportation to those persons of Illoderate income who normally buy them. Our studies 21 eeed on reliable information continue to show the Iacts to be as originally represented to Mr. Mayo. 'the regulation has helped rather than penalized the Person of moderate or law income. "Today the national income is at an all-time record 4,!vel. Unemployment is at its lowest point in our peacee history. Defense expenditures, which now account ,itor less than 10 per cent of total output, are scheduled 4° rise sharply and may well account for as much as twice ""at percentage within the next twelve months. Considerable has been made in the past few months In stemming ' 041e tide of inflation. However, the substantial pressures 4 "pur economy resulting from the expanding defense program , ;re still present. As you know, the Board's primary 13°nsibility is concerned with preserving the integrity soundness of the dollar. From this point of view, : ti a tact is that the consumer dollar is buying more in durable goods field today than it automobile and other Ilould have bought in the absence of consumer credit colltrols. Re "The 'The Board is continually studying the effect of Re W in markets for regulated articles, and we l ' Irciate the opportunity of commenting on Mr. Mayo's Aber, which is returned herewith." ' Approved unanimously.
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